HSBC alleges Zenrock sought multiple loans for same oil cargo - court document

By Roslan Khasawneh and Anshuman Daga

SINGAPORE (Reuters) - HSBC Holdings PLC has alleged that Singapore-based Zenrock Commodities Trading Pte Ltd engaged in a series of "highly dishonest transactions" which included using the same oil cargo to obtain loans from at least two different lenders, according to a court document seen by Reuters.

Zenrock did not respond to requests for comments.

HSBC filed a court application on Monday to place Zenrock Commodities under judicial management, where a court appoints an independent manager to run the affairs of a financially distressed company in the place of existing management.

"The Singapore High Court granted HSBC's application for the appointment of interim judicial managers (IJM) in relation to Zenrock," a spokeswoman from HSBC told Reuters.

Two sources with knowledge of the matter said executives from accounting firm KPMG have been appointed as IJMs of Zenrock. KPMG declined to comment.

Late last month, Zenrock issued a statement to reassure clients that it was not under financial duress after global oil and fuel prices slumped.

HSBC said in the court filing that Zenrock Commodities has "behaved fraudulently, and engaged in double/multiple financing" in two separate crude oil transactions that occurred in March and April.

HSBC filed a police report on April 28 with Singapore's Commercial Affairs Department "on such conduct", the court document said.

Zenrock Commodities owed HSBC close to $49 million while its total debt to institutional lenders stands at around $165 million, HSBC said.

HSBC declined to comment on the court document. Its law firm Shook Lin & Bok did not respond to a request for comment.

When asked if the Singapore Police Force could confirm that they have received a report from HSBC against Zenrock, a police spokeswoman said in an email that it was "inappropriate" for them to comment on this matter.

Zenrock is the latest Singapore-based commodities trading firm whose finances have come under scrutiny as the collapse in global oil prices amid a slump in consumption due to the coronavirus pandemic ripples through the sector.

Zenrock trades crude, oil products and petrochemicals and has offices in Singapore, Shanghai and Geneva.

The company's revenues more than doubled to $6.15 billion in 2018, from $2.88 billion in the previous year, according to its latest annual financial statement on Singapore's Accounting and Corporate Regulatory Authority website.

Its earnings before interest and tax (EBIT) also more than doubled to $11.17 million in 2018, from $4.62 million in 2017.

(Reporting by Roslan Khasawneh and Anshuman Daga; Additional reporting by Jessica Jaganathan; Writing by Florence Tan; Editing by Michael Perry, Jane Merriman and Louise Heavens)