Bank of China is suing BP for allegedly fabricating oil deals with collapsed oil trader Hin Leong which involved the oil major withdrawing a total of US$125.7 million on three letters of credit (L/Cs) in early February 2020 from Bank of China.

The case is the latest in the Hin Leong collapse involving L/Cs used in what appears to be a "fictitious purchase scheme conspiracy" to demonstrate the Singaporean oil trader's liquidity even though no real transactions took place.

L/C abuse

Earlier this year UniCredit SpA sued Hin Leong and commodity trader Glencore over an L/C that the collapsed trader obtained ostensibly to purchase oil but instead used to settle debts.

Unicredit claimed it did not know at the time it provided the L/C that Hin Leong had made a separate agreement to sell the cargo straight back to Glencore on the same day (DC World News, 2020).

Judicial manager

The Italian bank says it only became aware of the real purpose of the L/C when it was told in June 2020 by PwC, Hin Leong's judicial manager.

In this latest case, the Bank of China only learnt about the allegedly fictitious use of the L/Cs when it was informed by PwC that its trades associated with Hin Leong were fabrications backed by non-existent cargoes financed by at least 27 L/Cs including the three from Bank of China.

Bank of China is also suing Hin Leong's founder, Lim Oon Kuin and two of his children, claiming unpaid debts of US$187.2 million.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.