Malaysia’s CIMB alleges ‘suspicious’ Hontop Energy oil deals with BP

A woman wearing a facemask as preventive measure against the spread of the coronavirus (COVID-19) walks at the business district in Singapore. (AFP)
Short Url
Updated 06 July 2020

Malaysia’s CIMB alleges ‘suspicious’ Hontop Energy oil deals with BP

  • Hontop is one of four commodity trading firms in Singapore which ran into financial trouble as the oil price crashed

SINGAPORE: Singapore’s High Court has appointed an independent supervisor to oversee the restructuring of trader Hontop Energy.

The move came after Malaysian lender CIMB, its biggest creditor, raised concerns about what it described as “suspicious” deals involving oil major BP, according to an affidavit filed with the court this week.

Hontop, the trading arm of Chinese independent refiner China Wanda Holding Group Co. Ltd., is one of four commodity trading firms in Singapore which ran into financial trouble as the oil price crashed. CIMB is seeking repayment of $105 million it lent the company.

In the affidavit requesting the appointment of an independent supervisor to run Hontop’s affairs, CIMB Bank Berhad detailed how it lent Hontop the money to finance two crude oil deals late last year in a section titled “Suspicious transactions.” In total, Hintop owes nearly $470 million to seven banks, according to a list of creditors included in the affidavit.

Accounting firm RSM Corporate Advisory Pte Ltd. has been named interim judicial managers following the bank’s application, according to CIMB’s law firm Rajah & Tann and the affidavit. CIMB said it does not disclose or comment on specific names or clients. 

The deals cited by CIMB in its affidavit involved Hontop buying cargoes from Sugih Energy International Pte Ltd., now known as Aeturnum Energy International Pte Ltd, and telling CIMB it was reselling them to BP Singapore Pte Ltd. (BPS), a unit of BP.

Focus Law Asia LLC, representing Aeternum Energy, confirmed the transactions with Hontop.

In the first deal, CIMB agreed to finance Hontop’s sale of Russian ESPO crude onboard vessel Green Attitude to BP on an “open account” basis, where goods are shipped and delivered before payment is due, according to the affidavit.

When CIMB reached out to BP for payment in February, the oil major told the bank that the contract and payment for the cargo had been subject to a separate agreement between BP and Hontop and because it had not received payment from Hontop it was not obliged to pay Hontop or CIMB for the cargo, according to the affidavit.

BP did not specify what the agreement was about or say why it was meant to receive a payment from Hontop.

“It appears to be the case that, when applying for financing, Hontop neglected to disclose to CIMB material details about the nature of its agreement with BP,” BP said in a Feb. 20 letter to CIMB, a copy of which was appended to the affidavit.

In the second deal, for 1 million barrels of Russian Export Blend crude onboard vessel Gem No. 5, BP told CIMB in January that it did not enter into any contracts relating to this cargo.

S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.