(Bloomberg) — The prospects for HSBC Holdings Plc and different banks to recuperate losses from a failed Singapore oil dealer are dimmer than initially thought after an accounting evaluate discovered the power agency overstated belongings by $Three billion and fabricated paperwork on a “massive scale.”Hin Leong Buying and selling (Pte) Ltd. has belongings of about $257 million, or 7% of its estimated $3.5 billion in liabilities, the corporate’s interim managers stated in a report back to Singapore’s Excessive Court docket on Tuesday. That’s lower than half the belongings estimated by founder Lim Oon Kuin and his son Evan Lim, in accordance with earlier affidavits to the court docket.HSBC is amongst 23 banks owed virtually $four billion by Hin Leong, one of many largest merchants in Singapore earlier than its collapse in April following a plunge in oil costs that uncovered what the report discovered had been “manipulated” accounts and frequent double counting of cargo to maintain credit score traces flowing.“The scale and regularity of the fabrication suggests that the practice was routine and pervasive,” the report discovered. “These forged documents enabled the company to mislead banks in extending financing to the company and also acted as supporting documentation for the fictitious gains and profits.”HSBC, the London-based bank with probably the most publicity to Hin Leong at about $600 million, declined to touch upon the report. Hin Leong didn’t reply to e mail inquiries looking for remark. The court docket submitting was earlier reported by Reuters and Singapore’s Straits Instances.Hin Leong “systematically manipulated its accounts to inflate the value of its accounts receivables” to current an exaggerated image of its monetary well being, in accordance with the report by PricewaterhouseCoopers LLC’s Chan Kheng Tek and Goh Thien Phong. Chan and Goh, who had been appointed in April as interim judicial managers to supervise the corporate, added that Hin Leong has “no reasonable prospect” of rehabilitation as a standalone entity.Authorized DisputesThe buying and selling home and its sister firms owned by the Lim household must be put collectively as an built-in buying and selling platform to be restructured, whereas the Lims ought to inject their private belongings, the managers stated within the report. The Lims, who acquired dividends totaling $90 million within the 2018 and 2017 fiscal years, haven’t responded to this suggestion by way of their authorized advisers, in accordance with the report.The Hin Leong collapse has sparked a number of authorized disputes amongst banks and different collectors looking for to recuperate losses from the debacle. Sinopec final month misplaced a authorized bid to halt a loan fee, whereas Winson Oil Buying and selling Pte. Ltd. took Oversea-Chinese language Banking Corp. to court docket, demanding fee for a sale of gasoline tied to Hin Leong.Hin Leong’s audited monetary statements for the monetary yr led to October overstated the value of its belongings by at the very least $Three billion, in accordance with the report. This overstatement comprised $2.23 billion in accounts receivables that don’t have any prospect of restoration, and $800 million in stock shortfalls, it stated.As a part of the alleged manipulation, Hin Leong transfered cash amongst its numerous bank accounts to provide the misunderstanding that accounts receivables had been collected, when no funds had been acquired, the managers stated. This not solely inflated the value of the balances, but in addition gave it an look of legitimacy by making certain that the accounts had been stored present, they stated.The strikes helped conceal vital losses, the managers stated, including that Hin Leong suffered derivatives buying and selling hits of about $808 million over the previous decade.Non-Existent CargoAmong its $3.5 billion in liabilities, there are about 273 excellent letters of credit score amenities issued by 23 lenders, the report stated. About 60 of them, amounting to $1.5 billion, had been utilized in bilateral or multi-party transactions through which Hin Leong would purchase and promote the identical cargo on the identical date, or inside a brief interval, at a loss. These trades had been finished for the sake of acquiring liquidity, the report stated.In different situations, the corporate would promote and purchase again non-existent cargo from its counterparty for financing, the report stated. Different transactions included buying cargo solely to promote it again concurrently with out taking bodily supply.The PwC report stated the corporate and founder OK Lim haven’t replied to questions from the managers, nor said whether or not or when they may reply. Lim’s attorneys stated he’s unwell and gained’t be capable of help “for a prolonged period of time,” in accordance with the report.(Provides HSBC declined to remark in fifth paragraph)For extra articles like this, please go to us at bloomberg.comSubscribe now to remain forward with probably the most trusted enterprise information supply.©2020 Bloomberg L.P.