Commodity finance fraud
In 2020, commodity finance fraud claimed its place as the most popular topic on the GTR website, following several allegations and cases of fraudulent activity that were exposed across Asia and the Middle East.
The first sign of trouble appeared in March when Singapore-based commodities giant Agritrade International was accused of “massive, premeditated and systematic” deception by an ING court filing. Shortly afterwards, Singapore oil trader Hin Leong collapsed, marking the demise of one of Asia’s largest independent trading houses.
In the subsequent weeks, three other oil traders – ZenRock, Hontop and Sugih Energy – also found themselves at the centre of fraud allegations by lenders that feared being left out of pocket, with accusations generally focused on multiple financing.
The scandals have left banks nervous – in the case of Hin Leong for example, liabilities to banks and other creditors total around US$3.5bn.
ABN Amro, whose exposure to Hin Leong was second only to HSBC, announced a complete withdrawal from the trade and commodity finance market in August.
Meanwhile, Société Générale and BNP Paribas are consolidating activities or suspending business with new clients.
Elsewhere, ING announced plans to “refocus” its wholesale banking operations, including trade finance, and target a smaller number of core clients. The decision is unrelated to the recent fraud cases, according to the bank.