KPMG Cites Concerns Over ‘Questionable’ ZenRock Transactions

Source: Regulation Asia Editors, Regulation Asia 2020-07-15

KPMG was appointed as ZenRock’s interim judicial manager in May amid allegations from HSBC that the company engaged in “dishonest transactions”.

KPMG has said in a report to Singapore’s High Court that it has “serious concerns” over hundreds of transactions of ZenRock Commodities Trading, Reuters has reported.

KPMG executives were appointed as interim judicial managers of ZenRock in May to oversee a transition to new management, amid allegations from HSBC that the company was engaged in a number of “dishonest transactions”, including the use of false and/or fraudulent transaction documents in loan applications.

As of 17 April, HSBC had USD 49 million in exposures to ZenRock, of an estimated USD 166 million owed to six lenders.

In the report, KPMG cited concerns with Zenrock’s transactions with Singapore-based firm Huitongrong International and Shenzhen Qianhai Jin Rong Petrochemical Trading. It also pointed to “questionable transactions” involving the use of duplicate invoices to obtain financing from multiple lenders, the sale of the same cargo to more than one company, and unusually large cash transactions.

Zenrock is unlikely to continue its core businesses of oil trading, gasoil blending and storage, and commodity derivatives trading in the long term, KPMG said, adding that “any restructuring would, at best, preserve a fraction of ZenRock’s original business”.

The KPMG report was based on documents and interviews with ZenRock’s employees.

ZenRock is under investigation by the CAD (Commercial Affairs Department) of the Singapore Police Force.

Earlier this month Bloomberg reported that ZenRock has plans to wind down its business by August.

HSBC

ZenRock

KPMG

KPMG Cites Concerns Over ‘Questionable’ ZenRock Transactions

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