The Panama-registered Universal Shipping Group was ordered to pay US$ 2.89 million (Sin$ 3.73 million) by the High Court in Singapore after the court found that the shipping company had conspired with another company to defraud a Chinese bank.
Universal chartered its vessel, the “Dolphina”, to a Malaysian palm oil producer, Kwantas Oil, to carry 3000 tonnes of palm oil to China in 2008.
On arrival of the ship in China, the palm oil cargo was unloaded in Huangpu without the original bills of lading. Kwantas gave an indemnity to The Bank of Communications (BOC) in Zhejiang Province to protect Universal against all liabilities arising from unloading without the original bills of lading.
The BOC had given a letter of credit for US$ 3.4 million in favour of Kwantas on behalf of Zhejiang Zhongguang Industry, which imported the oil from Malaysia.
According to the charges, Universal conspired with Kwantas to persuade BOC to pay US$ 3.4 million to Kwantas under the letter of credit on the strength of the documents presented. Kwantas distributed the oil to various end users through Dongma Oils & Fats, a company linked to Kwantas and Universal.
In the meantime, Zhejiang Zhongguang Industry ran into financial difficulties and could not meet the payment to BOC. The bank found out that the oil had been sold 2 months before the due date.
BOC arrested the “Dolphina,” which was seized in Singapore waters in July 2008, and began proceedings against Universal for conspiring with others to defraud it.
Justice Belinda Ang, in her 63 page judgement, found that the case for conspiracy had been satisfactorily made, and ordered Universal to pay BOC’s losses, set at US$2.89 million. The three directors of Universal are also directors of Kwantas.
The role of director Steve Kwan, whose knowledge of what transpired could be attributed to Universal, the Judge ruled, invoking the rarely used “Law of Attribution” to link a director of Universal directly to the fraud by the firm. Lawyers said that this judgment is expected to be a reference point for court rulings on the requirements to support future claims of civil conspiracy.