New Singaporean Venture Digitalizes Bunker Trading to Prevent Fraud
Singapores public-private trade data partnership, SGTraDex, has launched an industry-backed initiati...
Singapore's public-private trade data partnership, SGTraDex, has launched an industry-backed initiative to digitalize bunkering transactions. The new trade platform went live on June 1 after a month of "soft-launch" testing.
The initiative's objective is to use digitalization to head off any further oil-trading fraud scandals, like the high-profile failure of Hin Leong Trading in 2020. By building more transparency into transactions and making it hard to forge documents, the initiative seeks to attract more bankers back to the bunkering sector; many financial firms have shied away from paper-dependent bunker transactions after the multibillion-dollar loss caused by Hin Leong's fraudulent trade financing scheme.
Singaporean prosecutors contend that Hin Leong used falsified documents in order to obtain tens of millions of dollars in trade financing, then failed to repay the money. By the time the firm's shaky finances finally fell apart, the business empire owed its creditors $3.5 billion - and only a fraction has been recovered since.
The newly-launched SGTraDex platform could help prevent similar instances of fraud by digitalizing the transaction, ensuring security and efficiency, its sponsors say. The flow data from the physical bunker supplier's bunkering vessel is used to generate a proprietary digital bunker delivery note, delivered automatically to multiple players in the transaction. The banker can use the digital note to verify the authenticity of the transaction, making it harder for a supplier to falsify a trade by manipulating the paper trail. The result is a fully digital transaction, with no manual data entry.
The platform is proving popular: top Singaporean bunkering financier UOB - which provides trade finance for about half of the local market - is making it mandatory for its customers. Equatorial Marine Fuel, a large bunker supplier in Singapore, has fitted one third of its bunkering vessels with systems to capture flow data and generate digital bunker delivery notes. SGTraDex is also automating sales invoices and orders for Equatorial Marine Fuel, and the reduction in paperwork is expected to save the company more than 50,000 man-hours per year (when fully rolled out).
"Our success in signing up more than a quarter of all licensed bunker suppliers even before our official launch today, is a testament to their hard work and dedication in helping us succeed. We urge other bunker suppliers who are still undecided to take advantage of our first year no-fee usage to digitalize their processes as soon as possible," said Antoine Cadoux, the CEO of SGTraDex.