Court papers give an insight into tycoon’s dealings, show how he lost millions in the past year
By CHEW XIANG
COURT papers filed in an ongoing suit lodged by tycoon Oei Hong Leong against Citibank’s private banking arm shine a rare spotlight on the way the famed investor has handled some of his finances - and lost hundreds of millions over the last year.
For instance, last November, as Barack Obama was elected US president, Mr. Oei believed that bond yields would fall sharply, implying a jump in bond prices, ‘especially if his fears that President-elect Obama might be assassinated were realised’.
Although Mr. Obama wasn’t shot, bond prices still jumped sharply through the month, causing Mr. Oei undisclosed losses. He had an uncovered exposure to US$600 million of put and call options on 30-year US Treasury bonds and wanted to buy US$600 million from Citi to cover the positions.
One part of the dispute with Citi centres on Mr. Oei’s claims that his orders to do this at a lower price were repeatedly not carried out by the Citi banking team, causing him considerable losses when he had to meet his obligations later at a less favourable price.
The court papers also show that Mr. Oei dealt heavily in forex trades. Between Sept 16 and Oct 6 last year, he sold 13 options in various currencies including the sterling, US dollar, euro and the yen - entering in total over US$1 billion in trades over that three-week period.
And according to the documents, Mr. Oei lost US$518.3 million when liquidating 23 further forex contracts at the end of October. The contracts involve a range of straight cash deals, options, forex hedges, strips, bonds, and one targeted accrual redemption note.
To cover margin shortfalls due to the losses, Mr. Oei apparently offered to pledge C$250 million (S$322 million) in Canadian properties as well as valuable antiques to avoid further liquidations at a loss.
In one instance of his market savviness, Mr. Oei claimed in the documents that he foresaw the downturn as early as 2007, and so decided to trim his trading positions with Citi, then valued at about US$7 billion. He also decided to routinely maintain a margin surplus of at least US$100 million above that required by the bank.
That year, Mr. Oei also began selling out of a number of other assets - according to reports, he gained S$14 million in just ten months from the sale of a 55,000 square foot plot of land in Pasir Panjang, and also netted millions through offloading stakes in SC Global and Centillion Environment and Recycling.
The lawsuit, filed last month and set for a first pre-trial conference in July, alleges that Citibank gave him inaccurate information on his trading positions on a number of occasions, causing him millions of dollars in losses. Mr. Oei also alleges that Citi failed to carry out its duty to execute market orders, causing him losses.
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Oei’s Obama assassination fears
Court papers give an insight into tycoon’s dealings, show how he lost millions in the past year
By CHEW XIANG
COURT papers filed in an ongoing suit lodged by tycoon Oei Hong Leong against Citibank’s private banking arm shine a rare spotlight on the way the famed investor has handled some of his finances - and lost hundreds of millions over the last year.
For instance, last November, as Barack Obama was elected US president, Mr. Oei believed that bond yields would fall sharply, implying a jump in bond prices, ‘especially if his fears that President-elect Obama might be assassinated were realised’.
Although Mr. Obama wasn’t shot, bond prices still jumped sharply through the month, causing Mr. Oei undisclosed losses. He had an uncovered exposure to US$600 million of put and call options on 30-year US Treasury bonds and wanted to buy US$600 million from Citi to cover the positions.
One part of the dispute with Citi centres on Mr. Oei’s claims that his orders to do this at a lower price were repeatedly not carried out by the Citi banking team, causing him considerable losses when he had to meet his obligations later at a less favourable price.
The court papers also show that Mr. Oei dealt heavily in forex trades. Between Sept 16 and Oct 6 last year, he sold 13 options in various currencies including the sterling, US dollar, euro and the yen - entering in total over US$1 billion in trades over that three-week period.
And according to the documents, Mr. Oei lost US$518.3 million when liquidating 23 further forex contracts at the end of October. The contracts involve a range of straight cash deals, options, forex hedges, strips, bonds, and one targeted accrual redemption note.
To cover margin shortfalls due to the losses, Mr. Oei apparently offered to pledge C$250 million (S$322 million) in Canadian properties as well as valuable antiques to avoid further liquidations at a loss.
In one instance of his market savviness, Mr. Oei claimed in the documents that he foresaw the downturn as early as 2007, and so decided to trim his trading positions with Citi, then valued at about US$7 billion. He also decided to routinely maintain a margin surplus of at least US$100 million above that required by the bank.
That year, Mr. Oei also began selling out of a number of other assets - according to reports, he gained S$14 million in just ten months from the sale of a 55,000 square foot plot of land in Pasir Panjang, and also netted millions through offloading stakes in SC Global and Centillion Environment and Recycling.
The lawsuit, filed last month and set for a first pre-trial conference in July, alleges that Citibank gave him inaccurate information on his trading positions on a number of occasions, causing him millions of dollars in losses. Mr. Oei also alleges that Citi failed to carry out its duty to execute market orders, causing him losses.
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