Hearing of Hyflux founder and ex-CEO Olivia Lum, ex-CFO and directors starts Monday
Their trial comes after former director Rajsekar Kuppuswami Mitta , 68, was fined S$90,000 and barred from holding any directorship following his guilty plea on Thursday over Hyflux's failure to disclose information relating to the Tuaspring integrated water and power project in 2011 as required under Singapore Exchange (SGX) listing rules.
Lum also allegedly failed to ensure that Hyflux made disclosures required under the accounting standards for its financial statements for the financial year ended Dec 31, 2017. PHOTO: ST
Lum and the other five accused persons will be jointly tried before District Judge Toh Han Li. The trial is scheduled to take place over 57 days until February 2026, court records showed.
Lum, 64, faces six charges: four counts of Companies Act violations and two counts of breaching the Securities and Futures Act.
She was first charged in November 2022, together with the water treatment firm's ex-CFO Cho Wee Peng and four board members, including ex-director Rajsekar, for disclosure-related offences under the Securities and Futures Act.
She was accused of consenting to the non-disclosure of information relating to the Tuaspring integrated water and power project in 2011, despite such information being required under the listing rules, while the directors were allegedly negligent in the matter.
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She also allegedly failed to ensure that Hyflux made disclosures required under the accounting standards for its financial statements for the financial year ended Dec 31, 2017.
In May 2023, she was subsequently slapped with three counts of breaching the Companies Act, while another independent director, Lee Joo Hai, was charged in March that year over Hyflux's non-disclosures. Former CFO Cho will be on trial after being charged with one count of violating the Securities and Futures Act due to allegedly conniving in Hyflux's intentional failure to disclose information relating to Tuaspring.
Olivia Lum, 64, ex-CEO Lum, 64, faces six charges: four counts of Companies Act violations and two counts of breaching the Securities and Futures Act. PHOTO: BT FILE
Charged with six counts: four counts of Companies Act violations and two counts of breaching the Securities and Futures Act
The Securities and Futures Act charges are: For consenting to Hyflux's intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project despite listing rules requiring it. She could be jailed for up to seven years, fined up to S$250,000, or both, if convicted of this non-disclosure offence.
For Hyflux's omission of information about Tuaspring in the 2011 offer information statement issued for the offer of S$200 million, 6 per cent preference shares on Apr 13, 2011. She faces a jail term of up to one year, fines of up to S$150,000, or both, if found guilty.
The Companies Act charges are:
Failure to ensure that Hyflux made disclosures required under the accounting standards for its financial statements for the financial year ended 2017. She could be fined up to S$50,000 if convicted of this offence.
Those deposits, which the company had undertaken not to withdraw, were with Mizuho Bank. The financial statements released on Nov 9, 2017, for the third quarter and for the nine months ended September 2017 disclosed restricted bank balances amounting to about S$73.7 million, without the inclusion of US$33.5 million.
Those released on Feb 27, 2018, for the financial year ended December 2017 disclosed restricted bank balances of about S$67 million, which the authorities said should have included the Mizuho Bank deposits of US$33.5 million.
For the statements published on May 9, 2018, for the first quarter ended March 2018, restricted bank balances amounting to about S$65.7 million were disclosed, with US$47.5 million allegedly omitted.
She could be jailed for up to one year or fined up to S$5,000 for each of these three offences.
Out on bail of S$100,000.
Represented by Senior Counsel Davinder Singh.
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Cho Wee Peng, 56, ex-CFO He faces a jail term of up to seven years, fined up to S$250,000, or both, if convicted of this non-disclosure offence. PHOTO: BT FILE
One count of violating the Securities and Futures Act, due to conniving in Hyflux's intentional failure to disclose information relating to Tuaspring.
Faces a jail term of up to seven years, fines of up to S$250,000, or both, if convicted of this non-disclosure offence.
Out on bail of S$160,000.
Represented by Rajah & Tann lawyers.
Expand
Independent directors Teo Kiang Kok, Gay Chee Cheong, Christopher Murugasu, and Lee each face two charges of breaching the Securities and Futures Act:
Neglect in connection with Hyflux's intentional failure to disclose information relating to Tuaspring, when such disclosure was required under the listing rules. Each faces a jail term of up to seven years, fines of up to S$250,000, or both, if convicted.
Liable for Hyflux's omission to state the material information relating to Tuaspring in the 2011 Offer Information Statement issued for the offer of S$200 million, 6 per cent preference shares on Apr 13, 2011. Each faces a jail term of for up to two years, fines of up to S$150,000, or both, if found guilty.
They are all represented by Shook Lin & Bok lawyers.
Gay Chee Cheong, 68, director PHOTO: BT FILE
Out on bail of S$160,000.
Christopher Murugasu, 66, director PHOTO: BT FILE
Out on bail of S$80,000
Teo Kiang Kok, 69, director PHOTO: BT FILE
Out on bail of S$160,000
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Straits Times
3 minutes ago
- Straits Times
Hyflux issued preference shares to fund Tuaspring as it had problems getting bank loans: Prosecution
Sign up now: Get ST's newsletters delivered to your inbox SINGAPORE - Hyflux issued preference shares to fund its Tuaspring project because it had trouble getting bank loans, the prosecution said on the first day of the trial involving former senior executives of the failed water treatment plant. Deputy Chief Prosecutor Christopher Ong noted that a consortium of banks had raised concerns in 2011 over Hyflux's strategy of selling electricity to subsidise the sale of water to PUB. This led Hyflux to consider other avenues of raising funds. Its eventual collapse left about 34,000 investors of perpetual securities and preference shares, who had sunk in a combined $900 million, with nothing. Former Hyflux employees and bank representatives who were involved in negotiations on financing the Tuaspring integrated water and power project are expected to testify for the prosection. In total, seven people have been charged over Hyflux's intentional failure to disclose information relating to Tuaspring, among other things. Six of them – Hyflux founder and former chief executive Olivia Lum Ooi Lin, former chief financial officer Cho Wee Peng, and former independent directors Teo Kiang Kok, Christopher Murugasu, Gay Chee Cheong, and Lee Joo Hai – are contesting their charges in a 56-day trial scheduled to run from Aug 11 to Feb 5, 2026. The prosecution will proceed on 11 charges, including two of the six charges Lum faces. The remaining four charges against Lum are stood down. Top stories Swipe. Select. Stay informed. Singapore Keppel to sell M1's telco business to Simba for $1.43b, says deal expected to benefit consumers Business Singtel, StarHub shares fall after announcement of Keppel's M1 sale Singapore ST Explains: Who owns Simba, the company that is buying M1? Singapore Simba-M1 deal is S'pore's first telco merger, after years of liberalisation Singapore S'pore Govt asks inactive political parties including Barisan Sosialis for proof of existence Singapore Man's claim amid divorce that his mother is true owner of 3 properties cuts no ice with judge Opinion Anwar's government: Full house but plenty of empty offices The prosecution, in an opening statement to the State Court on Aug 11, said Hyflux won the tender for Singapore's second and largest desalination plant with the lowest submitted bid. It had proposed to sell water to PUB at a first-year tariff price of $0.45/m3, undercutting its competitors by at least 27 per cent. 'At this price, the desalination plant would operate at a loss,' Mr Ong said. 'To make the project financially viable, and also fulfil PUB's requirement to procure or produce electricity for the desalination plant at Hyflux's cost, Hyflux intended for the power plant to supply electricity to the desalination plant, while actually selling the vast majority of the power that it generated to the national grid.' It was only from this sale that Hyflux would be able to make up for the desalination plant's losses and make the project profitable. But Hyflux had no prior experience in power generation, much less selling electricity. The Tuaspring Project would be the first time Hyflux entered the electricity market, the prosecution said. How it all unfolded To finance the Tuaspring project, which was initially projected to cost $890 million, Hyflux sought a term loan of about $527 million from a consortium of banks. Six banks signed in-principle commitment letters in October 2010 indicating their willingness to finance the project. But they had not been told of Hyflux's plan to build a power plant and sell excess electricity to the grid at the time, Mr Ong noted. In November 2010, when they found out about Hyflux's power strategy, they 'raised serious concerns'. In January 2011, they told Hyflux that they could not lend it money on the terms previously indicated, as the power plant introduced new 'merchant sale risk and operational risk'. On 4 July 2011, only three of the original six banks - DBS, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation - extended Hyflux financing of $150 million for the construction of the desalination plant. This financing was eventually terminated by Hyflux. Tuaspring was ultimately financed by a shareholder's loan of $840.4 million by Hyflux in October 2011, which was in turn refinanced with Maybank Singapore and Maybank Kim Eng Securities in September 2013. The case against Lum In January 2011, in the midst of their negotiations with the banks, Hyflux's management began to contemplate issuing of preference shares to raise funds. On 19 January 2011, Hyflux senior vice president, legal (business) Ms Yang Ai Chian informed the Board of the need to issue preference shares to 'increase our funding options' for 'several new major projects' that Hyflux was expected to win that year. In reality, this money was meant to fund Tuaspring because of the challenges Hyflux faced in getting bank financing. On 13 April 2011, Hyflux lodged an offer information statement with the Monetary Authority of Singapore to issue up to $200 million in 6% preference shares. These were oversubscribed and the offer amount was increased. Hyflux ultimately raised $400 million. But the statement did not mention risks arising from Hyflux's entry into the electricity business, or those associated with Hyflux's strategy for Tuaspring, which could affect the company's financial position or results, the prosecution said. The information was omitted because Lum wanted to downplay Tuaspring's significant exposure to the electricity market, both in Hyflux's announcement that it had been named the 'preferred bidder' for the desalination project, as well as in the offer information statement, the prosecution said. 'Lum was determined that Hyflux had to win the bid and cement its status as a global leader in the water treatment and desalination industry. Hyflux was facing setbacks in its Middle Eastern ventures and winning the Tuaspring bid was critical for strengthening the company's order book,' Mr Ong said. 'She did not want to detract from the positive news of winning a landmark water project, by revealing the Tuaspring Project's reliance on electricity sales, and the fact that the low tariff price – the key to winning the tender – was only viable because of such electricity sales.' The prosecution also said Lum was well aware of the banks' negative reactions regarding the power plant component of the project, and feared that full disclosure might deter investors and compromise Hyflux's ability to raise funds through the planned preference shares. This, in turn, could jeopardise financial close for the project and potentially result in losing the bid, the prosecution said. The desalination plant of the Tuaspring Project became operational on September 18, 2013. But its power plant only became operational nearly two years later, on or around August 2015. It began selling electricity commercially on 18 February 2016. In March 2011, the average Uniform Singapore Energy Price had been around $187 per megawatt hour (MWh). By February 2016, this had fallen to around $49.10 per MWh. As the profitability of Tuaspring depended on electricity sales, this fall in electricity prices hit Hyflux hard. In its 2017 annual report, it reported a $115.6 million after tax loss. The report stated that the weak power market in Singapore drove losses for the first time in Hyflux's history, with the Tuaspring Project accounting for the majority of the losses. On 21 May 2018, Hyflux suspended trading of its shares. The next day, Hyflux announced that it had applied to seek court protection for debt reorganisation. On 18 May 2019, PUB took over the Tuaspring desalination plant. On 1 June 2022, a wholly owned subsidiary of Malaysia-based YTL Power International, YTL Powerseraya, completed its acquisition of the Tuaspring power plant. By 16 November 2020, Hyflux entered judicial management and into liquidation on 21 July 2021. Other witnesses include a lawyer from Stamford Law Corporation, who was Hyflux's external legal counsel on the April 2011 offer information statement; an SGX representative who will provide evidence on the sequence of events that led to this case being investigated; and a PUB representative, who will testify to PUB's dealings with Hyflux and its employees and management during the tender and award process for Tuaspring. The Prosecution will also adduce evidence from a securities expert, Mr Kevin Gin who will address why the omitted information ought to have been disclosed by Hyflux. The hearing continues.
AsiaOne
an hour ago
- AsiaOne
Criminal trial of Hyflux founder Olivia Lum and 5 others starts on Aug 11, Singapore News
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Rajsekar, a 68-year-old Australian citizen and Singapore permanent resident, was fined $90,000 over the company's failure to disclose information relating to the Tuaspring project in 2011 as required. He was also barred from acting as a company director for five years. Corporate governance advocate Mak Yuen Teen said that Rajsekar's sentence "may be a combination of lower culpability and his guilty plea" before trial. In seeking the $90,000 fine for Rajsekar, Deputy Public Prosecutor Kevin Yong noted that the harm caused was high while Rajsekar's culpability was low. The prescribed sentence is a fine of up to $250,000, a jail term of up to seven years, or both. Corporate finance lawyer Robson Lee, a partner at Kennedys Law, noted: "The fact that one independent director pleaded guilty before the start of trial does not affect the legal positions of the other IDs or executive director and CFO to defend the charges against each of them." The charges against the seven followed a joint probe in June 2020 by the Commercial Affairs Department, the Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority. The probe was initiated after a review of Hyflux's compliance with accounting and auditing standards, as well as disclosure rules. It looked at whether there were lapses in Hyflux's disclosures concerning the Tuaspring project, and non-compliance with accounting standards between 2011 and 2018. [[nid:719522]] This article was first published in The Straits Times . Permission required for reproduction.
Business Times
2 hours ago
- Business Times
GetGo back to profit after easing on the gas in 2024
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