Legal raised no issue with news release, Hyflux was ready to share electricity sales information: Witness

CNA

8 hours ago

This led to investors pumping in money without having a full picture of what the Tuaspring project was about, as it was allegedly pitched primarily as a desalination project.
The company allegedly hid the fact that it would fund the sale of water at a very low price to national water agency PUB with the sales of electricity from a power plant it would build - its first foray into this business.
On Thursday, Mr Singh continued to take Ms Heap through presentation decks, meeting minutes and emails from about 15 years ago.
He showed her a series of emails in early 2011 where drafts of the news release were circulated, copying Hyflux's head of legal, Ms Yang Ai Chian.
Ms Heap agreed that Ms Yang had joined Hyflux before her and was very meticulous. She also agreed that as head of legal, one of Ms Yang's jobs was to ensure that whatever Hyflux did, it did properly and legally.
Mr Singh put it to Ms Heap that at no time did Ms Yang or the company secretary - who also helped ensure compliance with listing rules - say that the draft announcement was not in compliance with listing rules.
Ms Heap agreed.
She also agreed that "no one" suggested that the draft needed to be supplemented with further information, and that no one suggested there would be any issue with the listing rules based on a draft in January 2011.
As the senior management and board relied on the various teams, including legal and corporate communications, to draft and review the drafts, Ms Heap agreed that it would be fair for the senior management and directors to take the view that there was "no issue at all" with the drafts.
"Indeed, this you would remember - my client Olivia Lum, did not once say to you - please don't tell anyone else about this draft yet," said Mr Singh.
Ms Heap confirmed this. She also acknowledged that Ms Lum treated the exercise of drafting the announcement no differently than any other such exercise.
She further agreed that Lum never gave her any instructions not to put any draft on the record or over email.
Mr Singh showed Ms Heap various versions of the announcements and asked her to compare them in detail.
He said that it was normal in the course of Ms Heap's work for there to be refinements, changing of structure and moving around of words and paragraphs.
Ms Heap agreed with him that it would be fair to say that everyone at a discussion on the draft "put their heads together to consider these changes to see whether they were satisfactory and sufficient for the purposes of the news release" and agreed that the changes were appropriate and had them made.
Ms Heap also agreed that there was "nothing unusual" about some linguistic changes and tweaks to the presentation of a certain draft.
The news release initially contained more details about the electricity business, but this was later edited out.
PUB INSERTED LINE
Mr Singh then showed Ms Heap the news release on Mar 7, 2011. There was a line that read: "Excess power will be sold to the power grid."
He asked Ms Heap how this was inserted. She said that the announcement had been sent to PUB for vetting, and PUB suggested inserting this line, so it was inserted, with Hyflux immediately accepting the suggestion.
The court heard that the reason the draft was sent to PUB was that it was the agreement the agency had with Hyflux.
Ms Heap said PUB wanted the announcement to be "aligned" because they awarded the project to Hyflux, and it was a sensitive, "huge" and "significant" project.
"Yes, and so you understood that PUB was very concerned about what should and should not be said by Hyflux, correct?" asked Mr Singh.
"We (were) conscious of the fact that we need to get their buy-in as well, with the announcement," said Ms Heap.
Mr Singh then asked: "Yes, and also PUB needed to satisfy itself that if any information is meant to be confidential, they would have to decide whether or not it can be released. Correct?"
Ms Heap agreed.
She also agreed that as of Mar 7, 2011, the day the crucial announcement was made, nobody at Hyflux including Lum had said that any information was not to be disclosed.
She confirmed that at a question-and-answer session, information was made known about the fact that the desalination tariffs were going to be competitive and had to be subsidised by the revenue from the sales of electricity.
This fact was in a presentation which also stated that the yield for Tuaspring was going to come largely from the revenue from the sale of electricity, and "everything was shared".
On the same day the announcement was made, a briefing for analysts was held, and Ms Heap agreed that whatever questions were asked were answered honestly and comprehensively.
The questions and answers had been prepared by a team from finance, the treasury and investor relations, and Mr Singh took Ms Heap through the document question by question.
The document contained answers on why Hyflux was entering the power market and whether it planned to move away from the water sector, how confident it was entering the business as this was its maiden power project and whether they intended to sell the excess electricity. The answer provided was yes - and it was stated that Hyflux intended to sell electricity in the wholesale market as well as offer retail contracts to consumers.
"Looking at this Q&A, it would appear that a team from Hyflux involved in the Q&A was prepared to share information about the fact that excess electricity would be sold in the wholesale market, as well as offer retail contracts to consumers, yes?" asked Mr Singh.
"Yes, because if you do the math, you would have to," said Ms Heap, pointing to the fact that the maximum energy demand from the desalination plant was 60MW, whereas Hyflux was building a 400MW power plant.
Mr Singh had been supposed to finish his cross-examination earlier, but said he was unable to due to the way it panned out.
He stopped in the afternoon and said he was going into "another major area" which would not take "much more than half a day".
Input from the other lawyers defending the other accused persons revealed that Ms Heap would have to spend at least two more days on the stand.
The next tranche of the trial is in September, but Ms Heap told the court that she had made plans "to be away" from the first to the seventh of that month.
The prosecution said it would speak to her to see what can be done.
If Ms Heap cannot take the stand, arrangements will have to be made for other witnesses to testify first.
Next in line to testify for the prosecution was Hyflux finance personnel Nah Tien Liang. The prosecution had stated that they had applied for his evidence, along with a witness from PUB, to be heard in camera. This means the public and media cannot be in court to hear the evidence.
The application was for reasons of national security. CNA understands that the sensitivity involves water pricing issues.
Deputy Chief Prosecutor Christopher Ong said the prosecution would be asking the court to "carve out" an exception for another law firm to sit in during the in-camera evidence, mentioning a separate civil suit.
CNA has asked the Attorney-General's Chambers to provide more information about this.
However, Mr Singh said he would be objecting to this. The judge agreed and said that if the prosecution wanted to carve out an exception, the scope would have to be justified as the assumption is that only involved parties are allowed in an in-camera hearing since the reason for it is national security.
Updates on these issues will be given at a later date.
The trial will resume on Sep 1.
If convicted of consenting to Hyflux's intentional failure to disclose the electricity sale information to the securities exchange, Lum could be jailed for up to seven years, fined up to S$250,000 or both.