Olivia Lum and other ex-Hyflux leaders go on trial over omissions to SGX about Tuaspring project
Issues with the project ultimately led to the company's collapse and millions in losses for investors.
The six who went on trial on Monday (Aug 11) are mostly in their sixties. They are: Olivia Lum Ooi Lin, 64, then the CEO, director and executive chairman of the board of Hyflux; Cho Wee Peng, 56, former Hyflux chief financial officer; and independent directors of Hyflux Gay Chee Cheong, 68; Teo Kiang Kok, 69; Murugasu Christopher, 66; and Lee Joo Hai, 69.
A seventh person in the case, former Hyflux independent director Rajsekar Kuppuswami Mitta, was fined S$90,000 (about US$70,000) last week after pleading guilty.
The prosecution said in their opening statement that Hyflux was Singapore's first publicly listed water treatment and seawater desalination company.
"The collapse resulted in significant losses to investors, including about 34,000 investors holding perpetual securities and preference shares who were owed a total of S$900 million," the prosecution said.
Hyflux's collapse can be traced to the Tuaspring project, a project to design, build, own and operate Singapore's second and largest seawater reverse osmosis desalination plant in Tuas for a concession period of 25 years, with an on-site power plant providing electricity to the desalination plant.
Hyflux successfully bid for the project in 2011, in response to a tender conducted by the Public Utilities Board, now known as PUB.
Investors were led to believe that Tuaspring Project was primarily a desalination project, with Hyflux's announcement in March 2011 giving an impression that the power plant was to be built to supply power to the desalination plant.
But in reality, the financial viability of the Tuaspring Project depended entirely on the sale of electricity, said the prosecutors.
This meant that the Tuaspring Project exposed Hyflux to electricity market risks in what was a brand-new business for the company, said the prosecution.
These material facts were allegedly not disclosed to the investing public, and the omission was purportedly repeated when the offer information statement was released to raise funds from the public.
The prosecution is pursuing charges under the Securities and Futures Act (SFA) linked to two key public statements by Hyflux that contained material non-disclosures: The March 2011 announcement, forming the basis of certain charges against all six Hyflux ex-leaders, and the April 2011 offer information statement, which forms the basis of certain charges against five of them.
Both documents allegedly failed to disclose the following: That the Tuaspring Project was Hyflux's expansion into a new business of selling electricity, that revenue from the sale of electricity from Tuaspring Project's power plant was projected to make up the significant majority of the project's revenue, and that the profitability of the project was contingent on revenue from the sale of electricity from the power plant.
According to court records, a total of 57 days has been slated for the trial over two tranches between August and October and November and January.
The trial is presided over by Principal District Judge Toh Han Li.
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