Criminal trial of Hyflux founder Olivia Lum and 5 others starts on Aug 11, Singapore News

AsiaOne

6 days ago

SINGAPORE — The long-awaited criminal trial of Hyflux founder and former chief executive Olivia Lum Ooi Lin, former chief financial officer (CFO) Cho Wee Peng and several former board members will start on Aug 11, nearly three years after they were charged with violations of the Securities and Futures Act.
Already, one of the defendants has thrown in the towel.
In total, seven individuals have been charged over Hyflux's intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project, among other things. But six are contesting their charges in a 56-day trial scheduled to run from Aug 11 to Feb 5, 2026.
The charges were filed more than a year after the failed water treatment firm was approved for winding up in 2021, leaving about 34,000 investors of perpetual securities and preference shares, who had sunk in a combined $900 million, with nothing.
On Aug 11, the prosecution will proceed on 11 charges against the six defendants. These include two of the six charges Lum faces. The remaining four charges against Lum are stood down.
The two charges proceeding against Lum relate to her consenting to Hyflux omitting information relating to Tuaspring, when disclosure was required under Singapore Exchange (SGX) listing rules.
This information was necessary to avoid the establishment of a false market in Hyflux's securities, the charge sheet said.
According to the charge, she consented to intentionally failing to notify SGX that the Tuaspring project was Hyflux's expansion into a new business of selling electricity, and that the plant's profitability was contingent on electricity sales revenue, which was projected to make up a significant proportion of its overall revenue.
This had implications for Tuaspring's resulting exposure to market risks arising from the volatility of electricity prices.
If convicted of this charge, Lum, 64, faces up to seven years' jail, a fine of up to $250,000, or both.
She was also charged over Hyflux's omission to disclose the information about Tuaspring in the offer information statement issued for the offer of $200 million, 6 per cent preference shares on April 13, 2011.
If convicted of this charge, she faces up to two years' jail, a maximum fine of $150,000, or both.
Cho, 56, who was also Hyflux's group executive vice-president, was charged with conniving in Hyflux's omission to disclose the information about Tuaspring.
The former Hyflux independent directors (IDs) also charged with disclosure-related offences are: Teo Kiang Kok, 69; Christopher Murugasu, 66; Gay Chee Cheong, 69; and Lee Joo Hai, 69.
The four men were charged with two counts each - one for neglect relating to Hyflux's failure to disclose information relating to Tuaspring as required, and another for omitting material information in the 2011 offer information statement.
But one other independent director, Rajsekar Kuppuswami Mitta, on Aug 7 pleaded guilty to a charge of neglect in relation to an announcement by Hyflux to the SGX on March 7, 2011.
The announcement stated that Hyflux had been named the "preferred bidder" by national water agency PUB to build and operate Singapore's second and largest seawater desalination plant in Tuas for a concession period of 25 years.
It also mentioned that a power plant would be built to supply electricity to the desalination plant, and that excess power would be sold to the power grid.
But it did not disclose that Hyflux was going into the business of selling electricity for the first time.
A second charge, for non-disclosure related to Hyflux's offer on April 13, 2011, was taken into consideration during sentencing.
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.
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This article was first published in The Straits Times . Permission required for reproduction.