6 days ago
Hyflux investigator ‘took advantage' of Olivia Lum's inability to recall events: Davinder Singh
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SINGAPORE - Despite earlier concerns about
Hyflux's Tuaspring project, a group of banks still gave 'in-principle management support' for a loan of up to $527 million, argued the lead lawyer for Hyflux founder Olivia Lum on the second day of her trial.
To support his case, Senior Counsel Davinder Singh made reference to a letter issued by the banks to Hyflux on Jan 14, 2011, after they had finished reviewing Hyflux's plan to build a desalination plant and power plant, and sell excess electricity from the power plant to the grid.
In the letter, they said they had 'in-principle management support for a credit facility of up to $283 million for the desalination plant and shared infrastructure, and a credit facility of up to $244 million for the power plant,' as long as Hyflux met certain criteria, such as being named 'preferred bidder' for the project.
This letter was sent 10 days after they had raised concerns about risks arising from Hyflux's strategy of selling electricity to subsidise the sale of water to PUB.
In his cross-examination of the Commercial Affairs Department's lead investigating officer, Ms Jacqueline Wei Maojun, Mr Singh asked why she did not show Lum the entire letter when she was questioned in 2020, or 'give her a complete picture of the banks' position.
He said the letter showed that the banks were prepared to give support, despite their concerns.
Ms Wei replied: 'They were willing to give support, but not approval yet.'
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'I suggest to you that you took advantage of Lum's inability to recall what happened many years ago,' Mr Singh said.
Ms Wei said: 'There's no need for me to hide any information from her, because she will always clarify the answers she gave to statements... I have control over questions I want to ask.'
Mr Singh said: 'You have control, but you also have a duty to be fair. Not showing her the in-principle commitment in the Jan 14 2011 letter was unfair.'
Ms Wei replied that she was focused on finding out what happened to the desalination plant's funding, rather than the banks' concerns.
Mr Singh said: 'I am putting it to you that the reasons you didn't show her the Jan 14 letter is you were trying to create a scenario for the conclusion of your investigations, that the banks were affected by concerns over merchant sale risk.' He was referring to the risks of selling electricity to the grid.
Ms Wei disagreed. 'It would have been better for me to ask the banks directly,' she said.
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, the prosecution said on the first day of the trial.
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'.
Later that month, they informed Hyflux of their 'in-principle management support'.
On July 4, 2011, three of the original six banks – DBS, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation – extended financing of $150 million for the construction of the desalination plant. This financing was eventually terminated by Hyflux.
Pointing to the announcement that Hyflux had secured financing of $150 million, Mr Singh asked Ms Wei if there was any reason to doubt that this was a bridging loan - an interim measure to give the banks time to assess their concerns and Hyflux's request for project financing.
He said: 'When the prosecution says this financing of $150 million was eventually terminated by Hyflux, what really happened is that it wanted to repay the money ahead of time.'
Mr Singh also referred to a December 3, 2013 news release from Hyflux that its subsidiary Tuaspring had secured a $720 million,18 year term loan facility to fund the development of the desalination and power plant facilities in September that year. The financing was provided by Maybank Singapore and Maybank Kim Eng Securities.
'You would agree with me that this is ... an endorsement by a leading bank of its faith in the project, correct?' Mr Singh asked.
Ms Wei replied: 'It shows a willingness to lend.'
Mr Singh noted that the prosecution is not calling on anyone from Maybank as a witness. asked: 'I suggest to you that the reason prosecution has not produced Maybank documents, and is not calling Maybank as witness, is because that would undermine the prosecution's case.'
Ms Wei disagreed.
The hearing continues.
