Hyflux and its directors, including Olivia Lum, under criminal investigation for corporate governance breaches

SINGAPORE - Troubled water treatment firm Hyflux is under criminal investigation for false and misleading statements, as well as non-compliance with accounting standards, the authorities said on Tuesday (June 2).

The investigation, which also involves the company’s existing and former directors, follows a review of Hyflux-related disclosures and compliance with accounting and auditing standards which was announced in April last year. 

The review, conducted by financial regulators Monetary Authority of Singapore (MAS), the Accounting and Corporate Regulatory Authority (Acra) and the Singapore Exchange Regulation, uncovered reasons to suspect that several offences may have been committed.

The joint investigation undertaken by Acra, MAS and the police’s Commercial Affairs Department (CAD) will ascertain if there were lapses in Hyflux’s disclosures concerning the Tuaspring integrated water and power project, as well as non-compliance with accounting standards between 2011 and 2018.

Among the directors under investigation is Hyflux’s executive chairman, Ms Olivia Lum, who was the company’s only executive director during that period.

Other board members being investigated include current lead independent director Teo Kiang Kok and non-executive independent directors Gay Chee Cheong, Lee Joo Hai and Christopher Murugasu, all of whom were also serving as board directors during the years under probe.

The CAD, MAS and Acra have obtained accounting and other corporate records from Hyflux and its subsidiary Tuaspring as part of their investigation.

The company's directors and key officers involved in the Tuaspring project have also been interviewed, the authorities said.

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The Tuaspring project, which includes the desalination plant now operated by national water agency PUB, had cost Hyflux $1.05 billion and had been a drag on the company’s earnings since it began operations in March 2016.

The authorities said they will provide an update when there is an outcome to the investigation.

They added the criminal investigations are separate from Hyflux’s ongoing corporate rescue, and are not intended to interfere with the company’s reorganisation plans.

In a bourse filing on Tuesday, Hyflux said it is will make further announcements as and when there are updates on the investigation. 

Singapore-based Aqua Munda, one of the potential white knights Hyflux has been in discussions with, reiterated its interest in a letter on Tuesday in acquiring Hyflux’s unsecured debts and completing the beleaguered water treatment firm’s debt restructuring exercise. 

Middle Eastern utility firm Utico is also still interested in striking an agreement, said its chief executive Richard Menezes via e-mail yesterday, noting “the criminal investigations should not stop the deal but only ensure quick relief to all affected parties and save the company and its employees”.

Securities Investors Association (Singapore) president David Gerald said the case against the firm highlights the need for Hyflux’s board to be more transparent in their communication with investors and shareholders as they continue the restructuring process.

This article was first published in The Straits Times. Permission required for reproduction.