Hyflux founder Olivia Lum and 5 others charged for violating Securities and Futures Act

SINGAPORE - Hyflux founder and former chief executive Olivia Lum Ooi Lin, former chief financial officer Cho Wee Peng and four former board members were on Thursday (Nov 17) charged with violations of the Securities and Futures Act.

In a joint statement, the authorities said the six were charged over “Hyflux’s intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project”.

Lum, 61, was also charged with an offence under the Companies Act for her failure in ensuring Hyflux’s compliance with accounting standards. She is out on agency bail of $100,000.

The former Hyflux independent directors charged for disclosure-related offences were: Teo Kiang Kok, Christopher Murugasu, Gay Chee Cheong and Rajsekar Kuppuswami Mitta.

Cho, 53, had resigned from his position as Hyflux’s group executive vice-president and CFO in June 2013. He left his most recent position as CFO of real estate investment firm ESR Group on Sept 19, 2022, for health reasons.

Teo, 66, relinquished his position as Hyflux’s lead independent director in June 2020 and was one of several directors under investigation over the Tuaspring plant.

The charges follow a joint probe in June 2020 by the Commercial Affairs Department, the Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority, which the agencies initiated after a review of Hyflux’s compliance with accounting and auditing standards as well as disclosure rules.

The probe looked at whether there were lapses in Hyflux’s disclosures concerning the Tuaspring plant, and non-compliance with accounting standards between 2011 and 2018.

Hyflux was placed under judicial management in November 2020 and the High Court in July 2021 approved its winding up, after the company failed to secure a white knight while it was under a debt moratorium for almost two years.

The company’s liquidation likely left about 34,000 investors of perpetual securities and preference shares, who had sunk in a combined $900 million, with nothing.

Hyflux’s troubles began after its foray into the energy business through the Tuaspring plant. Once Hyflux’s largest asset, Tuaspring had been a drag on earnings since it began operations in March 2016.  The plant was hit badly by an oversupply of gas that depressed electricity prices below fuel costs, creating a cash-flow crunch, while Hyflux continued to borrow heavily from banks and investors through the issuance of perpetual securities.

Analysts also said that Hyflux might have taken on too many capital-intensive projects with long gestation times, borrowed beyond its means and was too optimistic with its projections.

The authorities said in June 2020 that they were investigating all the directors who served on the Hyflux board between 2011 and 2018, including Lum, former independent directors Gay, Teo, Murugasu, Lee Joo Hai and Lau Wing Tat, as well as non-executive and non-independent director Gary Kee.

Mr Lau was appointed to the board in July 2014, replacing Rajsekar Kuppuswami Mitta, who left the board in 2012 after having served as non-executive independent director since April 2007.

Former independent director Simon Tay, who resigned in February 2020 over disagreements with the board, was also part of the group under scrutiny.

Meanwhile, it is unclear if a pre-emptive lawsuit brought by Hyflux, its subsidiaries and their liquidators from Borrelli Walsh against Lum is still on hold. Hyflux’s liquidators are still investigating if there are sufficient grounds to pursue claims.

When asked by The Straits Times, Mr Eddee Ng of Tan Kok Quan Partnership, representing the plaintiffs, said: “We have made clear our position on not being able to comment.”

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