Introduction to the Hyflux Case
The Hyflux case has been making headlines in Singapore, with the company’s ex-chief executive Olivia Lum and five others on trial. The case revolves around the Tuaspring project, which included a power plant, and whether Hyflux had withheld material information from the investing public.
The Reason Behind Withholding Information
According to Lum’s lawyer, Jaikanth Shankar, Hyflux had initially withheld information about the power plant from bank lenders to protect its strategy from rivals. This was revealed during the trial, where Jeanne Soh, managing director of structured finance for the Asia-Pacific at Sumitomo Mitsui Banking Corporation (SMBC), was questioned.
Testimony of Nah Tien Liang
Nah Tien Liang, Hyflux’s vice-president of investment at the time, had testified that the banks were not informed about the power plant initially to prevent Hyflux’s bidding strategy from being leaked to competitors. Shankar argued that there was nothing unreasonable about Hyflux’s desire to keep its strategy under wraps, and Soh agreed.
Charges Against the Accused
Lum is facing charges of non-disclosure of material information in announcing the Tuaspring project win in March 2011, as well as in the issue of preference shares the following month, relating to Hyflux’s entry into power generation. Four directors – Gay Chee Cheong, Teo Kiang Kok, Christopher Murugasu, and Lee Joo Hai – each face similar charges, except that they were accused of neglect and causing Hyflux’s failure to disclose the information in the March 2011 announcement. Hyflux ex-chief financial officer Cho Wee Peng is contesting a charge of conniving in the water treatment company’s omission to disclose the material information about Tuaspring.
Sharing of Information with Banks
Shankar took Soh through several emails between Hyflux and SMBC, and got the witness to confirm that Hyflux had, upon unveiling its plans for a power plant for the Tuaspring project, "voluntarily and openly" shared information with the banks, including its strategy, particulars of the power plant, and its financial model for the project. Soh agreed that Hyflux had "moved reasonably quickly" to share the information in a transparent manner.
Conclusion of Soh’s Testimony
Soh concluded her testimony, and another bank’s executive is set to take the stand. The case highlights the importance of transparency and disclosure in business dealings, and the consequences of withholding material information from the investing public. As the trial continues, it remains to be seen how the court will rule on the charges against Lum and the other accused individuals. One thing is certain, however – the outcome of this case will have significant implications for the business community in Singapore and beyond.
