Hyflux founder Olivia Lum faces 3 more charges, independent director Lee Joo Hai arrested and charged
Source: Straits Times
Article Date: 06 May 2023
Author: Grace Leong
The charges were in relation to her alleged failure to exercise diligence in the discharge of her duties as a director.
Hyflux’s founder and former chief executive Olivia Lum was hit with three more charges in State Court on Friday for violations of the Companies Act, in relation to her alleged failure to exercise diligence in the discharge of her duties as a director.
Lum, 61, who now faces a total of six charges, is out on bail of $100,000.
In addition, Hyflux independent director Lee Joo Hai, who left Singapore before investigations commenced, was charged on March 13, 2023 with one count of violating the Securities and Futures Act.
This came after he was arrested in Malaysia on March 12 with assistance from the Royal Malaysia Police, the authorities said in a joint statement on Friday.
Lee is accused of negligence in relation to Hyflux’s intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project when disclosure was required under the Singapore Exchange Listing Rules. If convicted, Lee faces a jail term of up to seven years, a fine of up to $250,000, or both.
The Commercial Affairs Department, Singapore Police Force, Monetary Authority of Singapore and Accounting and Corporate Regulatory Authority (Acra) also announced three fresh charges against Lum on Friday.
She was charged over Hyflux’s omission to disclose, in its 2017 third-quarter financial statements, US$33.5 million (S$44.7 million) worth of bank deposits that it had undertaken not to withdraw as restricted bank balances.
She was also charged over the company’s omission to disclose, in its financial statements for the year ended Dec 31, 2017, US$33.5 million worth of bank deposits that Hyflux had undertaken not to withdraw as restricted bank balances.
In the third new charge, Lum was charged over Hyflux’s omission to disclose in the 2018 first-quarter financial statements, US$47.5 million worth of bank deposits that Hyflux had undertaken not to withdraw as restricted bank balances.
If convicted, Lum faces a jail term of up to 12 months or a fine of up to $5,000, on each of the three new counts.
Lum was first charged in November 2022 with three counts of violations of the Securities and Futures Act and the Companies Act. Former chief financial officer Cho Wee Peng and four former board members of Hyflux were also charged in 2022 with violations of the Securities and Futures Act.
The charges came 17 months after the water treatment firm was approved to be wound up, which likely left about 34,000 investors of perpetual securities and preference shares, who had sunk in a combined $900 million, with nothing.
In November 2022, Lum was charged with consenting to Hyflux omitting information relating to Tuaspring, when disclosure was required under Singapore Exchange (SGX) listing rules.
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. If convicted, she faces jail of up to seven years, a fine of up to $250,000, or both.
Lum was also charged over Hyflux’s omission to disclose the information about Tuaspring in the 2011 offer information statement issued for the offer of $200 million, 6 per cent preference shares on April 13, 2011. If convicted, she faces jail of up to two years, a maximum fine of $150,000, or both.
She was charged with an offence under the Companies Act over her failure to ensure Hyflux’s compliance with accounting standards when it disclosed its statements for the financial year ended Dec 31, 2017, at a Hyflux annual general meeting in 2018. This included failing to disclose the breach of a subsidiary’s loan agreement that permitted its lenders to demand accelerated repayment. If convicted, she faces a fine of up to $50,000.
On Friday, the authorities announced that the Public Accountants Oversight Committee, which administers Acra’s practice monitoring programme under the Accountants Act, has issued orders against Hyflux’s auditors from KPMG in relation to the financial statements for the financial years ended between 2013 and 2017.
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