Former Hyflux comms executive testifies that news release did mention power business

[SINGAPORE] The news release that landed Hyflux founder Olivia Lum and five others in the dock did refer to the company selling power, a former corporate communications executive testified on Monday (Sep 15).

Seah Mei Kiang was Hyflux’s assistant vice-president of corporate communications between 2009 and 2014. Her responsibilities included drafting news releases for the Singapore-listed water treatment company.

The release Seah helped draft, dated Mar 7, 2011, related to Hyflux being named the preferred bidder by national water agency PUB for the Tuaspring integrated water and power project. The release is one of two subject matters of the criminal hearing.

The six accused, including former Hyflux chief financial officer (CFO) Cho Wee Peng, are standing trial for not disclosing in the announcement to the bourse that Hyflux was entering the electricity business; that the Tuaspring project would draw the bulk of its top line from the sale of electricity; and that the project’s profitability hinged on electricity sales.

Seah testified that a line – which said the remaining capacity of the power plant co-located with the desalination plant would be sold through Singapore’s wholesale electricity market – was taken out of a subsequent draft of the release.

When questioned by the prosecution, Seah said she did not know whose idea it was to play down the energy part of the project; neither did she know the reasons behind the removal of that line, or who gave the instruction to leave out that piece of information.

“Did you have the authority to remove this line?” asked Deputy Public Prosecutor Dhiraj Chainani.

“No,” replied Seah.

The version that was filed with the Singapore Exchange instead included the line: “Excess power will be sold to the power grid.” This was after PUB requested it to be added to the news release.

Senior Counsel Davinder Singh, who is representing Lum, noted during his cross-examination of Seah that this effectively reinstated the information that Hyflux would be selling electricity.

Seah agreed with him.

He then drew her attention to the position of this information in the release, at the second paragraph, compared with an earlier draft, where it was closer to the end.

This was in line with what the prosecution witness had earlier said about prioritising important information at the top of a news release, he said.

News release clearance

Seah also gave evidence that nobody at Hyflux had given her instructions to change the reference to the power business, and that Lum had agreed to the words “Excess power will be sold to the power grid”.

Responding to a question from Singh, Seah said she assumed that Lum would have “very quickly” given the green light to the final version of the news release that the witness sent out at 1.12 pm for clearance, before it was filed the same evening to the bourse.

When under cross-examination by Cho’s lawyer Thong Chee Kun, she testified that the focus of her writing up the news release was it being a media announcement and not about complying with the listing rules.

On Mar 7, 2011, she sent the news release to two colleagues Yang Ai Chian and Lim Poh Fong, and that was because they were Hyflux’s legal head and corporate secretary, respectively, at that time.

Seah said the news release would have been cleared by senior management including Cho. But Lum would have the final say, and the version the former chief executive approved would then be presented to the board of directors.

The release was subsequently sent by Yang to the board of directors for their comments.

While Seah acknowledged that a CFO’s job would be managing the company’s finances, financial strategy and budgeting, she pointed out that Cho would have to approve this news release as the Tuaspring project win would have a financial impact on the company.

But she agreed with Thong that Cho would have looked at the news release from the perspective of checking for accuracy of the facts and numbers.

Thong said it was not disputed that Cho had been working on Tuaspring’s funding as chief investment officer, a position he was holding before becoming CFO.

Except for Cho, Lum and the other four accused – independent directors Teo Kiang Kok, Gay Chee Cheong, Christopher Murugasu, and Lee Joo Hai – were also allegedly responsible for Hyflux’s intentional failure to disclose the same three pieces of material information in the Apr 13, 2011, offer information document for its issuance of S$200 million, 6 per cent preference shares.

The trial continues.