Hyflux independent director charged over neglect in failure to disclose material information on Tuaspring

AN independent director of Hyflux has been charged over neglect which caused the company to omit information relating to Tuaspring Integrated Water and Power Project, in violation of Singapore Exchange (SGX) listing rules.

The Business Times learnt on Thursday (May 4) that Lee Joo Hai, 67, was charged in March this year with one count of neglect as an independent director under the Securities and Futures Act.

His alleged neglect resulted in Hyflux on Mar 7, 2011 intentionally failing to notify the bourse that the Tuaspring project was the water treatment firm’s expansion into a new business of selling electricity.

The beleaguered company also failed to disclose that the plant’s profitability was contingent on electricity sales revenue, which was projected to make up a significant proportion of its overall revenue.

The information was necessary for disclosure to avoid the establishment of a false market in Hyflux shares, the charge sheet indicated.

If convicted, Lee faces a jail term of up to seven years, a fine of up to S$250,000, or both.

The independent director is out on bail of S$80,000.

Apart from Lee, founder and former chief executive (CEO) of Hyflux, Olivia Lum Ooi Lin; former chief financial officer Cho Wee Peng and four former board members Teo Kiang Kok; Christopher Murugasu; Gay Chee Cheong; and Rajsekar Kuppuswami Mitta were all first charged in November.

The district court has scheduled Lum’s case for further mention on Friday (May 5).

Lum, represented by Davinder Singh Chambers, was first charged with three counts of violations of the Securities and Futures Act and the Companies Act.

One of her charges was similar to Lee’s: During her tenure as CEO, she consented to Hyflux intentionally failing to disclose material information relating to Tuaspring on Mar 7, 2011, when disclosure was required under SGX listing rules. Her second charge was over Hyflux’s omission to disclose the information about Tuaspring in the 2011 offer information statement issued for the offer of S$200 million worth of 6 per cent preference shares on Apr 13, 2011.

Her third charge was 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 the company’s 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.

Clarification note: An earlier version of this article stated that Lee Joo Hai was charged last year and he was a former director of Hyflux. The police have since clarified that Lee was charged in March and he is still a director of Hyflux. The article above has been revised to reflect these.