Legal officer ‘responsible’ for the compliance of fundraising document named in Olivia Lum’s trial

[SINGAPORE] A former senior legal officer of Hyflux testified that her then-colleague Joscelyn Tan was in charge of the legal compliance of the offer information statement released for the issuance of preference shares in April 2011.

Yang Ai Chian was testifying as prosecution witness on Day 17 of the trial, in which the now-defunct water treatment company’s founder and former chief executive officer (CEO) Olivia Lum, former chief financial officer (CFO) Cho Wee Peng and four board members are each contesting at least one charge of being responsible for Hyflux’s non-disclosure of material information.

The six accused are facing a charge of not disclosing three pieces of information in a press release dated Mar 7, 2011 that was filed to the Singapore Exchange, and announced Hyflux being named the preferred bidder for the Tuaspring project. Except for Cho, the other five accused persons have also been charged with being responsible for Hyflux not disclosing the material information in the Apr 13, 2011 offer information statement for preference shares.

The information that the company should have included to accurately reflect the commercial realities and risks, the prosecution alleged, was that it 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.

Yang was cross-examined by Senior Counsel Davinder Singh on Thursday (Sep 18) when she was quizzed about the legal officer at Hyflux who had to ensure that the offer information statement would be released in accordance with the legal requirements for Hyflux’s issuance of S$200 million, 6 per cent preference shares.

Yang was Hyflux’s senior vice-president for legal (business), with responsibilities including reviewing contracts such as the water purchase agreements.

Initially, she commented that the external law firm engaged by Hyflux would have had the responsibility of ensuring that the offer information statement complied with the law. But when she was probed about the specific Hyflux staff who would be responsible, she named Tan.

Tan was Hyflux’s legal officer for corporate finance at that time, holding the designation of vice-president.

When she was asked if Tan would know about the developments at Hyflux in relation to the Tuaspring project and issuance of the preference shares, Yang testified that she was unable to answer this because Tan reported to the CFO (and not to her).

But she concurred with the lawyer acting for Lum that Tan had access to the CFO and could have obtained information related to the offer information statement from her superior.

She also concurred that the senior management, including Lum, would reasonably have relied on the internal and external legal counsel for the compliance of the offer information statement with the law.

“And to advise the senior management (regarding) any issues of non-compliance with the law that the internal and/or external lawyers may be concerned about?” asked Singh.

“Yes,” responded Yang.

She was cross-examined by Thong Chee Kun, Cho’s lawyer, over an e-mail she sent just hours before Hyflux made the announcement to the bourse about being Tuaspring’s preferred bidder, and to which she attached the press release seeking approval.

In that correspondence to the board of directors, including the four now standing trial, she wrote that “this version (of the press release) has been commented on by the authorities” and sought their comments.

The four directors are Teo Kiang Kok, Gay Chee Cheong, Christopher Murugasu and Lee Joo Hai.

Thong told her that anyone, including the directors who received this e-mail, may reasonably come to the conclusion that the draft announcement has been approved, reviewed or at least have taken in the comments of the authorities.

Later, David Chan, who represents the four directors, also questioned her over the same e-mail.

He asked her if the purpose of including her then colleagues, who were so-called subject matter experts, as recipients of that correspondence was to give the impression to the directors that the announcement has been approved by these experts as well as the authorities.

She agreed.

Yang has concluded her testimony, and Hyflux’s ex-deputy CEO Sam Ong is slated to take the stand next week.