Swiber Holdings under investigation by CAD

Singapore

THE Commercial Affairs Department (CAD) has contacted mainboard-listed offshore and marine (O&M) group Swiber Holdings over a probe into an offence under the Securities and Futures Act (SFA).

Swiber said in a Singapore Exchange (SGX) announcement before Wednesday's trading close that CAD has requested access to information concerning the group's three affiliates, Swiber Offshore Construction Pte Ltd (SOC), Pape Engineering Pte Ltd and Swiber Corporate Pte Ltd, from Jan 1, 2012, till now.

CAD has not disclosed any further details on the investigation to Swiber but specialists pointed to clues from the announcement and a preceding public reprimand issued by SGX.

Corporate governance advocate Mak Yuen Teen said the announcement mentions "an offence" signalling possibly the start of regulatory investigations depending on what CAD uncovers in the documents and information it has requested.

Gibson Dunn's partner Robson Lee said CAD's investigation came within expectations, given SGX formally rebuked Swiber just over a fortnight ago.

In its public reprimand, SGX had asked Swiber "to provide a balanced and fair announcement" on the US$710 million project award in West Africa first disclosed on SGX on Dec 15, 2014. The exchange concluded after examining a letter of intent signed between Swiber's subsidiary SOC and the client that the December 2014 announcement on the US$710 million project award "failed to disclose the material conditions that are pre-requisite to the progress of the project and the recognition of revenue by Swiber".

Swiber did not highlight in its December 2014 disclosure or in an update on July 8, 2016, on the delay of the project that the contract value is caveated on the completion of an engineering design study and the finalisation of a field development plan.

Prof Mak said SFA offences could include false or misleading statements, failure to make continuous disclosure, and insider trading, among others.

Mr Lee concurred, suggesting that based on SGX's public reprimand, CAD may direct its investigations towards breaches of SFA's Section 203 on continuous disclosure and Section 199 on false or misleading statements.

Section 203 states that listed entities are required to notify the securities exchange of information on specified events or matters as they occur or arise for the purpose of the exchange making that information available to the market.

Section 199 deals with dissemination of information that is false or misleading that is likely to induce other persons to subscribe for securities, or the sale or purchase of securities by other persons or impacting market price of securities.

Swiber stock traded 3.5 per cent or one cent higher at S$0.295 on news of the US$710 million award, which the O&M group said bolstered its order book then to US$1.03 billion. The group followed up with a rights issue to raise S$45 million shortly after. It was only on July 8 this year, almost two years after the contract was first announced and after prodding from SGX, that the group acknowledged to a deferment in the delivery of the US$710 million project.

Swiber's tardy disclosures drew widespread criticisms from investors. On July 28, the group disclosed its winding-up petition, which was reversed into a judicial management (JM) application.

Mr Lee said the events leading up to the SGX public reprimand and the CAD probe are unlikely to impact on Swiber's JM because they are likely to have taken place before the listed group entered into JM.

Swiber on Sept 2 appointed John Swinden as group president, chief executive officer and an executive director while announcing the resignation of Yeo Chee Neng (also known as Darren Yeo) from the firm's top office.

Mr Swinden served as chairman to the advisory board of global business development at Swiber. He was also responsible for expanding Swiber's footprint into Europe, Africa and the Mediterranean.