Commencement of legal proceedings for Olivia Lum, ex- Hyflux CEO, along with the former CFO and several directors
Hyflux Trial Begins: Former CEO Olivia Lum Faces Charges Over Tuaspring Project
The long-awaited trial of Olivia Lum, former CEO of Singapore-based water treatment firm Hyflux, and five other individuals began on August 11, 2022. The trial is centred around charges that Hyflux, under Lum's leadership, failed to properly disclose critical information about the Tuaspring Integrated Water and Power Project's viability.
Hyflux, a once successful company, went into liquidation in July 2021. The Tuaspring project, a combined desalination plant and power plant, was an ambitious venture that aimed to supply desalinated water and sell electricity. However, the project's financial risks and dependency on power sales were not fully disclosed to investors, leading to significant legal consequences.
Prosecutors argue that investors were led to believe the project primarily involved desalination, with the power plant simply supporting it, while in reality, the project's financial model depended heavily on the electricity market. This omission was allegedly repeated in official statements made to raise funds from the public, violating Singapore Exchange rules.
Lum, along with Cho Wee Peng, former Hyflux chief financial officer, and four independent directors, faces criminal charges related to this failure to disclose. If found guilty, Lum could face up to seven years in jail and fines. Other parties, including a former independent director fined SGD 90,000 for non-disclosure related to Tuaspring, highlight the broader compliance issues within Hyflux regarding the project.
The Tuaspring project marked Hyflux's first foray into power generation and electricity sales, an area where it had no prior experience. The initial cost projection was about $890 million, with Hyflux seeking $527 million in bank loans. However, due to difficulties in securing loans, Hyflux issued preference shares to fund Tuaspring.
At the time, female founders were not common, but Lum, a successful female entrepreneur, was able to navigate the industry and lead Hyflux to success. However, the Tuaspring project's failure has cast a shadow over her legacy.
The trial is a culmination of a dramatic downfall for Hyflux and is expected to last for several months. The outcome could have far-reaching implications for corporate governance and disclosure practices in Singapore.
The trial of Hyflux's former CEO, Olivia Lum, alongside five other individuals is a business affair with significant political and general-news implications, as it centers around charges of inadequate disclosure of the Tuaspring Project's financial risks and viability, which allegedly violated Singapore Exchange rules. The trial's outcome could shape finance and general-news discussions about corporate governance and disclosure practices in Singapore.
The trial uncovers intricate connections between Hyflux's business dealings, politics, and the government, as prosecutors argue that investors were misled about the Tuaspring Project, which shifted the emphasis from desalination to power generation to secure funds, a move that could have long-term repercussions for Singapore's business landscape.
