The criminal trial involving Hyflux founder and former chief executive Olivia Lum has reached a major stage after prosecutors closed their case following 54 days of hearings tied to the collapse of the Singapore water-treatment company.
The prosecution concluded its case on September 29 after 59 weeks of proceedings, during which the court heard testimony from 22 witnesses about Hyflux’s Tuaspring integrated water and power project and the company’s subsequent financial collapse.
The next step is now in the hands of the defence.
Lum’s lawyers are scheduled to indicate whether they will submit a “no case to answer” on October 21. If such a submission is made, the court will have to consider whether the prosecution has presented sufficient evidence for the case to proceed.
WHAT THE PROSECUTION ALLEGES
According to prosecutors, Lum intentionally failed to disclose material information connected to the Tuaspring project, including the project’s reliance on electricity sales for profitability.
The prosecution alleges that Lum was concerned that revealing those risks could discourage investors while Hyflux was pursuing the project.
Hyflux won the Tuaspring tender with the lowest bid after proposing a first-year water tariff of 45 Singapore cents per cubic metre, at least 27% below competing bids, according to the prosecution’s case.
The prosecution argued that the project’s financial viability depended heavily on selling electricity generated by its power plant to the national grid.
However, Hyflux had limited experience in power generation and electricity sales, making its exposure to electricity-market conditions an important element of the prosecution’s case.
CHARGES FACING LUM
Lum originally faced six charges, but prosecutors stood down four Companies Act charges and proceeded with two charges relating to alleged omissions concerning Tuaspring.
One charge concerns the alleged failure to inform the Singapore Exchange that the project represented Hyflux’s expansion into electricity sales and that its profitability depended significantly on electricity revenue.
The second relates to alleged omissions in a 2011 offer information statement connected to S$200 million in preference shares.
If convicted of the first charge, Lum faces a maximum penalty of seven years’ imprisonment, a fine of up to S$250,000, or both. The second charge carries a maximum of two years’ imprisonment, a fine of up to S$150,000, or both.
HYFLUX’S COLLAPSE LEFT THOUSANDS OF INVESTORS OUT OF POCKET
Hyflux was placed under judicial management in November 2020 and wound up in 2021.
The company’s collapse followed severe financial difficulties linked in part to weak electricity sales at Tuaspring. About 34,000 holders of Hyflux perpetual securities and preference shares had invested a combined S$900 million, according to the prosecution’s case as reported by The Straits Times.
The trial has therefore placed renewed attention on corporate disclosure, project financing and the risks faced by investors when companies undertake complex infrastructure projects.
Several other former Hyflux directors are also facing charges relating to alleged failures to disclose information about Tuaspring. Former chief financial officer Cho Wee Peng faces a separate charge concerning alleged connivance in Hyflux’s omission of information.
One former independent director, Rajsekar Kuppuswami Mitta, previously pleaded guilty to a charge relating to the company’s March 2011 announcement to the Singapore Exchange.
THE NEXT DECISION COULD SHAPE THE CASE
With prosecutors now finished presenting their evidence, attention turns to the defence’s October 21 decision.
Whether the defence submits a “no case to answer” will be an important procedural development in a trial that has already lasted nearly a year and involved dozens of hearing days.
For now, the allegations remain allegations, and the court has yet to determine Lum’s guilt or innocence.
After 54 days of prosecution evidence, the next chapter of the Hyflux case now moves into the hands of the defence — with the October hearing set to provide the next major test.
WWC ONE MEDIA G,A
