Hyflux’s legal head did not raise issues over non-compliance of listing rules for draft announcement, witness says

[SINGAPORE] The legal head of Hyflux did not raise any issue of non-compliance with the listing rules in a draft of an announcement on the company being named the preferred bidder for the Tuaspring integrated water and power project, the court heard on Thursday (Aug 21).

Winnifred Heap, Hyflux’s head of corporate communications and investor relations at the material time, said under cross-examination by counsel for the defence that, aside from the legal head, the company secretary also had no issues with the draft that is now the subject of the case involving the water-treatment company’s alleged non-disclosure of material information.

Thursday was Day 6 of the trial. Hyflux’s founder and former chief executive Olivia Lum and five others – former chief financial officer Cho Wee Peng and independent directors Teo Kiang Kok, Gay Chee Cheong, Christopher Murugasu, and Lee Joo Hai – are contesting one or more charges of Hyflux’s alleged non-disclosures in its Mar 7, 2011 announcement to Singapore Exchange and also in the Apr 13, 2011 document for the offer of preference shares.

The insolvent Hyflux is listed on the Singapore Exchange, but trading in its shares has been suspended.

The company is said to have failed to disclose in those two instances that it was entering the power-generation business for the first time, 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.

Heap told the district court on Thursday that none of the accused persons (except Lee), along with then legal head Yang Ai Chian and company secretary Lim Poh Fong had, as at Jan 21, 2011, raised concerns with the draft dated Jan 19, 2011 for the Mar 7, 2011 announcement.

Lee was absent from the risk management committee meeting on Jan 21, 2011.

Lum’s lawyer Davinder Singh asked her: “Fair to say, as of Jan 21, 2011, those who knew about the Jan 19 (2011) draft and attended the risk management committee meeting on Jan 21 (2011), did not have or voice any concern about the legitimacy, propriety, lawfulness and compliance of the draft?”

Heap responded: “Correct.”

She also agreed with the Senior Counsel that the senior management would have been entitled to take the view that there was no issue with that draft, since it had been vetted by Heap, the legal head and the company secretary.

She also testified that she finalised the draft in the usual way, and added that edits to drafts – refinements, changing of structure and moving of paragraphs – were not unusual.

Heap earlier testified when asked by the prosecution that she was told by Lum and Cho to “play down” the power plant of the Tuaspring project for a February 2011 announcement draft.

When she was cross-examined on this on Thursday, she acknowledged that playing down the energy part of the project, and highlighting Hyflux’s expanded bench strength and core capabilities encapsulated the substance of her investor relations strategy for Hyflux.

But she disagreed with the defence that this was done because of the strategy that she had been advocating.

The witness had recommended as part of her investor relations strategy that Hyflux position itself as a growth company rather than a utility company, because the latter attracts a lower valuation.

The trial continues.