Two months ago, the Securities Investors Association (Singapore), or SIAS, raised questions about Hyflux CEO Olivia Lum’s “large remuneration” even as the company was racking up debt and losses.
Sias has posted a list of over 30 questions to the company’s board and its advisers.
It flagged that Ms Lum had received over $60 million in dividends “in the time that shareholders and bond holders have seen their entire investment destroyed”.
In 2017, when Hyflux reported losses of $115.6 million, Ms Lum received between $750,000 and $1 million in salary, benefits and bonuses, SIAS said.
“How was Hyflux able to justify such large remuneration given (its) financial position and the performance of (its) businesses and assets?” SIAS asked, questioning as well if there has been an independent investigation on the role of key executives in the firm’s collapse.
In total, Hyflux’s debt amounts to $2.95 billion as of end-March last year.
SIAS also said that there appeared to be “material faults and defects” in almost every Hyflux asset. They either have operational problems and cannot operate at or close to capacity, or are loss-making and cannot service their debt with cashflow from operations.
“What level of scrutiny did the board of directors apply to the operations of the main assets of Hyflux? Why were these faults and defects not announced or described in annual reports?” asked SIAS.
In particular, SIAS also asked why Hyflux’s board continued paying dividends when operating cashflow was negative, and how it was possible for Hyflux to report profits each year prior to 2017 despite negative operating cashflow.
As it turns out, the person who heads the Board’s Remuneration Committee in Hyflux is Gay Chee Cheong, who is also a member of the Nominating, Audit and Investment Committees.
Gay Chee Cheong sits on the board of both Hyflux and Heliconia Capital Management, a wholly owned subsidiary of Temasek Holdings.
That is to say, as Chairman of the Hyflux Board’s Remuneration Committee, Gay Chee Cheong is perfectly comfortable with Hyflux CEO Olivia Lum getting large remuneration despite the company making losses, having negative operating cashflow and showing poor performance of its businesses and assets.