Olivia Lum and five other ex-Hyflux leaders face trial over alleged omissions in Tuaspring project disclosures

SINGAPORE: Four years after the High Court ordered Hyflux to wind up, six former leaders of the once-prominent Singapore water treatment company have gone on trial for alleged omissions in disclosures to investors and the Singapore Exchange (SGX) about its ill-fated Tuaspring project. The project, Hyflux’s second and largest seawater desalination plant, was pitched as a major national infrastructure undertaking. However, prosecutors allege that key details about the project’s reliance on electricity sales — not just water production — were withheld from investors. The failed foray into the power market contributed to Hyflux’s collapse, resulting in losses for thousands of retail and institutional investors.

Six leaders in the dock, one already fined

On 11 August, company founder Olivia Lum Ooi Lin, 64, and five others appeared in court. They are former chief financial officer Cho Wee Peng, 56, and four former independent directors: Gay Chee Cheong, 68; Teo Kiang Kok, 69; Murugasu Christopher, 66; and Lee Joo Hai, 69. A seventh person in the case, former independent director Rajsekar Kuppuswami Mitta, was fined S$90,000 last week after pleading guilty. Charges under the Securities and Futures Act Lum faces two active charges under the Securities and Futures Act (SFA). The first is for making an offer of S$200 million worth of securities to the public without disclosing material information about Tuaspring’s electricity sales. The second is for consenting, as chief executive, to Hyflux’s failure to inform SGX about such information. Four further charges against her have been stood down or set aside for now. Cho is facing one charge of conniving in the company’s omission to notify SGX about the electricity sales. The four former independent directors each face two charges — one for alleged non-disclosure in an April 2011 offer information statement, and another for alleged neglect in failing to ensure SGX was informed.

Collapse traced to Tuaspring project

Prosecutors told the court that Hyflux was Singapore’s first publicly listed water treatment and seawater desalination company. At the time of its collapse, it owed about S$900 million to around 34,000 investors holding perpetual securities and preference shares. The Tuaspring project was awarded to Hyflux in 2011 after a tender by the Public Utilities Board (PUB). The plan was to design, build, own and operate a large reverse osmosis desalination plant for 25 years, alongside an on-site power plant.

Alleged omission of material facts

Investors were told that the power plant was intended mainly to supply electricity to the desalination facility. However, prosecutors allege the project’s financial viability depended almost entirely on selling electricity to the national grid — a business Hyflux had never entered before. Such facts, prosecutors say, were absent from the March 2011 announcement and the April 2011 offer information statement, despite both being key public documents used to attract investment. Deputy Chief Prosecutor Christopher Ong said Hyflux intentionally offered to sell water to PUB at a loss to secure the tender, planning to recoup revenue from electricity sales. Ong told the court that early drafts of the March 2011 announcement contained more detail on electricity sales, but these were removed after input from Lum and Cho. Only after PUB insisted on clarity was the line “excess power will be sold to the grid” included.

Banks raised concerns early

During 2010 and early 2011, Hyflux estimated the project’s cost at S$890 million, later revised to S$1.05 billion. Six banks initially expressed willingness to finance the project, but withdrew after learning about the electricity sales strategy. In January 2011, the banks issued a side letter stating they could not lend on the previously indicated terms. Ultimately, none funded the power plant, and only three financed part of the desalination facility before their involvement ended. Facing difficulty securing bank loans, Hyflux turned to raising funds from the public. In February 2011, it engaged DBS as lead manager for a preference share issuance. The April 2011 offer information statement lodged with the Monetary Authority of Singapore mentioned the power plant and selling excess power to the grid, but did not disclose the project’s revenue dependence on electricity sales. The S$200 million offering was oversubscribed, raising S$400 million. Motivation behind non-disclosure Ong argued that Lum feared full disclosure would deter investors, particularly given banks’ earlier reactions. Winning the Tuaspring bid was viewed as critical for strengthening Hyflux’s order book after setbacks in the Middle East. He alleged that Lum prioritised securing the deal over revealing the project’s reliance on a volatile electricity market. The desalination plant became operational in September 2013, while the power plant began selling electricity in February 2016. Electricity prices fell sharply during that period — from S$187 per MWh in March 2011 to S$49.10 per MWh in February 2016. This market slump severely affected Tuaspring’s profitability. Hyflux reported a S$115.56 million after-tax loss in 2017, its first annual loss, with Tuaspring accounting for the bulk of the deficit.

From suspension to liquidation

Hyflux suspended trading of its shares on 21 May 2018 and applied for court protection the following day. In May 2019, PUB took over the Tuaspring desalination plant. The power plant was sold to YTL Powerseraya in June 2022. The company entered judicial management in November 2020 and liquidation in July 2021. The trial, presided over by Principal District Judge Toh Han Li, is set to run over 57 days between August and October 2025, and again between November 2025 and January 2026. Witnesses will include former Hyflux staff, legal advisers, and representatives from banks, SGX and PUB. The prosecution will present internal emails, board meeting minutes, financial models, and investor presentations as evidence. If convicted, Lum and Cho each face up to seven years in jail and fines of up to S$250,000 for certain charges. Lum also faces up to two years in jail and fines of up to S$150,000 for the securities offering charge. The four former directors face similar penalties for each of their charges.