Hyflux suffered massive losses after a fall in electricity prices and entered liquidation in July 2021, with 34,000 investors holding perpetual securities and preference shares owed a total of S$900 million (US$699,950).
On Tuesday, Mr Singh questioned lead investigating officer Jacqueline Wei Maojun from the Commerical Affairs Department (CAD) about a statement she took from Lum.
During a recording of the statement, Ms Wei had referred Lum to an announcement Hyflux made on Jul 4, 2011, about securing financing of S$150 million to fund the Tuaspring desalination plant, Hyflux’s second desalination project at Tuas.
According to Ms Wei’s question to Lum, flashed on the screen in court, Ms Wei had told Lum that based on her investigation findings, six mandated lead arrangers or banks had jointly signed an in-principle commitment letter dated Jan 14, 2011, to provide financing of up to S$283 million.
Ms Wei’s question to Lum was then: why did Hyflux secure financing of only S$150 million, which is a “drastic drop” from the S$283 million.
In response, Lum said this was not project financing but only a bridging loan as the banks needed more time to evaluate the project.
Mr Singh then took Ms Wei through the Jan 14, 2011 in-principle commitment letter and questioned her about another portion of the letter that he said she had omitted in her questioning of Lum.
Other than the S$283 million, the six banks had also indicated in their letter that they had obtained in-principle management support for a credit facility of another sum of up to S$244 million for the power plant, which brought the total to S$527 million.
Crucially, this was at odds with what the prosecution said in its opening statement that the banks had concerns after discovering the power plant and sales of electricity portion of the Tuaspring project, Mr Singh said.
The prosecution in its opening statement said the banks had “serious concerns” about the power plant and electricity sales portion of the Tuaspring project and that none of the six banks eventually funded the construction of the power plant.
The prosecution’s case is that Hyflux had pitched the Tuaspring project to the public as its second and largest seawater desalination plant in Tuas, while hiding the fact that it would fund the sale of water at a very low price to national water agency PUB, with a new business of selling electricity from a power plant it would build.
DAVINDER ZEROES IN ON THE JAN 14, 2011 LETTER
Mr Singh repeatedly questioned Ms Wei about why she did not show the Jan 14, 2011 letter to Lum when questioning her.
Ms Wei said she did not show her the letter as she did not think it was relevant. She said she was the interviewer, with control of the interview, and had chosen to focus only on the desalination plant portion as the Hyflux announcement she was showing to Lum involved only the funding for the desalination plant.
However, Mr Singh said that Ms Wei herself referred to the Jan 14, 2011 letter which did contain reference to the S$244 million for the power plant, but chose not to tell Lum about this portion.
Explaining how she framed her question, Ms Wei said: “I was just curious, how come they eventually only got S$150 million (in) financing.”
“It was not curiosity,” said Mr Singh. “I suggest to you, you took advantage of Ms Lum’s inability to recall what happened many years ago. You knew she would not have known what that Jan 14 letter said, and so referred to it but very carefully did not show it to her. Isn’t that right?”
Ms Wei disagreed. She said that, in her experience interviewing Lum, she knew Lum would review her statements carefully, and that she would give Lum a chance to make any clarifications if she wished to, and she did.
“Clarification is nothing to do with showing her a document,” said Mr Singh. “Effectively what you’re saying is – I don’t show it to her, I let her in clarification raise it with me and ask me if she wants.”
“But this is my investigation,” replied Ms Wei. “I’m saying this is my interview. I have control over the questions I want to ask. If she wants to make any clarification, she is free to.”
“Exactly,” answered Mr Singh. “You have control, but you also have a duty to be fair and asking her about the banks’ concerns on Jan 4 (2011) and not showing her the in-principle commitment of Jan 14 (2011) was completely unfair.”
He said that despite the so-called banks’ concerns about the power plant and electricity sales raised on Jan 4, 2011, six of them still signed an in-principle commitment letter for a total sum of S$527 million on Jan 14, 2011.
Ms Wei disagreed that she was unfair, saying the focus of her question was not the banks’ concerns with the power plant anymore, but to find out what happened to the funding for the desalination plant.
“Even if this set of questions had nothing to do with the banks’ concerns … why did you not show her that, 10 days later, despite those concerns, the banks issued this Jan 14 (2011) letter. Why did you not show her that letter?” asked Mr Singh.
“I did not feel it was relevant to show her,” answered Ms Wei.
Mr Singh said: “The reason you did not feel it was relevant to show her is that you wanted to run a line, that because the banks learnt of the power plant, they panicked, it was material, they acted differently, when that was not the case. Ms Wei, I am putting that to you.”
Ms Wei disagreed.
Mr Singh then asked Ms Wei if she knew that it was announced in September 2013 that Maybank had granted a S$720 million, 18-year term loan facility to Hyflux’s Tuaspring Project.
Ms Wei began to indicate that she was unable to recall without reference, and Mr Singh then said he would show her the related document.
“You see, that’s why it’s important for me to be fair to show you documents that I refer to,” he said.
He then suggested to her that the reason there were no Maybank documents produced and that the prosecution is not calling Maybank is because it would undermine the prosecution’s case.
The lead prosecutor tried to object to this question, but the judge allowed it. Ms Wei disagreed with what Mr Singh was suggesting.
In a portion of Lum’s police statement flashed on the screen in court, she had said that even though Maybank financed Hyflux only from 2013 onwards, the bank had started to evaluate the project in 2011, with “very good terms”, and that DBS was “upset” that Hyflux awarded the project financing to a Malaysian bank.
FIRST INFORMATION REPORT
Mr Singh also raised the issue of the First Information Report (FIR), a document that details the first instance the police receive a report about a possible offence, a step that usually triggers investigations.
He showed the report to the court. It was signed by a CAD officer Bernard Kho, and his name was listed as both informant and recording officer.
In the report, the officer wrote that he had received information on May 7, 2019, that there may be potential breaches under the Securities and Futures Act arising from “certain non-disclosure of material information by Hyflux relating to Tuaspring project”.
“So this FIR was lodged by Bernard Kho to himself! Is that right?” asked Mr Singh.
“Your question is, is this FIR lodged by my colleague to himself?” clarified Ms Wei.
“Yes, to himself! It was a self-FIR!” exclaimed Mr Singh.
Ms Wei said “usually” CAD officers lodge reports themselves when they receive referrals from the Monetary Authority of Singapore (MAS) or Singapore Exchange (SGX).
Mr Singh then referred Ms Wei to Section 14 of the Criminal Procedure Code, which states what the recording officer must do when he first receives information at a police station about an offence.
“Do you agree with me that it is highly unusual for the informant to be the recording officer?” asked Mr Singh.
Ms Wei disagreed.
Mr Singh then showed her a letter from SGX several days after the FIR was filed, reporting the alleged breaches in the Hyflux Tuaspring project. He asked Ms Wei repeatedly why this letter was necessary.
Ms Wei repeatedly said it was CAD’s “usual process”.
Mr Singh then suggested to her that the SGX complaint was needed because in this case, there was “a concern” that the FIR was “not proper” and that “six days later, someone then said, we better get a letter from SGX”.
Ms Wei disagreed.
After grilling Ms Wei, the prosecution’s first witness, over two days of the trial, Mr Singh wrapped up his cross-examination around lunchtime on Tuesday.
After this, the lawyers for the other accused Hyflux ex-leaders took their turns briefly cross-examining Ms Wei. She did not take statements from most of the other accused persons.
The second witness for the prosecution was supposed to be Hyflux’s former corporate communications officer in charge of investor relations, but she reported sick with COVID-19.
The judge said that although her doctor was unwilling to certify her as unfit for court, he would not want the next witness to testify if she had COVID-19.
The hearing resumes on Wednesday morning, with the prosecution re-examining Ms Wei.
If convicted of consenting to Hyflux’s intentional failure to disclose the electricity sale information to the securities exchange, Lum could be jailed for up to seven years, fined up to S$250,000 or both.
For making an offer of securities to the public with omissions about the electricity sales, she could be jailed up to two years, fined up to S$150,000, or both.
