Hyflux Being Probed By 3 Govt Agencies, Suspected Of False Statements & Breaching Disclosure Requirements

The problems are still piling up for beleaguered water treatment firm Hyflux.

The company is currently undergoing reorganisation as its $1.05 billion Tuaspring desalination plant registered losses and was taken over by national water agency PUB.

Now, it’s facing a criminal investigation involving at least 3 government agencies.

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These organisations will be spearheading the case:

  1. Singapore Police Force (SPF)
  2. Monetary Authority of Singapore (MAS)
  3. Accounting & Corporate Regulatory Authority (ACRA)

Hyflux, current and former directors are all under investigation

In a media release on (Tuesday) 2 Jun, MAS revealed that the joint investigation would cover Hyflux Ltd and its current and former directors.

They are suspected of making false and misleading statements and breaching of disclosure requirements under the Securities and Futures Act.

The investigation will ascertain whether Hyflux’s disclosures relating to the Tuaspring plant contained lapses, MAS said.

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They are also being investigated over alleged non-compliance with accounting standards from 2011 to 2018, under the Companies Act.

Probe follows review into Hyflux’s disclosures & compliance

On 16 Apr, 2019, MAS, ACRA and the Singapore Exchange Regulation announced it would be conducting a review into the company.

Specifically, its disclosure and compliance with accounting and auditing standards.

According to MAS,

The review disclosed reasons to suspect that offences may have been committed.

Hyflux directors & officers involved in Tuaspring have been interviewed

MAS also revealed that as part of the probe, interviews have been conducted with Hyflux’s directors and its key officers who took part in the Tuaspring project.

That includes Ms Olivia Lum, the company’s executive chairman and group chief executive officer.

She was formerly a Nominated Member of Parliament, and has won awards like the Ernst & Young World Entrepreneur Of The Year 2011.

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Ms Lum was the company’s only executive director from 2011 to 2018, according to The Straits Times.

Hyflux’s and Tuaspring’s accounting and corporate records have now been taken by the government agencies conducting the investigation.

Hyflux says will cooperate fully with investigations

In an update on its website on Tuesday (2 Jun), Hyflux acknowledged the investigation by the Commercial Affairs Department (CAD) of the SPF.

It said that it had received a notice from the CAD, ordering it to furnish information and documents related to the Tuaspring project.

The company will cooperate fully with the CAD investigation and will provide updates in due course, it added.

Hyflux posted loss in 2018 due to weak electricity prices

Hyflux’s woes started in 2018 when it posted a net loss of $116.4 million for financial year 2017, its first annual loss.

Tuaspring’s losses at that time amounted to $81.9 million, as Singapore’s electricity prices fell below fuel costs when dispatched by power generation companies to the national power grid.

Then, in May 2018, the company called for a halt to the trading of its shares. A court-supervised reorganisation process amid sustained losses followed,

This prolonged weakness has led to increasing strain on the Group’s finances, resulting in short-term liquidity constraints in recent weeks.

Since then, potential white knights for the company have come and gone, as its financial difficulties meant that creditors were at the door.

The latest potential white knight is Singapore-registered Aqua Munda, which has expressed interest in “acquiring the senior unsecured debts as well as the preference shares and perpetual capital securities of the Hyflux Group”.

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Hopefully Hyflux can get back on its feet soon

While it’s sad to see a home-grown company and former role model for the industry now in trouble with the authorities, the public needs to know if offences have been committed.

Let’s hope Hyflux can get back on its feet soon after the reorganisation and its funding problems are over.

Featured image adapted from Facebook & Facebook.