SINGAPORE: The former chief executive officer of offshore gas and oil contractor Swiber Holdings was on Thursday (Jul 4) fined over a false announcement of a S$710 million (US$526 million) project it claimed to have secured.
Yeo Chee Neng was fined a total of S$310,000 for four offences, including approving Swiber’s announcement despite knowing it was false, insider trading and failing to disclose changes in his interest in the company’s debentures.
He was disqualified from being a director of any company. Yeo is also not allowed to directly or indirectly take part in the management of any company for five years, the police said in a news release on Saturday.
Five other charges were taken into consideration for sentencing.
FALSE STATEMENT
On Dec 15, 2014, Swiber released an announcement stating that it had secured a US$710 million project award to provide engineering, procurement, construction, installation and commissioning services for an offshore field development project in West Africa.
However, investigations revealed that Swiber’s subsidiary had only entered into a letter of intent to provide some services.
The letter merely stated that the contract price was “estimated to be” US$710 million and was subject to review after the conclusion of front-end engineering design studies and on finalisation of the field development plan.
The subsidiary was only authorised to spend up to US$2 million to carry out part of the work.
The police said that Swiber’s announcement on Dec 15, 2014 had the effect of “significantly overstating” the company’s business prospects and was likely to “induce the purchase of Swiber’s securities” by other people.
Yeo, then a non-executive director of Swiber, admitted that he approved the announcement on the Singapore Exchange (SGX) despite knowing about the letter of intent and its terms, and that the announcement was false.
INSIDER TRADING
Yeo became the company’s Deputy CEO in 2015 and then its CEO and Group President from Jun 20, 2016.
He was given non-public information relating to Swiber’s financial difficulties, due to a slowdown in the oil and gas sector in early 2016.
Swiber was due to redeem debentures, or long-term securities, worth S$305 million in June, July and October 2016 and was negotiating with third parties to raise funds to fulfil the redemptions, as well as other operating and financial commitments.
He believed that if these fundraising exercises failed, the company would go into default. On multiple occasions, Yeo shared information about Swiber’s financial situation with his wife.
On Jun 29, 2016, Yeo knew that Swiber had not secured the funds and this information would have an impact on the companies’ securities.
He instructed his wife to sell Swiber debentures that were held in their joint account, and she placed an order to sell them with a face value of S$500,000. She eventually liquidated half of this on Jul 5, 2016.
On Jul 27 that year, Swiber filed an application to wind up the company. Two days later, the winding-up application was withdrawn and Swiber was placed under judicial management.
It defaulted on the outstanding debentures.
By conducting insider trading, Yeo avoided losses of S$629,762. Before he was sentenced, he voluntarily paid this sum in full and it has been forfeited to the state.
On top of the sale on Jul 5, 2016, Yeo’s wife also sold Swiber debentures held in their joint account with a face value of S$500,000 between Jun 28 and Jun 29 that year. She sold a further S$250,000 on Jul 12, 2016.
Yeo got to know about these sales on and about Jun 29 and Jul 13, 2016, and that his wife and he held further Swiber debentures with a face value of S$500,000 in their joint accounts as of Jul 13, 2016.
“Despite this, he failed to notify Swiber in writing of the changes in his interest in the Swiber debentures, as required of him as a director and CEO of Swiber,” said the police.
