AHTC-appointed independent panel files lawsuit against Workers' Party MPs over 'improper' payments

AHTC-appointed independent panel files lawsuit against Workers' Party MPs over 'improper' payments

From left to right: Workers' Party MPs Pritam Singh, Sylvia Lim and Low Thia Khiang.

SINGAPORE: An independent panel appointed by the Aljunied-Hougang Town Council (AHTC) has filed a lawsuit against Aljunied GRC MPs Low Thia Khiang, Sylvia Lim and Pritam Singh and a number of others, over alleged improper payments amounting to millions of dollars.

The suit, filed last Friday (Jul 21), alleges that the three Workers' Party (WP) MPs have acted in breach of their fiduciary duties.

It alleges that Ms Lim and Mr Low misled the town council into waiving a tender and appointing FM Solutions and Services (FMSS) as AHTC’s managing agent. It also accused them of deciding on the town council’s behalf that then-deputy secretary and general manager How Weng Fan, and her late husband Danny Loh – who was AHTC’s secretary – would set up and incorporate FMSS.

This was done even before the incumbent managing agent, CPG, had apparently expressed a preference to be released from the contract, according to court documents seen by Channel NewsAsia.

The move effectively enabled Ms How and Mr Loh to certify work done by FMSS and FM Solutions and Integrated Services (FMSI) – the former Essential Maintenance Services Unit contractor for AHTC – and to approve payments and sign cheques to benefit themselves, the documents said.

The lawsuit also claims that contracts awarded to FMSS and FMSI were "so tainted by conflicts of interest and/or so contrary to the best interests of AHTC as to render them incapable of approval by a Town Councillor acting consistently with his/her fiduciary obligations of loyalty and fidelity".

The independent panel is asking to rescind the contracts with FMSS and FMSI, and is seeking compensation of more than S$33 million which it said was wrongfully paid out to the companies – subject to Ms Lim, Mr Low, FMSS, FMSI or Ms How showing which payments were lawful. 

Among other allegations, the lawsuit also claims that although Ms Lim and Mr Low said the terms offered by FMSS did not put the Town Council worse off than under CPG, FMSS "was clearly more expensive".

The lawsuit also accused the MPs of entering into contracts with LST Architects for 10 projects, despite them being more expensive in seven of those projects, without adequate justification.

The statement of claim asks Mr Low and Ms Lim to give an account of profits made from the appointment of FMSS, or pay damages of not less than S$1.25 million. It also asks Ms Lim and Mr Singh to pay damages of S$2.8 million for the wrongful appointment of architects.

Two other WP members were named as defendants in the lawsuit: Mr Chua Zhi Hon, a former member of the WP Youth Wing executive committee; and Mr Kenneth Foo, the party’s deputy organising secretary. Both were members of AHTC’s tenders and contracts committee.

“WE ACTED IN GOOD FAITH AND BEST INTERESTS OF RESIDENTS”: WP

In a joint statement to the media on Wednesday, the three MPs rejected the allegations and said they intend to “vigorously” contest the lawsuit.

“The WP MPs have acted in good faith and in the best interests of the town council and our residents,” the statement said, adding that they “have not benefited a single cent” from the appointment of FMSS.

The party has engaged law firm Tan Rajah and Cheah to defend the three MPs, as well as the other two WP members named in the lawsuit.

“In the course of these proceedings, we will be furnishing more information so that all concerned will be clearer on the issues and why we made the decisions and acted as we did,” the statement added.

PANEL SET UP TO REVIEW KPMG REPORT

The lawsuit was brought by an independent panel set up in February to review the findings of a KPMG report, which said the town council had "serious flaws" in governance and made improper payments amounting to millions of dollars to third parties.

The panel is headed by senior counsel Philip Jeyaretnam, and comprises senior counsel N Sreenivasan and KPMG managing partner Ong Pang Thye.

In its report, KPMG highlighted the relationship between the then-Aljunied-Hougang-Punggol East Town Council and FMSS and FMSI.

The auditors said payments of S$33 million were made to FMSS or FMSI, including S$23 million approved by town council members with conflicts of interest, and S$10 million approved by other individuals with no payment voucher or work order.

In a statement on the formation of the independent panel, HDB noted that the KPMG report said that AHTC may look to the town councillors for the recovery of losses arising from any breaches of their fiduciary duties.

On Wednesday, HDB said it is studying the details of the claim, which contains "serious allegations of misconduct". It has also asked the Attorney-General’s Chambers to advise on the matter.

Source: CNA/cy