AHTC trial: Managing agent 'enjoyed' 300% profit increase as town council's finances suffered, say lawyers

SINGAPORE: Lawyers for the Aljunied-Hougang Town Council (AHTC) reminded the court how the town council's former managing agent enjoyed "extraordinary profits" while AHTC's financial position was "severely damaged" in their closing submissions for the landmark trial.

The Shook Lin & Bok lawyers called for the court to allow its claims of S$33.7 million from the eight defendants, with costs, in the documents filed on Friday (Jan 18) and seen by Channel NewsAsia on Monday.

Workers' Party (WP) Members of Parliament Sylvia Lim, Low Thia Khiang and Pritam Singh were taken to court along with former AHTC town councillors Kenneth Foo and Chua Zhi Hon in October last year for allegedly breaching their fiduciary duties in appointing FM Solutions and Services (FMSS) as managing agent.

FMSS was helmed by Ms How and her late husband Mr Loh. Both of them also had roles in the town council, and are accused of dishonestly assisting in the breaches of fiduciary duties.

READ: Defendants acted ‘in good faith’ at all times, say lawyers in closing submissions

READ: AHTC trial wraps up after 17 days, with last defence witnesses on the stand

Observers have previously said that should the defendants not be able to pay damages, if any, AHTC could commence bankruptcy proceedings against them, and the WP MPs may lose their parliamentary seats.

Under the Singapore Constitution, an undischarged bankrupt cannot be a Member of Parliament and will not be allowed to contest in any parliamentary election.

The WP MPs involved in the suit had successfully raised a million dollars in a few days in October after turning to the public for help in legal fees.

READ: Workers' Party MPs close fundraising appeal after raising more than S$1m for legal fees

TOWN COUNCIL ACTING AT BEHEST OF MR LOW, MS LIM: LAWYERS

In their closing submissions numbering 156 pages, AHTC's lawyers reiterated their arguments that the defendants did not act in good faith and breached their duties of loyalty and fidelity by appointing FMSS as agent without a tender for its first managing agent contract.

In particular, the town council’s lawyers said Mr Low and Ms Lim "acted in bad faith in their dealings with FMSS", and that there was "an alarming picture of a lack of independent thought on the part of the town councillors".

"The town council was in effect just going through the motions and acting at the behest of Sylvia Lim and Low Thia Khiang," wrote the lawyers.

The lawyers argued that Ms Lim and Mr Low breached their duties in several ways, including: Acting in the interests of the Workers' Party and its supporters and not in the best interests of AHTC; deciding to appoint FMSS without a tender before performing due diligence on the existing managing agent; and failing to disclose the shareholding of FMSS before awarding it the second managing agent contract.

READ: What makes a ‘responsible’ town councillor? Low Thia Khiang, PRPTC lawyer cross swords at AHTC trial

The lawyers also attacked the defence put up by the defendants in their submissions, saying that the argument that they acted in good faith "cannot apply".

"Sylvia Lim, Low Thia Khiang, Danny Loh and How Weng Fan acted recklessly, and therefore not in good faith, and/or were wilfully blind in their dealings with FMSS," said the lawyers.

"A particularly disturbing consequence of the appointment of FMSS, and the fact that Ms How, Mr Loh and FMSS were effectively given carte blanche over AHTC’s payment process, was that FMSS enjoyed extraordinary profits (an increase of over 300 per cent) in the period between 2011 and 2015," wrote AHTC’s lawyers.

"In contrast, AHTC’s financial position was severely damaged and Mr Loh himself declared in Sep 27, 2014 that 'the town council is now bankrupt and in deep financial trouble'."

READ: An 'egregious, cavalier misuse of public funds': Town council lawyers rip into Workers' Party leaders

Turning to FMSS, the lawyers set out their case that FMSS dishonestly assisted in the breach of fiduciary duties by entering into contracts "with full knowledge of the conflicts of interests in play".

It submitted that the contracts FMSS signed with the town council "are void in public law", and called the court to disregard FMSS' counterclaim against AHTC.

FMSS is now claiming protection under its contract with AHTC, but the town council's lawyers pointed out that they had not pleaded this counterclaim in court and "there would be no contract at all" if AHTC successfully rescinds the FMSS contracts as void in public law.

SYLVA LIM AN EVASIVE WITNESS: AHTC'S LAWYERS

The town council’s lawyers, in their submissions, paid particular attention to Ms Lim, alleging that she was “an evasive witness as she will not hesitate to concoct evidence and/or be evasive in order to avoid making admissions under oath”. 

"Sylvia Lim’s cross-examination also revealed that previous statements she made in Parliament were, at best, inaccurate and, at worst, untruthful," submitted the lawyers. "Therefore, negative inferences should be drawn in respect of her motivations as regards the award of the FMSS and/or FMSI contracts."

READ: FMSS’ How Weng Fan wanted 'hopeless chairman' Sylvia Lim replaced, reveals Davinder Singh

The lawyers charged that Ms Lim "fabricated stories", "concocted evidence" and was "extremely evasive", “constantly attempting to side-step questions when confronted with the truth and the apparent unsustainability of her original answer".

"AHTC submits that the inference to be drawn from this recurrent pattern of evasiveness is that Sylvia Lim is attempting to cover up her failings and the failings of the elected town councillors," wrote the lawyers.

Parties will have up to the middle of next month to file replies to each other's submissions, before making oral submissions in March.