Workers' Party MPs, AHTC town councillors acted in good faith, did not breach duties: Defence

Workers' Party MPs, AHTC town councillors acted in good faith, did not breach duties: Defence

The first day of trial for two multimillion-dollar civil lawsuits brought by the Aljunied-Hougang Town Council (AHTC) and Pasir Ris-Punggol Town Council (PRPTC) against three Workers’ Party Members of Parliament over an alleged breach of fiduciary duties kicked off on Friday (Oct 5). Cheryl Goh reports.

SINGAPORE: The Workers' Party (WP) Members of Parliament (MPs) and Aljunied-Hougang Town Council (AHTC) town councillors involved in a civil lawsuit over millions in alleged improper payments "acted in good faith and in the best interests of the residents", the defence said in their opening statements on Friday (Oct 5).

In response to allegations that the defendants breached their fiduciary duties, the defence lawyers said that their clients owe "no fiduciary duties" to the plaintiffs - AHTC and Pasir Ris-Punggol Town Council (PRPTC) - as they were already bound by duties in the Town Councils Act.

A fiduciary is a person who acts for or on behalf of another, in a legal or practical relationship of trust, such as one between a trustee or beneficiary.

READ: Multimillion-dollar civil suits against Workers' Party MPs go to trial

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

Furthermore, when WP took over Aljunied Town Council (ATC) from the People's Action Party in 2011, it was "the first time in the history of town councils in Singapore that there had been a change in management of a town council from government MPs to opposition MPs of that scale", the defence said. 

ATC merged with Hougang Town Council to become AHTC and later Aljunied-Hougang-Punggol East Town Council (AHPETC) after WP won the Punggol East single-member constituency in a by-election in 2013.

Pritam and Sylvia Lim court sketch
Courtroom sketch of Workers' Party MPs Sylvia Lim and Pritam Singh conferring during the opening statement of PRPTC lawyer Davinder Singh. (Illustration: Kenneth Choy)

THE DEFENDANTS AND THE ALLEGATIONS THEY FACE

The defendants' positions were revealed on the first day of the landmark trial for two lawsuits brought by the plaintiffs against eight defendants.

The first set of defendants are: WP MPs Sylvia Lim, Low Thia Khiang and Pritam Singh, along with AHTC councillors Chua Zhi Hon and Kenneth Foo Seck Guan.

Two of the other defendants hold dual roles in both AHTC and AHTC's former managing agent FM Solutions and Services (FMSS): Former AHTC deputy secretary How Weng Fan was also a director and shareholder at FMSS, while her late husband Danny Loh was the owner of FMSS and secretary at AHTC. Ms How is the personal representative of her late husband.

The last defendant is FMSS itself.

The WP MPs and AHTC councillors are accused of breaching their fiduciary duties in the appointment of town council managing agent FMSS.

As a result of this appointment, they allegedly allowed "improper" payments of more than S$33 million to FMSS, its service provider FM Solutions & Integrated Services (FMSI) and third parties.

AHTC in its opening statement outlined three complaints against the defendants: The installation of FMSS, that created a conflict of interest; the flawed governance and a system of payments made by the town council to FMSS; and the appointment of consultants LST Architects for seven out of 10 construction projects over the lower-priced Design Metabolist.

Mr Davinder Singh, lead lawyer for PRPTC, charged that the appointment of FMSS was "tainted". 

He alleged that the defendants "misled" the residents, Parliament and the public by saying in a media release by AHTC that there was an urgent need to put in place a new managing agent for Aljunied GRC as the incumbent managing agent had indicated its wish to be released from the managing agent contract.

The defence rebutted these allegations in their opening statements, setting out arguments that they would be discussing over the course of the trial.

Low and Kenneth courtroom sketch
Courtroom sketch of former Workers’ Party chief Low Thia Khiang and AHTC councillor Kenneth Foo listening as lawyer David Chan, representing AHTC, makes his opening statement. (Illustration: Kenneth Choy)

NOT FOR THE COURT TO STEP INTO THE SHOES OF THE TOWN COUNCIL: DEFENCE

Mr Chelva Retnam Rajah, lead lawyer for the WP MPs and AHTC town councillors, told the court that the Town Councils Act and the Town Council Financial Rules "reflect the political nature" of town councils. 

He noted that the Court of Appeal previously recognised that under the Town Councils Act, "it was not for the court to step into the shoes of the town council or to substitute its own decisions for those of the town council in question as to how the various requirements and duties are to be carried out".

"Various allegations have been made ... we have our responses and defences to all of these," he said. "At the heart of all our actions is the fact that at all times, the first to fifth defendants – they were acting in good faith, acting honestly and for the purposes of the Town Council Act in all their actions."

He added that his clients had not breached "any of their duties" owed and cannot be held liable for breaches, even if there were any.

Mr Rajah added that the legal proceedings were being maintained "on the sole basis of the accountant's reports prepared by KPMG and PwC".

According to KPMG's October 2016 report, focusing on AHTC's payment transactions from May 2011 to November 2015, there were serious flaws in the town council's government, with S$33 million worth of "improper payments" made to FMSS and third parties.

Mr Rajah said the appointments of FMSS, FMSI and the third-party contractors, along with the payments that were made to them, were done in accordance with the processes in AHTC and with the consent and approval of all the town councillors. 

As for the defendants appointing the more expensive LST Architects for seven out of 10 construction projects, over a lower-priced alternative, Mr Rajah said that LST Architects was deemed "more suitable" by the defendants.

"There is nothing improper about these appointments and payments," he said. The defence will seek to prove this during the course of the trial.

DEFENDANTS AWARE OF POTENTIAL CONFLICT OF INTEREST, ASKED FORMER MANAGING AGENT

According to Mr Rajah, the defendants were aware of the issue of a potential conflict of interest in having an officer of the managing agent being employed as the secretary and general manager of the town council.

But this had been the practice of ATC under the PAP, prior to the handover to WP. The secretary of ATC, Mr Jeffrey Chua, was also the managing director of ATC's managing agent CPG Facilities Management.

Ms Lim asked Mr Chua about the issue of a potential conflict of interest in a meeting with other AHTC members on May 30, 2011, Mr Rajah said.

Mr Chua stated that there was a system in place to address this concern, Mr Rajah explained.

For example, the Ministry of National Development was informed about contracts which ATC entered into with the managing agent, and ATC was subject to annual audits by external auditors.

The AHTC town councillors, however, put in place an additional check by requiring all payments to FMSS to be signed by the town council's chairman or vice-chairman, Mr Rajah said.

Even if the allegations held any weight, the Town Councils Act protects members of town councils from legal proceedings, subject to conditions, Mr Rajah pointed out.

He referred to Section 52 of the Town Councils Act, which states that "no suit or other legal proceedings shall lie personally against any member, officer or employee of a town council ... for anything which is in good faith done or intended to be done in the execution ... of this Act".

"The plaintiffs have no evidence that the first to fifth defendants acted for a purpose other than in the execution of the Act," he said. "Further, there is no allegation that they have acted under any malice in the discharge of their duties."

The hearing wrapped up with two-thirds of the defence's opening statements for the second set of the defendants to go.

It will be heard when the trial resumes on Monday, after which the plaintiffs' witnesses KPMG and PwC are expected to take the stand.

Source: CNA/ll(hm)

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