Workers' Party MPs found liable in multimillion-dollar AHTC case; judgment raises 'serious doubt' about their integrity
SINGAPORE: A judge on Friday (Oct 11) found three Workers’ Party (WP) Members of Parliament liable in a landmark case investigating misuse of town council funds, saying that there is "serious doubt" about the integrity of Ms Sylvia Lim and Mr Low Thia Khiang.
The two MPs, along with WP chief Pritam Singh, could now be liable for part of the S$33.7 million in claims, which will be determined in a "future second stage of the trial", said High Court judge Kannan Ramesh.
In his written judgment, Justice Ramesh said Ms Lim and Mr Low had breached their fiduciary duties in appointing FM Solutions and Services (FMSS) as managing agent of Aljunied Hougang Town Council (AHTC).
Both had "failed to act in AHTC’s best interests and had acted for extraneous purposes”, he said.
As for Mr Singh, while "it cannot be said that he has breached his fiduciary duties to AHTC”, he had breached his “duties of skill and care”, the judge said.
The appointment of FMSS as managing agent led to AHTC making more than S$33 million in improper payments to FMSS, which was helmed by conflicted parties with roles in both the town council and FMSS.
The conflicted parties are Ms How Weng Fan, who had worked with Mr Low for more than two decades, and her late husband Danny Loh.
The judge found that all three MPs were “clearly involved from the beginning to effect the appointment” of FMSS without a tender, and they had “collateral motives in doing so”.
He also rapped Ms Lim and Mr Low for their "lack of transparency and candour", which he said was apparent in an email sent by Ms Lim to FMSS' Ms How and Mr Loh, asking them to examine a draft report on the managing agent appointment if it would "pass the auditors' eyes".
"I find this to be quite extraordinary and casts serious doubt on the integrity of Ms Sylvia Lim. It seems to me to be wholly unsatisfactory and inappropriate for Ms Sylvia Lim to ask Ms How Weng Fan and Mr Danny Loh to comment on a report concerning the appointment of FMSS without tender being called," the judge said.
Mr Low was "equally complicit", since it was his suggestion that Mr Loh should prepare the first draft of the report under the instruction of Ms Lim, Justice Ramesh said, adding that his observations on Ms Lim's conduct "would also apply" to Mr Low.
"There was a concerted attempt to cloak the appointment of FMSS with a veneer of propriety. It was an attempt to mislead, and a clinical demonstration of the disregard Ms Sylvia Lim and Mr Low Thia Khiang had for the requirements in the TCFR (Town Councils Financial Rules)," he said.
“Their conduct was improper and the attempt to cloak the same with a veneer of truth and credibility collectively leads to the conclusion that they had not acted honestly and therefore breached their duty of unflinching loyalty to AHTC as fiduciaries,” said Justice Ramesh.
The civil suit had been brought against the defendants by AHTC and Pasir Ris-Punggol Town Council (PRPTC), the former asking for claims of S$33.7 million from the defendants, with costs, and were based on audit reports by KPMG and PricewaterhouseCoopers.
The auditors had pointed to poor controls in the town council, flawed governance and millions of allegedly improper payments made by the town council to FMSS.
The verdict comes half a year after both sides made their final oral submissions, with PRPTC lawyer Davinder Singh arguing that the defendants had used residents’ hard-earned money to improve their political standing.
AHTC lead lawyer David Chan said WP stalwarts Ms Lim and Mr Low had three motives: To protect the former employees of Hougang Town Council and bring them over with them to AHTC when WP won Aljunied in the elections, to reward Ms How and Mr Loh as long-time WP supporters, and to position FMSS as an alternative service provider for opposition-run town councils.
At the heart of the MPs’ defence is their claim that they acted in good faith and in the best interests of their residents, as they had to work swiftly against deadlines to find a managing agent and ensure continuity of services to residents.
Senior Counsel Chelva Retnam Rajah, who represents the three WP MPs and town councillors, had said the accountants who wrote the audit reports were second-guessing the town councillors’ decisions, despite Parliament’s intention for town councils to exercise latitude over their own decisions.
If the defendants are not able to pay damages, AHTC could commence bankruptcy proceedings against them, and the WP MPs may lose their parliamentary seats as undischarged bankrupts cannot be MPs nor contest in parliamentary elections, under the Singapore Constitution.
The WP MPs involved in the suit had successfully raised a million dollars in a few days last October after turning to the public for help in legal fees.
Noting the court's findings, the Housing and Development Board (HDB) said AHTC should take "the appropriate steps" to recover the town council funds.
"This legal action was brought by an independent panel that AHTC had appointed," said HDB in its response to media queries. "The panel was appointed after a court-appointed auditor, KPMG, found severe lapses and withholding of documents."
"As public monies are involved, AHTC should take the appropriate steps to recover the monies misused," it added. "HDB will study the matter further."
Mr Low, Ms Lim and Mr Singh said in a statement on their blog, In Good Faith, that they are reviewing Friday's judgement.
"We are in the midst of reviewing the judgment and will take advice from our lawyers. We will share more details on our next step(s) in due course," they said.