Aljunied-Hougang Town Council (AHTC), which had appointed an independent panel to help recover improper payments, is taking several of its town councillors to court.
They include Workers' Party chief Low Thia Khiang, as well as the town council's chairman Pritam Singh and vice-chairman Sylvia Lim.
The Straits Times understands the legal action was initiated as part of the work of the panel tasked with looking into improper payments made by AHTC.
The three WP MPs were served yesterday evening with a statement of claim against them by AHTC, Ms Lim confirmed last night.
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"We will respond further shortly, after we have studied the claim," she told The Straits Times.
The independent panel has the power to commence legal action on behalf of the town council for overpayments and payments without proper certification of work being done, among other things. This can include mediation, arbitration and other court proceedings.
The panel's other powers include making demands and coming to settlements on behalf of AHTC.
According to case details, AHTC is claiming $622,593.78 in liquidated claims from multiple parties, as well as $4,167,501.71 in unliquidated claims.
The Housing Board had asked AHTC to appoint a third party to recover the improper payments made from town council funds.
The independent panel appointed in February is chaired by Senior Counsel Philip Jeyaretnam. Its other members are Senior Counsel N. Sreenivasan and KPMG managing partner Ong Pang Thye.
When contacted, Mr Jeyaretnam and Mr Sreenivasan declined to comment on the lawsuit. Mr Ong could not be reached for comment. Mr Daryl Fong of Shook Lin & Bok, who was named as AHTC's lawyer in case details seen by The Straits Times, also declined to comment.
The writ of summons was filed last Friday by the town council in the High Court, over a breach of fiduciary duties. According to case details, AHTC is claiming $622,593.78 in liquidated claims from multiple parties, as well as $4,167,501.71 in unliquidated claims. Additional sums may be involved.
Besides the three Aljunied GRC MPs, other defendants named are: Mr Chua Zhi Hon, a former member of the WP Youth Wing executive committee; Mr Kenneth Foo, deputy organising secretary of the WP and WP candidate in Nee Soon GRC in the 2015 General Election; Ms How Weng Fan, owner of the town council's former managing agent firm FM Solutions and Services (FMSS); and FMSS.
A pre-trial conference date of Aug 31 has been listed.
Besides this case, AHTC also filed another writ of summons in the High Court against FMSS last Friday. This was in relation to an arbitration case over a financial dispute emerging from the lapses at the town council.
In a report last year, audit firm KPMG found that governance lapses at AHTC between 2011 and 2015 had put public funds running into the millions of dollars at risk of improper use.
It traced some of the improper payments to AHTC's then managing agent FMSS.
Ms How and her late husband, Mr Danny Loh, were owners of FMSS and held key management and financial control positions in the town council at the same time.
This meant that they effectively approved and made payments to themselves when they paid FMSS, the KPMG report found. It also raised the possibility of civil and criminal liabilities.
The report was part of the ongoing audit of AHTC following lapses flagged by its own auditors as well as by the Auditor-General's Office in a special report in February 2015.