Aljunied-Hougang Town Council lawsuit

AHTC lawsuit: Three Workers' Party MPs say they are not liable for payments made

Ms Sylvia Lim and Mr Low Thia Khiang said they acted in good faith and in the residents' best interests. AHTC alleged that $33,717,535 in payments it made to FMSS and FMSI are not valid, as the town councillors had acted in breach of their fiduciary
AHTC alleged that $33,717,535 in payments it made to FMSS and FMSI are not valid, as the town councillors had acted in breach of their fiduciary duties. ST PHOTO: SEAH KWANG PENG
Ms Sylvia Lim and Mr Low Thia Khiang said they acted in good faith and in the residents' best interests. AHTC alleged that $33,717,535 in payments it made to FMSS and FMSI are not valid, as the town councillors had acted in breach of their fiduciary
Ms Sylvia Lim (above) and Mr Low Thia Khiang said they acted in good faith and in the residents' best interests.ST PHOTO: SEAH KWANG PENG
Ms Sylvia Lim and Mr Low Thia Khiang said they acted in good faith and in the residents' best interests. AHTC alleged that $33,717,535 in payments it made to FMSS and FMSI are not valid, as the town councillors had acted in breach of their fiduciary
Ms Sylvia Lim and Mr Low Thia Khiang (above) said they acted in good faith and in the residents' best interests.ST PHOTO: SEAH KWANG PENG

They also say they do not owe any special duty of care to AHTC beyond what law states

Workers' Party MPs Sylvia Lim, Low Thia Khiang and Pritam Singh have filed their defence in the lawsuit brought against them by the Aljunied-Hougang Town Council (AHTC), saying they are not personally liable for $33 million in payments made by the town council to its former managing agent and service provider.

The MPs, who have been asked to account for the sum, also said they do not owe any special duty of care to the town council beyond what is stated in the laws governing town councils. They pointed out that they need only to fulfil obligations imposed by these laws.

Even so, they added, they had acted in good faith and in the best interests of the town council in the appointment of its managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI).

These arguments by the trio, who lead the AHTC, are set out in a 40-page statement of defence that also covers two other defendants, town councillors Kenneth Foo Sek Guan and Chua Zhi Hon.

It is the latest turn in the long- running saga since WP took charge of the town council after it won Aljunied GRC in 2011.

Last month, AHTC, represented by Shook Lin & Bok, initiated legal action against them under the direction of an independent panel the town council appointed in February to help recover improper payments.

  • What lawsuit is about

  • The town councillors from Aljunied-Hougang Town Council (AHTC) have filed their defence to the lawsuit brought by an independent panel on AHTC's behalf. The lawsuit had made claims in three broad areas:

    APPOINTING FMSS AS MANAGING AGENT

    Ms Sylvia Lim and Mr Low Thia Khiang had allegedly misled other town councillors to get FM Solutions and Services (FMSS) appointed as managing agent without a tender.

    This was made in "bad faith and/or for improper purposes", including to benefit the late Mr Danny Loh and his wife How Weng Fan, who owned FMSS.

    AHTC also alleges that the couple did not declare their interest in FMSS to town councillors at a town council meeting in August 2011, and "dishonestly assisted" the breaches of fiduciary duty by Ms Lim and Mr Low.

    ALLOWING A FLAWED SYSTEM OF PAYMENT

    AHTC alleges that Ms Lim and Mr Low had breached their fiduciary duty as they had set up or allowed a "flawed system of governance", which facilitated or contributed to improper payments to FMSS and service provider FM Solutions and Integrated Services.

    As a co-signatory of cheques to FMSS, Ms Lim allegedly failed to conduct proper checks before signing off on the payments.

    AHTC has asked Mr Low, Ms Lim, Ms How and FMSS to account for $33.7 million in payments made to FMSS, and is seeking "equitable compensation" for any losses suffered from improper payments.

    ENTERING INTO IMPROPER CONTRACTS WITH ARCHITECTURAL FIRM

    As members of the town council's tenders and contracts committee, current town council chairman Pritam Singh, Ms Lim, Mr Chua Zhi Hon and Mr Kenneth Foo allegedly breached the Town Councils Financial Rules by not calling separate tenders for 10 construction projects.

    They also picked the more expensive bid for seven of these projects, which cost AHTC an additional $2,794,560.

 
 
 

The town council alleged that $33,717,535 in payments it made from July 15, 2011, to July 14, 2015, to FMSS and FMSI are not valid, as the town councillors had acted in breach of their fiduciary duties.

Last night, the three MPs said their defence would deal with all the allegations made against them and which they denied.

"We maintain that, at all times, we had acted in good faith and in accordance with our duties as town councillors. Our actions had the best interests of the residents of AHTC at heart and sought to ensure that AHTC was able to fulfil all its functions and duties, notwithstanding the difficult circumstances that we were faced with," they said in their statement.

The five defendants are represented by law firm Tan Rajah & Cheah, which said: "Their duties as town councillors are no more and no less than as set out in the Town Councils Act (TCA) and the Town Councils Financial Rules."

Under the TCA, the councillors are also protected from any personal claims against them for actions they have taken in their roles, their lawyers added.

The councillors also denied that the town council had made any improper payments or suffered any loss as a result of their conduct.

AHTC had asked for "equitable compensation" for any sum wrongfully paid out, which was made in its statement of claim filed in the High Court last month.

It also wanted Ms Lim and Mr Low to be liable for $1.2 million in total - the difference between the "inflated charges" of FMSS against the rates of previous managing agent CPG Facilities Management.

The town council had pinpointed the appointment of FMSS, without a tender being called, as the start of its financial woes. It said FMSS was set up by Ms How Weng Fan and her late husband Danny Loh on the instruction of Ms Lim and Mr Low.

Both MPs, refuting allegations of wrongdoing, said they did it to ensure services to residents would not be disrupted, under a system stacked against opposition parties.

They said CPG had told them it wanted to stop providing managing agent services to AHTC, even though its contract had not ended.

Given its desire to quit, they said they did not trust it to continue to do its best for the residents and felt it was "too politically risky to retain a reluctant and unwilling managing agent".

They also said they took steps to "ameliorate" any conflicts of interest that would arise from making Ms How the town council's general manager, and Mr Loh the secretary, by requiring all payments to FMSS to be co-signed by either the chairman or vice-chairman of the town council.

FMSS and Ms How, who are also named in the suit, are represented by lawyers from Netto and Magin.

Separately, the Attorney-General's Chambers (AGC), representing the Housing Board, has written to the court to ask for permission to follow the case at all hearings. The councillors objected to the request.

The AGC said the HDB has an interest in the proceedings, which are about the recovery of improper past payments.

A version of this article appeared in the print edition of The Straits Times on August 17, 2017, with the headline 'Three WP MPs say they are not liable for payments made'. Print Edition | Subscribe