Another chapter in the town council saga was opened when a lawsuit against councillors was initiated by an independent panel appointed by the Aljunied-Hougang Town Council (AHTC). The panel was set up in February to look into alleged improper payments made by the Workers' Party-run council - highlighted last October by audit firm KPMG which had been appointed by AHTC to look into its books. The tangled web of events, which goes back to 2011, might prove hard to grasp for those who have not followed the developments closely. This is so particularly because no conclusion seems to be in sight despite a series of probes. But a satisfactory resolution must emerge ultimately as important questions about municipal governance have been raised.
For example, the KPMG report had said a "failed control environment exposed public funds to the potential for misappropriation and civil or criminal breach of trust". The risk arose because some shareholders of managing agent FM Solutions and Services (which was allegedly overpaid) also held management roles in AHTC, with authority over financial matters. However, AHTC denies there was "significant lack of oversight" over its managing agent. So, how are the precedents set by AHTC to be regarded by future town councils? The court case will yield an answer.
The scrutiny of AHTC by the Government over several years might be seen as being politically motivated, given the rivalry between the People's Action Party and Workers' Party (WP). During that period, the town council grew with the addition of Punggol East after WP won a by-election in 2013. WP retained Aljunied and Hougang in the 2015 General Election but lost Punggol East. However, the independent panel, which is taking WP leaders to task, is decidedly apolitical. It comprises Senior Counsel Philip Jeyaretnam, Senior Counsel N. Sreenivasan and KPMG managing partner Ong Pang Thye. As AHTC chairman Pritam Singh said when they were appointed: "The panel will act independently, without remuneration, and without taking directions from AHTC, HDB or any other party."
While the panel's remit is to pursue recovery actions in respect of AHTC's past losses, the case will help to clarify the fiduciary duties of councillors. Responding to the lawsuit, WP chief Low Thia Khiang said: "We acted in good faith and in the best interests of our residents." It would be useful to determine if more is required. All custodians of public funds would be expected to exercise care and skill when carrying out their duties. Further, the Town Council Act says that councillors must declare their interest when conflict of interest arises in a matter, and must not participate in any decision relating to it. The extent of councillors' liability for any breaches of such rules is also a matter of considerable public interest.