AHTC case: Workers' Party leaders put political interests above that of town council and residents, says judge

A file photo taken on Oct 9, 2018, showing Workers’ Party MPs (from left) Pritam Singh, Low Thia Khiang and Sylvia Lim at the Supreme Court. The trio are involved in a multi-million-dollar civil suit over alleged improper payments. PHOTO: ST FILE

SINGAPORE - The Workers' Party (WP) leaders, Mr Low Thia Khiang and Ms Sylvia Lim, had put their own political interests over that of the Aljunied-Hougang Town Council (AHTC) and residents in Aljunied GRC in the way they handled the appointment of a managing agent, said a High Court judge.

This is evidenced by the great lengths they went to keep the town council's incumbent managing agent CPG in the dark while the takeover by FM Solutions & Services (FMSS) was being planned without a tender being called, added Justice Kannan Ramesh, as he found the two MPs liable for damages suffered by the town council.

Later on, Ms Lim and Mr Low had also asked the owners of FMSS to prepare a "sanitised" report on its appointment for a meeting with AHTC's other town councillors, painting a misleading narrative of why a tender was waived.

This story was later repeated in a release sent out to the press, said the judge in a much-anticipated judgment released on Friday (Oct 11).

"It is particularly unsatisfactory that this misleading narrative was conveyed to the public, and specifically the very constituents that the elected MPs were elected to serve," he added.

The machinations of Ms Lim and Mr Low showed that they wanted to camouflage the true reasons for not calling a tender, said the judge.

He added that they were also "dishonest" and went to the extent of misleading their fellow town councillors.

Describing this as "unacceptable and egregious", Justice Ramesh said: "Not only was there no real urgency or necessity in the public interest to waive tender, it would appear that the waiver was really motivated by extraneous considerations, including politics and a misguided sense of loyalty.

"I am not suggesting that Mr Low Thia Khiang and Ms Sylvia Lim were expected to have no regard to any political considerations in making their decisions, which would surely be unrealistic. However, they were expected to not subordinate the interests of AHTC, not to mention their statutory and fiduciary duties, to their own political interests."

In his judgment, Justice Ramesh found Mr Low, the former WP secretary-general, and Ms Lim, the party chairman, as well as WP's new chief Pritam Singh, liable for damages suffered by AHTC, which is said to have made millions in improper payments under their watch.

Specifically, Ms Lim and Mr Low had failed to act in the best interests of the town council and breached their fiduciary duty when they hired FMSS as managing agent without calling a tender in 2011. During that time, Ms Lim was chairman of the town council, while Mr Low was secretary-general of the WP.

Meanwhile, Mr Singh was found to have breached his duty of skill and care in the same matter, as he did not question the waiver at all.

As a member of the town council's tenders and contracts committee and an elected MP, he had been copied on some of the key e-mails discussing the matter and was privy to the information.

That ought to have raised red flags as to the propriety of FMSS' appointment, the judge found.

Speaking to The Straits Times on Friday afternoon at the AHTC office in Hougang, Mr Low said the WP MPs would be seeking legal advice from their lawyers.

A joint statement was posted on Friday too on a blog that was used to raise funds for the legal fees of the three MPs last year, which said they 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," it added.

At this point, it is unlikely that the judgment will affect their position as MPs.

It arises from civil proceedings, and the MPs can appeal against the verdict.

The case will move on to a second round of hearings to assess and determine the quantum of damages suffered by the town council, and how much it can recover from the MPs.

AHTC had asked for "equitable compensation" for any sum wrongfully paid out in its statement of claim.

If the WP MPs cannot pay up, they will be made bankrupt and lose their parliamentary seats.

Last year, the three WP MPs, in their personal capacity, raised more than $1 million in three days for their legal fees in a crowdfunding effort.

The hiring of FMSS had been at the centre of the case, as the company is said to have received some $33.7 million in improper payments from the town council from July 2011 to July 2015.

The firm was set up by Ms How Weng Fan and her late husband Danny Loh, who had been working with Mr Low in the Hougang Town Council before he left the single-seat Hougang constituency to run for election in Aljunied group representation constituency (GRC) in 2011.

The five-member WP team - comprising Mr Low, Ms Lim, Mr Singh, star candidate Chen Show Mao, and Mr Muhamad Faisal Abdul Manap - ousted the incumbent People's Action Party team in Aljunied GRC led by then-Foreign Minister George Yeo and including Singapore's first woman minister Lim Hwee Hua.

In doing so, WP became the first opposition party to land a GRC since the scheme's inception in 1988.

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The WP MPs have said that they were forced to hire FMSS without calling a tender because they had to act quickly when CPG indicated it wanted to stop working with AHTC.

But it emerged from documentary evidence such as e-mails and meeting minutes produced during the trial that this could not have been the case.

The WP MPs met with CPG only on May 30, 2011, but a decision had been made by Mr Low and Ms Lim that AHTC would not work with CPG shortly after the May 7, 2011 General Election. A plan was set in motion then to hire FMSS.

The judgment highlighted some events that took place around this time that support this conclusion: An application had been filed with the Accounting and Corporate Regulatory Authority for use of the name "FMSS" on May 12, 2011, and FMSS was incorporated with a substantial paid-up capital of $450,000 on May 15, 2011.

These had happened way before the May 30, 2011 meeting with CPG.

The WP MPs also did not examine its existing contract with CPG before this.

"The inevitable conclusion of this analysis is that the decision to remove CPG as managing agent of AHTC was arrived at shortly after the 2011 GE at the very latest. The defendants, or at least some of them, wanted CPG out.

"This means that the waiver of tender and the appointment of FMSS was not a contingency at all, but a fait accompli by the time of the May 30, 2011 meeting with CPG," said Justice Ramesh.

"The assertion that FMSS was a contingency is nothing more than an attempt to varnish the plan with a veneer of credibility in order to camouflage its true motive."

The suit had also named FMSS and Ms How, who was also representing her late husband's estate, as well as two other town councillors Chua Zhi Hon and Kenneth Foo Sek Guan.

All five were also found to be liable for part of the damages suffered by the town council.

Ms How had breached her fiduciary duty over the hiring of FMSS as well as sister company FM Solutions & Integrated Services (FMSI), while her late husband had breached his fiduciary duty over the FMSI contract.

Meanwhile, Mr Chua and Mr Foo had breached their duty of skill and care over both the contracts with FMSS and FMSI, as well as other contracts entered into by the town council for various projects.

The civil suit was initiated in 2017 under the direction of an independent panel set up by the town council to recover improper payments.

Pasir Ris-Punggol Town Council (PRPTC) had also sued to recover its share of losses incurred when Punggol East constituency was managed by the WP-led town council from 2013 to 2015. The WP had won the seat in a 2013 by-election but lost it in the 2015 General Election.

Friday's verdict brings to a close the first tranche of the trial to determine liability.

Over 17 days last year, 14 witnesses were called and questioned by lawyers, resulting in robust exchanges and debates, as well as unexpected disclosures before an often-packed public gallery.

The case is the latest turn in an ongoing saga that goes back to 2011.

AHTC had been unable to submit an unqualified set of accounts since 2011, after the WP won Aljunied GRC in the 2011 General Election.

The state of affairs led to a special audit by the Auditor-General's Office (AGO), which found significant governance lapses at AHTC.

The AGO's findings were raised in Parliament, and the Court of Appeal directed AHTC to appoint a Big Four accounting firm to help it fix the lapses and ensure compliance with the law. AHTC appointed independent auditor KPMG in 2016 to look into its books.

KPMG found that the lapses at AHTC had put public funds running into millions of dollars at risk of improper use. AHTC appointed an independent panel to look into the improper payments and take action, including recovering the money.

The WP MPs and town councillors were represented by Tan Rajah & Cheah, with lawyer Chelva Retnam Rajah as lead counsel, while FMSS was represented by Netto & Magin.

The independent AHTC panel was represented by a team from Shook Lin and Bok, led by lawyer David Chan.

PRPTC was represented by Senior Counsel Davinder Singh who is now at Davinder Singh Chambers.

Additional reporting by Rei Kurohi

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