SINGAPORE - When Workers' Party chairman Sylvia Lim and then chief Low Thia Khiang were elected as MPs for Aljunied GRC in 2011, the existing managing agent of the Aljunied town council still had two more years left on its contract.
But instead of continuing with the services of CPG Facilities Management, Ms Lim and Mr Low decided to appoint a newly set-up company to manage the town council affairs for both Aljunied GRC and Hougang SMC.
The new managing agent, FM Solutions & Services, or FMSS, was to be run by long-time WP supporters, the late Danny Loh Chong Meng and his wife, Ms How Weng Fan.
The circumstances in which FMSS was appointed resulted in the creation of a system whereby "controls were abdicated and checks and balances were thrown to the wind", said Senior Counsel Davinder Singh on Friday (Oct 5), on the first day of a trial against three WP MPs and two town councillors.
The case involves over $33.7 million in payments the town council made from July 15, 2011, to July 14, 2015 to FMSS and service provider FM Solutions and Integrated Services (FMSI), which Mr Low and Ms Lim have been asked to account for and to repay any money paid out wrongfully.
The lawsuit, which is initiated by Aljunied-Hougang Town Council (AHTC) under the direction of an independent panel, alleges that the payments to its former managing agent and service provider were improper and void.
AHTC also made the case that Mr Low and Ms Lim had breached their core fiduciary duties as town councillors.
The other defendants are WP chief Pritam Singh, town councillors Kenneth Foo Seck Guan and Chua Zhi Hon, FMSS and Ms How, who is also representing her late husband.
Mr Davinder Singh is representing Pasir Ris-Punggol Town Council (PRPTC), which manages the affairs of the single-seat Punggol East. The WP had managed Punggol East from 2013 to 2015 after winning the constituency in a by-election.
The People's Action Party wrested the seat back in the 2015 general election, and PRPTC is now suing to recover Punggol East's share of losses arising from the improper payments.
In his opening statement, Mr Singh referenced reports by audit firms KPMG and PWC, which make it clear that the instances of non-compliance, lapses and failures stem from the WP leaders' "complete and reckless disregard of their duty" to protect the residents' and public's monies.
"Improper payments were made to benefit the elected members' supporters who owned FMSS," Mr Singh charged. "The system of checks and balances in the town council was so lacking and flawed that it allowed conflicted persons to enrich themselves almost at will."
The court heard on Friday that the decisions to appoint FMSS were made in the weeks following the May 7 General Election, as seen in e-mails between the parties, including Mr Low, Ms Lim and Ms How.
FMSS was then set up on May 15, 2011, and in July, a letter of intent was endorsed. FMSS took over the running of AHTC on Aug 1, the same day CPG's services was discharged. No tender was called to appoint the new managing agent.
The late Mr Loh was appointed as secretary and Ms How as general manager of AHTC. But as shareholders in FMSS, they had a stake in the profit which FMSS would earn from AHTC, Mr Singh added.
Citing reports by KPMG on AHTC's finances from 2016 to 2018, Shook Lin & Bok lawyer David Chan, who is representing AHTC, said that there were 186 instances of non-compliance or "control failures".
These were "pervasive, cutting across the key areas of governance, financial control, financial reporting, procurement and records management", Mr Chan said in his opening statement.
"The circumstances were such: On one hand, we had FMSS and FMSI raising invoices; and on the other hand, we had conflicted persons with profit interests in FMSS and/or FMSI certifying that work had been done for those same invoices," said Mr Chan.