AHTC lawsuit

FMSS says all payments received were proper

A direction sign for the Hougang office of Aljunied-Hougang Town Council (AHTC) at Block 701, Hougang Ave 2. ST PHOTO: SEAH KWANG PENG

The former managing agent of the Aljunied-Hougang Town Council (AHTC) said it had not received any improper payments from the town council, challenging findings to the contrary by the Auditor-General's Office (AGO) and audit firm KPMG as unmeritorious, inaccurate and incorrect.

The claim by FM Solutions and Services (FMSS) and its owner, Ms How Weng Fan, was made in a 16-page statement of defence filed in the High Court on Wednesday, in which they said that they had acted in good faith as managing agent and had not caused any losses to the town council.

FMSS and Ms How are being sued by AHTC over improper payments that the firm received from the town council from July 15, 2011, to July 14, 2015. Also being sued by AHTC are five of its own town councillors, including Workers' Party MPs Sylvia Lim, Low Thia Khiang and Pritam Singh, who are said to have breached their fiduciary duty in appointing FMSS as managing agent, a charge they deny. The five had filed their defence in the High Court on Tuesday.

The town council, represented by Shook Lin & Bok, had initiated the legal action last month under the direction of an independent panel it appointed in February to help recover improper payments. It has pinpointed the rushed appointment of FMSS in 2011, without a tender being called, as the start of AHTC's accounting woes, and has said that $33,717,535 in payments made to the managing agent were improper and invalid.

In making its claims, AHTC referred to the findings of the AGO - which conducted a special audit of the town council after it failed to submit clean financial statements since it was formed after the 2011 General Election - and those of KPMG, which AHTC had appointed to look into its books following an order from the Court of Appeal. Both the AGO and KPMG found a flawed system of governance at the town council that was absent of any checks and balances to ensure payments to FMSS were legitimate. Ms How and her late husband Danny Loh, FMSS' owners, were respectively general manager and secretary of the town council and had approved payments to their own company.

FMSS and Ms How - by herself and in her capacity as the representative of Mr Loh's estate - are represented by law firm Netto & Magin. They also charged that the findings are "allegations without merit" and denied its "correctness and accuracy".

Ms How has never publicly commented on the audits implicating her company in the saga since WP took charge after it won Aljunied GRC in 2011.

In her joint defence with FMSS, she also asserted that the town council is barred, or stopped, from getting back its money from FMSS. This is because AHTC had voluntarily entered into a contract with FMSS, paid for the managing agent services in accordance with contractual terms, and benefited from the services provided, the defence argued.

It is "unconscionable for (AHTC) to impute fault" on FMSS, Ms How and Mr Loh and to demand they cough up money legitimately received under the contracts awarded by AHTC itself, said the defence.

AHTC had said in its claim that FMSS and Ms How had knowingly received payments known to be improper. But FMSS and Ms How said they had "acted honestly and reasonably and ought to be excused by the court", even if they had breached any trust.

FMSS and Ms How also denied any wrongdoing in the rushed appointment of FMSS, and the appointment of Ms How and Mr Loh to decision-making positions, saying this was done in good faith to avoid the disruption of services to residents caused by the town council's then managing agent, CPG Facilities Management, prematurely terminating its services.

They also said: "Sylvia Lim and Low were of the view that the functions of the secretary would not cause a conflict of interest as transactions would have to follow safeguards contained in... (the) Town Councils Act and Town Council Financial Rules."

They further said they did not owe any fiduciary duties to the council, especially since they were not council members, had no voting rights and merely acted on the instruction of town councillors like Ms Lim and Mr Low. And even if Mr Loh and Ms How could be considered fiduciaries, they "cannot be held to a standard equal to that of town councillors".

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A version of this article appeared in the print edition of The Straits Times on August 18, 2017, with the headline FMSS says all payments received were proper. Subscribe