Time and again, members of the former Aljunied-Hougang-Punggol East Town Council (AHPETC) - which was run by the Workers' Party - had opted for more costly contracts when they had the choice to extend existing contracts at much lower prices.
This led to additional costs of $479,000 in the management of Punggol East constituency, said lawyers for the Pasir Ris-Punggol Town Council (PRPTC) in a claim filed with the High Court obtained by The Straits Times yesterday.
They sought to show this was a pattern in the management of AHPETC. They also sought to show that its town councillors had breached their fiduciary duties and made allegedly improper payments to contractors.
PRPTC, represented by Drew & Napier, had initiated a lawsuit in July against WP chief Low Thia Khiang, party chairman Sylvia Lim and assistant secretary-general Pritam Singh. It now manages Punggol East after the People's Action Party wrested control of the single seat from the WP in the 2015 General Election.
PRPTC alleges the decisions made by the town councillors had caused it to suffer "loss and damage", and is claiming equitable compensation. Also named in its suit are Aljunied-Hougang Town Council's (AHTC) former managing agent FM Solutions and Services (FMSS), its owner How Weng Fan, and two other town councillors, Mr Chua Zhi Hon and Mr Kenneth Foo.
Separately, all seven are also being sued by AHTC, which is acting under the direction of an independent panel.
Both lawsuits are linked to the more than $33 million paid to FMSS and a related service provider between July 2011 and July 2015. AHTC wants the town councillors to account for the sum and repay any money that was wrongfully paid out.
The WP won Punggol East in the January 2013 by-election. From 2013 to 2015, it was managed by the WP's AHPETC, which was later reconstituted as AHTC.
PRPTC said in a statement last week that it had to file its own suit as AHTC, in its current form, no longer has legal rights to make claims and seek repayment of money related to Punggol East.
In its claim, PRPTC listed instances where town councillors had caused "improper payments" to be made to third parties.
It cited, for instance, a contract for conservancy and cleaning works for a zone in Punggol East. AHPETC had an option to extend the contract for a year after it expired in March 2015.
Instead, AHPETC called a fresh tender and awarded it to the same company - Titan Facilities Management. But Titan's new charge was 67 per cent higher. This amounted to an extra $423,147.
Extra costs of $27,249 were racked up in a similar fashion for servicing and maintenance of fire protection systems. For maintenance services, AHPETC chose a more expensive contractor for Punggol East, leading to extra costs of $25,920. For pest control services, AHPETC also chose a more expensive contractor - which cost Punggol East an extra $2,700.
PRPTC also claims that in November 2015, before AHPETC handed over Punggol East, it made 22 payments totalling $536,059, even though "supporting documents and/or evidence of work done were missing and/or incomplete".
That same month, payments were also made on 56 invoices, despite not being "properly authorised and/or certified" by the property manager, as mandated by the Town Councils Financial Rules. The invoices totalled $674,388.
In alleging the town councillors had breached their fiduciary duty - including the duty of not making a profit except through "legitimate entitlements" - PRPTC also said Ms How and FMSS had "been enriched" from improper payments at its expense.
It is asking the court to award it Punggol East's share of the equitable compensation or damages, plus an interest of 5.33 per cent a year on this sum.
Yesterday, Mr Singh told The Straits Times that the claim would be dealt with "through the legal process". Both AHTC's and PRPTC's lawsuits are scheduled for a pre-trial conference on Thursday.