Workers' Party (WP) MPs Sylvia Lim and Low Thia Khiang have refuted allegations that they improperly appointed Aljunied-Hougang Town Council's (AHTC) new managing agent when they took over the running of the town council.
In their defence filed with the High Court on Tuesday, both highlighted an "immediate and urgent need" to appoint a new managing agent, as the previous agent - CPG Facilities Management - was not willing to continue with its contract beyond Aug 1, 2011. The contract was due to expire about two years later.
The court documents cited Mr Low's past experience when he took over Hougang SMC to illustrate why he and the WP's chairman, Ms Lim, had acted quickly to appoint FM Solutions and Services (FMSS) as managing agent without a tender.
In 1991, the incumbent managing agent served Mr Low notice to terminate its contract less than a month after he took over Hougang. This experience impressed on Mr Low "the continuity of essential services by the existing service providers was at risk" when he took over Aljunied GRC, which covered a much larger area.
"He was also aware that PAP may attempt to 'trip up' the new MPs in the way they did when he took over the Hougang Town Council," said the court documents, adding that AHTC also "did not have the luxury of time to call an open tender because doing so could result in a real danger that services to the residents would be disrupted in the meantime".
Mr Low, the WP's secretary-general, believed none of the three companies managing People's Action Party (PAP) town councils would be prepared to work with his party. When AHTC later called a tender in 2012 for a managing agent, none of these companies submitted a bid.
"As the managing agents of PAP town councils, they felt it was disadvantageous for them should they choose to work for opposition town councils since all town councils have political connections," said the documents.
They had also considered it "too politically risky to retain a reluctant and unwilling managing agent in CPG... because it is hard for them to trust that CPG would continue to do their best to serve the residents when they were reluctant to continue in the first place".
Outlining their version of events, both MPs said they acted in good faith and did not pay inflated rates to FMSS.
They are being sued by AHTC, which initiated the legal action against them and other town councillors under the direction of an independent panel. The suit is to recover alleged improper payments to FMSS.
It is demanding that Ms Lim, Mr Low, FMSS owner How Weng Fan and FMSS account for over $33 million in payments, paid from July 15, 2011, to July 14, 2015.
Ms Lim and Mr Low were part of a WP team that wrested Aljunied GRC from the PAP in the May 2011 General Election.
Mr Low had e-mailed Ms How on May 19, 2011, about appointing Mr Danny Loh as general manager/secretary of AHTC and FMSS as its managing agent.
AHTC had flagged that e-mail to show that Ms Lim and Mr Low were aware that installing FMSS would put both Mr Loh and Ms How in positions of conflict as they were directors and shareholders of FMSS while holding senior positions in AHTC.
In court papers obtained by The Straits Times, Ms Lim and Mr Low denied instructing Ms How and Mr Loh, her late husband, to set up and incorporate FMSS. Instead, they said they wanted FMSS set up as soon as possible to "provide an alternative to CPG, particularly if CPG decided to pull out" of its contract.
Court documents show they met CPG's managing director and Aljunied Town Council general manager Jeffrey Chua on May 30, during which he told them CPG did not want to continue as managing agent.
Addressing allegations of conflict of interest, the court documents pointed to an e-mail sent six days before the May 19, 2011, correspondence between Mr Low and Ms How.
In the earlier e-mail, Ms Ng Swee Bee - who went on to be an AHTC town councillor - shared with Mr Low a Straits Times article that reported Mr Chua's dual role at both the town council and managing agent, raising the issue of conflict of interest.
Ms Lim and Mr Low felt a "system of checks and balances" could be put in place, with "sufficient safeguards to ameliorate possible conflicts of interest".
They said AHTC adopted the "industry practice" for employees of the managing agent to approve payments to the managing agent on behalf of the town council, and instituted an "additional layer of protection", requiring the town council chair or vice-chair to co-sign all payments to FMSS.
Both Ms Lim and Mr Low also denied paying "inflated rates" to FMSS in its first year of service, pointing out that these were calculated on the basis of the former CPG contract rate.