AHTC case: WP leaders Low Thia Khiang, Sylvia Lim engineered plan to ensure FMSS could be appointed without tender, says High Court

They did so to ensure FMSS could be appointed without tender, says judge

Workers' Party leaders Low Thia Khiang and Sylvia Lim outside the Supreme Court on Oct 16, 2018. PHOTO: ST FILE

Workers' Party (WP) leaders Low Thia Khiang and Sylvia Lim had engineered a plan to ensure that a company set up by their loyal supporters could be appointed by the Aljunied-Hougang Town Council (AHTC) as managing agent without a tender being called, said a High Court judgment released yesterday.

Together with Mr Danny Loh and his wife How Weng Fan, the two MPs planned for FM Solutions and Services (FMSS) to be set up shortly after the May 7, 2011, General Election, it added.

They assiduously hid this fact from the town council's existing managing agent CPG, and even misled other elected MPs of Aljunied GRC. Then, employing delay tactics, they caused the time for calling a tender to be compressed.

The lack of time was cited as a convenient excuse for a waiver of the tender, on the ground of exceptional circumstances, Justice Kannan Ramesh said in his verdict.

All this while, the MPs had said they were forced to appoint a managing agent in this manner because they did not want to cause any disruption in services to their residents, he added.

But the significant amount of documentary evidence after the GE showed otherwise, said Justice Ramesh. It turned out that their motivations for doing so had nothing to do with the best interests of AHTC and, by extension, their residents.

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."

He cited two factors behind the WP's decision to waive a tender: Mr Low's distrust of entities that he perceived to be PAP-affiliated and the need to have them removed from the equation, as well as Mr Low's desire to ensure the continued employment of the Hougang Town Council staff who served the WP loyally for the past two decades.

"Clearly, both these concerns would not be addressed if CPG remained as managing agent for the reconstituted AHTC," said Justice Ramesh.

Citing the events leading up to the appointment of FMSS, he added that there was a concerted attempt to cloak the appointment of FMSS with a veneer of propriety, which was "a clinical demonstration of the disregard that Ms Lim and Mr Low had for the requirements in the TCFR (Town Council Financial Rules)".

"The inevitable conclusion is that those involved in the scheme - Ms Sylvia Lim, Mr Low Thia Khiang, Ms How Weng Fan and Mr Danny Loh - were keenly aware that the waiver of tender and appointment of FMSS was not consonant with the TCFR, and papered over the cracks," added the judge.

Given this, Ms Lim and Mr Low as town councillors, and Ms How as deputy secretary of the town council, had breached their fiduciary duty towards the town council.

Mr Loh, on the other hand, had been appointed as the town council's secretary only from Aug 1, 2011, after the award of the contract to FMSS and, as such, did not owe any fiduciary duties to the town council. He died in Japan in June 2015.

The conduct of the quartet in the appointment of FMSS had been the main point of contention in the civil suit initiated by AHTC through an independent panel.

Citing e-mails, letters and meeting minutes, Justice Ramesh said it was clear that Ms Lim and Mr Low had taken steps to replace the town council's existing managing agent CPG shortly after the GE, even though they claimed they were forced to appoint a new managing agent because CPG wanted to leave.

In an e-mail on May 9, 2011, for instance, Mr Low had written about the decision to appoint a managing agent. Ms How was copied on the e-mail.

In the same period, two events were taking place. On May 12, 2011, Mr Loh had filed an appli-cation with the Accounting and Corporate Regulatory Authority to register the company name FMSS. On May 15, 2011, he incorporated FMSS with a paid-up capital of $450,000.

Taken together, the e-mails and the events speak to the unwavering intention to replace CPG with FMSS, way before a meeting on May 30, 2011, when CPG said it did not want to remain as managing agent, said Justice Ramesh. As such, he added, the MPs' claims that the departure of CPG was the root cause of their plight was "misleading and not honest".

He also noted how Ms Lim and Mr Low had gone to great lengths to keep CPG out of the loop on its plans to appoint FMSS without calling a tender to ensure that CPG would not blow the whistle.

At town council meetings attended by CPG representatives, the MPs had given the impression that the plan was for AHTC to be managed in-house.

FMSS or a new managing agent was never mentioned during a June 9, 2011, meeting, even though Mr Loh had made a presentation on June 2 about the appointment of FMSS.

Ms Lim had also hinted in an e-mail on July 7 that she did not want CPG to know of FMSS.

"Can we defer the formal appointment till after Aug 1? Or do we need to get council to waive tender now... which needlessly involves CPG?" she wrote.

Mr Low had similarly expressed his desire that CPG not be around in a discussion on the appointment of FMSS, suggesting that a planned meeting should be postponed.

"If Mr Low Thia Khiang and Ms Sylvia Lim believed the waiver to be entirely above board and objectively justified, there would have been no harm in having an open discussion in front of CPG representatives at the originally scheduled date of July 21, 2011, for the second town council meeting," said Justice Ramesh.

"There was a consistent and concerted effort to keep the true facts away from CPG's eyes so that the effort to appoint FMSS without tender being called would be successful."

At the same time, Ms Lim had asked in an Aug 3, 2011, e-mail to Mr Loh if a draft report on the appointment of FMSS would "pass the auditors' eyes".

Describing this as inappropriate and a clear conflict of interest, Justice Ramesh said: "I find this to be quite extraordinary and casts serious doubt on the integrity of Ms Sylvia Lim."

He added that Mr Low had also been complicit, as he was the one who suggested that Mr Loh work on the draft report with Ms Lim.

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A version of this article appeared in the print edition of The Straits Times on October 12, 2019, with the headline AHTC case: WP leaders Low, Lim engineered plan to ensure FMSS could be appointed without tender, says High Court. Subscribe