The Aljunied-Hougang Town Council (AHTC) is suing three Workers' Party MPs - party chairman Sylvia Lim, former chief Low Thia Khiang and secretary-general Pritam Singh - as well as two of its town councillors over $33.7 million in payments the town council made between July 15, 2011, and July 14, 2015.
The civil lawsuit, initiated by AHTC under the direction of an independent panel, alleges that the payments to its former managing agent were improper and void, as Mr Low and Ms Lim had acted in breach of their fiduciary duties.
The duo have been asked to account for the sum and to repay any money paid out wrongfully. Also named in that suit are town councillors Chua Zhi Hon and Kenneth Foo, the former managing agent FM Solutions and Services (FMSS), and the firm's owner, Ms How Weng Fan, who is also representing her late husband Danny Loh.
The Pasir Ris-Punggol Town Council (PRPTC) has also filed a suit against AHTC to recover its losses from the alleged wrongful payments.
The case is the latest turn in an ongoing saga that goes back to 2011.
AHTC had been unable to submit an unqualified set of accounts since the opposition party formed the town council in 2011, after winning Aljunied GRC in the general election that year.
The state of affairs eventually led to a special audit by the Auditor-General's Office (AGO), which found significant governance lapses at the town council.
The AGO's findings were raised in Parliament, and the town council was directed by the Court of Appeal to appoint a Big Four accounting firm to help fix its lapses and ensure compliance with the laws. AHTC appointed independent auditor KPMG in 2016 to look into its books.
KPMG foundthe governance failures at AHTC had put public funds running into millions of dollars at risk of improper use. The town council then appointed an independent panel to look into the improper payments and take follow-up action, including recovering the money.
The Workers' Party MPs and town councillors are represented by Tan Rajah & Cheah, with lawyer Chelva Retnam Rajah as lead counsel.
The independent AHTC panel is represented by a team from Shook Lin and Bok, led by lawyer David Chan. PRPTC is represented by Drew & Napier, led by Senior Counsel Davinder Singh, while FMSS is represented by Netto & Magin.