Aljunied-Hougang Town Council (AHTC) is taking some of its most senior councillors - including Workers' Party (WP) chief Low Thia Khiang and party chairman Sylvia Lim - to court to account for more than $33 million in payments made to its former managing agent and service provider.
AHTC alleges that the payments it made to managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services, from July 15, 2011, to July 14, 2015, are null and void as the town councillors had acted in breach of their fiduciary duties - a charge they strongly deny.
AHTC initiated the legal action under the direction of an independent panel it appointed in February to help recover improper payments, as first reported by The Straits Times yesterday.
It is demanding that Mr Low, Ms Lim, FMSS owner How Weng Fan and FMSS give an account of the $33,717,535 in payments.
AHTC wants "equitable compensation" for any sum that has been wrongfully paid out.
At the very least, it wants Mr Low and Ms Lim to be liable for a sum of $1,261,773 - which it claims was the difference in fees between the "inflated rates" charged by FMSS and the rates it would have paid under CPG Facilities Management, the previous managing agent.
AHTC claimed that Mr Low and Ms Lim had acted in bad faith and misled other town councillors in order to justify installing FMSS as the managing agent without a tender. They then "set up and/or allowed a system" that made it possible for FMSS and its officers to "benefit themselves".
"No town councillor could have reasonably approved the system, without being in breach of his or her duties," said AHTC.
The town council, represented by lawyer David Chan from Shook Lin & Bok, set out its demands in a statement of claim filed in the High Court.
The independent panel that directed the action is chaired by Senior Counsel Philip Jeyaretnam and includes Senior Counsel N. Sreenivasan and KPMG managing partner Ong Pang Thye.
The WP MPs have denied the allegations.
Speaking to the media last night, Mr Low thrice said that his conscience is clear.
"We acted in good faith and in the best interests of residents - the residents can see for themselves," said Mr Low, who was flanked by Ms Lim and town council chairman Pritam Singh, also a defendant in the suit.
Ms Lim and Mr Singh said they welcomed the opportunity to tell their side of the story in court.
Mr Singh said: "It is my firm conviction that we acted in good faith. We are not in politics for the purposes of enriching ourselves and things of that nature."
In a statement released earlier yesterday, the WP MPs said they "will contest the lawsuit and lay out our case vigorously in court".
They have engaged Senior Counsel Chelva Retnam Rajah from Tan Rajah & Cheah to represent them. A pre-trial conference has been scheduled for Aug 31.
Besides the three MPs, other parties named in the suit include two town councillors, Mr Chua Zhi Hon and Mr Kenneth Foo.
The two, along with Ms Lim, were part of the town council's tenders and contracts committee, which was chaired by Mr Singh.
AHTC claims the four breached their duties by causing the town council to enter into contracts in contravention of the Town Councils Financial Rules.
In a separate statement, the Housing Board said it is studying the details of the claim, and has asked the Attorney-General's Chambers for advice on the lawsuit.