Workers' Party MPs Sylvia Lim and Low Thia Khiang will not need to recuse themselves from all financial matters, the Aljunied-Hougang Town Council (AHTC) said.
The town council said in a statement yesterday that a decision had been made at its recent quarterly meeting, at which the council voted 17 to one against the recusal.
The resolution was passed as a secret vote. Ms Lim and Mr Low were both absent from the meeting.
Parliament had previously voted on Nov 5 in favour of a motion calling on Ms Lim and Mr Low to discharge themselves from all financial matters at the AHTC.
The motion was introduced by Deputy Prime Minister Heng Swee Keat after a High Court verdict released in October found that they had acted dishonestly.
Mr Heng made the point that if AHTC were a company, Ms Lim and Mr Low would not be allowed to carry on in the same roles and enjoy the same degree of financial oversight over public funds.
The vote saw 52 MPs supporting the motion and all nine WP MPs voting against it. Two Nominated MPs abstained from voting.
Following the motion, on Nov 7, Mr Low told reporters that he would refrain from participating in any meeting or discussion by the AHTC on whether he and Ms Lim should recuse themselves from all its financial matters.
In a judgment released on Oct 11, High Court Judge Kannan Ramesh found that Ms Lim and Mr Low had breached their fiduciary duties towards the town council, and were liable for losses suffered by the town council, which is said to have made millions of dollars in improper payments under their watch.
Judge Ramesh also found them liable for losses suffered by the Pasir Ris-Punggol Town Council, which had also sued to recover its share of losses incurred when Punggol East constituency was managed by the WP-led town council from 2013 to 2015.
In awarding contracts to FM Solutions & Services (FMSS) and FM Solutions and Integrated Services (FMSI) without calling a tender, Ms Lim and Mr Low had put their own political interests above the interests of their residents, he said.
FMSS was brought in by the opposition MPs after the 2011 General Election to provide estate management services. It was owned by the late Danny Loh and his wife How Weng Fan, later revealed to be the secretary and general manager of the town council respectively.
Justice Ramesh also found that the owners of FMSS and FMSI had breached their fiduciary duty, and three other town councillors, including an MP for Aljunied GRC, WP chief Pritam Singh, had breached their duty of skill and care.
Mr Low and Ms Lim are challenging the High Court's decision.
The points of contention include that they owe fiduciary duties to the town council; that they are liable for compensation over certain sums paid by the council; that they are not protected from personal liability under the Town Councils Act; and that they breached Rule 74 of the Town Councils Financial Rules on tender processes. This is according to the notices of appeal they filed on Nov 11 with Mr Singh and AHTC town councillors Kenneth Foo Seck Guan and Chua Zhi Hon.