Thursday, 27 July 2017

Workers' Party MPs sued by own Town Council AHTC over $33 million in improper payments


Aljunied-Hougang Town Council (AHTC) taking WP leaders to court to account for $33 million it paid
The MPs deny town council's allegations and say they acted in best interests of residents
By Danson Cheong and Charissa Yong, The Straits Times, 27 Jul 2017

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.





















AHTC lawsuit: How town council came to take legal action against own councillors
By Charissa Yong, The Straits Times, 27 Jul 2017

At first glance, it might seem odd that the Aljunied-Hougang Town Council is bringing a lawsuit against its own town councillors.

But the turn of events is possible because the legal action was directed by an independent panel appointed by AHTC in February.

It was created to look into and help recover improper payments made by AHTC worth $6.9 million, which was uncovered by an extensive KPMG audit last year.

The panel is chaired by Senior Counsel Philip Jeyaretnam - whose father J.B. Jeyaretnam was the Workers' Party (WP) secretary-general from 1971 to 2001 and became the first opposition MP voted in after independence.

The other panel members are Senior Counsel N. Sreenivasan and KPMG managing partner Ong Pang Thye. It can act as agents of the town council under Section 32(2) of the Town Councils Act.



The law allows a town council to delegate its powers, functions and duties to an agent such as an independent panel. Under the panel's terms of reference, it can take actions it thinks are in the best interests of AHTC. This includes prosecuting, filing appeals and acting in legal disputes and suits.

The terms of reference thus allow the panel to take legal action in AHTC's name against town council chairman Pritam Singh, vice-chairman Sylvia Lim and WP party chief Low Thia Khiang.

The other defendants are appointed town council members Chua Zhi Hon and Kenneth Foo, Ms How Weng Fan, as owner of AHTC's former managing agent firm FM Solutions and Services (FMSS) and as the representative of the estate of her late husband Danny Loh, and FMSS itself.

According to initial case details, AHTC was claiming $622,593.78 in liquidated claims from multiple parties, as well as $4,167,501.71 in unliquidated claims. However, the full statement of claim shows that the monies in question in fact come up to more than $33 million.










Financial woes began with FMSS' installation, says town council
It says WP duo breached fiduciary duties by misleading AHTC to secure managing agent's appointment
By Danson Cheong, The Straits Times, 27 Jul 2017

Shortly after the Workers' Party (WP) won Aljunied GRC in the 2011 General Election, Mr Low Thia Khiang and Ms Sylvia Lim allegedly decided that Ms How Weng Fan and her husband Danny Loh would be instructed to set up and incorporate the estate management company, FM Solutions and Services (FMSS).

The couple, longstanding WP supporters, had helped manage the estate of Mr Low's previous Hougang ward.

FMSS was incorporated on May 15, 2011, with Mr Loh as its sole shareholder and director. The company would go on to be appointed the managing agent of Aljunied-Hougang Town Council (AHTC).

This incident was the start of AHTC's "financial woes", contends a statement of claim filed by AHTC in the High Court.

The statement set out how the two MPs had breached their fiduciary duties by misleading the town council to secure FMSS' appointment, and said this was done in "bad faith and/or for improper purposes".


The town council wants both Ms Lim and Mr Low to declare that they have "breached their fiduciary duty and duty of care", and for them to give an account of $33,717,535 of payments made to FMSS and service provider FM Solutions and Integrated Services (FMSI) from July 15, 2011, to July 14, 2015.

AHTC wants "equitable compensation" for any sum that has been wrongfully paid out.

Alternatively, AHTC wants the two WP MPs 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 under the People's Action Party.

It also wants them to give an account of any profits they made in breach of their duties.

The statement alleges that Mr Low and Ms Lim had, on or before May 15, 2011, decided on behalf of AHTC to instruct that FMSS be set up, and that the company would be appointed as managing agent of AHTC without a tender being called.

This would initially be for a "transition period" of one year. Mr Loh - who died after a fall in Japan in June 2015 - would concurrently be appointed general manager or secretary of AHTC, while Ms How would be appointed deputy secretary.



AHTC also points to an e-mail sent by Mr Low to Ms How on May 19, 2011, as proof that the WP chief was aware that his instructions, once carried out, would "create a position of conflict".

In the e-mail, Mr Low mentioned a discussion with Ms Lim over the appointment of Mr Loh to his roles in the town council.

He wrote: "As for the conflict of interest, we find that it is not a big issue as all transaction has to follow the Financial Rules and (managing agent's) company is subject to the Companies Act."

The statement also alleged that in a town council meeting on Aug 4, 2011, Ms Lim and/or Mr Low had made "key misleading and/or false representations" to other town councillors - including that CPG had "indicated their desire" to be released from their agreement with the town council.

The two WP MPs also allegedly said there was no time to call for a tender for a new managing agent, and it would be in the public interest to waive calling for such a tender.

There was also no record that town councillors were told that Ms How and Mr Loh were owners of FMSS at the meeting, or that any discussion on conflicts of interest arising from their appointment took place.

Meanwhile, town councillors were also supposedly told that the terms offered by FMSS "did not put the town council worse off" than under CPG.

AHTC's statement pointed out that a report by audit firm KPMG had stated that these reasons for waiving a tender for a managing agent were false or did not justify a waiver.

After the initial first-year contract, a tender for a three-year managing agent contract was called - and it was awarded to the only tenderer, FMSS.

Outlining the payment system, AHTC said invoices from FMSS to the town council would be raised by Ms How, while Mr Loh would raise invoices from FMSI to the town council. Ms How was director of FMSS, while Mr Loh was sole proprietor of FMSI.

Ms How or the town council's deputy general manager Yeo Soon Fei - who was also a minority shareholder of FMSS - would then certify the work done.

This was done "without any second review by another town council officer/member, despite How and Yeo being interested parties to the transaction".

Approval of payment vouchers or cheques would be done in the same fashion by Ms How. Most of the cheques to FMSS and FMSI would then be signed by Mr Loh on behalf of the town council.

Such a system was incapable of providing any independent checks against the payments and safeguards to public monies held by AHTC, said the statement.

"Accordingly, no town councillor could have reasonably approved the system, without being in breach of his or her duties," said the statement.

AHTC also said it had paid "inflated rates" - about 10 per cent, or $515,733, higher for FMSS' initial first-year contract - than if CPG had been retained as managing agent.

Similarly, if AHTC had used CPG's rates between July 2012 and July 2015, it would have saved some $746,000.















WP MPs reject allegations they acted in breach of fiduciary duties
They say they acted in the best interests of residents and that their conscience is clear
By Charissa Yong, Political Correspondent, The Straits Times, 27 Jul 2017

The three Workers' Party MPs at the centre of the lawsuit brought by Aljunied-Hougang Town Council (AHTC) yesterday rejected the allegations that they acted in breach of their fiduciary duties.

"My conscience is clear. We acted in good faith and in the best interests of our residents, and there were no dishonest intentions," party chief Low Thia Khiang told reporters before his Meet-the-People Session.



He added: "The residents can see for themselves. I have been in politics for more than 20 years, and I think people know me."

Mr Low, AHTC vice-chairman Sylvia Lim and chairman Pritam Singh said they would contest the lawsuit, which was brought against them by an independent panel on behalf of the town council.

It had been served on them the night before, following the work of the panel which had been tasked with looking into improper payments made by AHTC.

The lawsuit alleged, among other things, that Mr Low and Ms Lim acted in breach of their fiduciary duties and duties of care and skill owed to AHTC.

It also accused them of setting up a faulty system which allowed the appointment of FM Solutions and Services (FMSS), the town council's former managing agent firm, despite conflicts of interest.

Ms Lim said they welcomed the opportunity to explain to the court and the public the reasons behind their decisions.

She said the town councillors "still stand firm today that what we did was in the best interests of the council, based on the information we had at the time".

Asked about the $33 million in payments which the independent panel wants them to account for, Ms Lim said this was the total value of payments made.

"We reject the allegations that these payments were unlawful and wrong, and it will be up to the court to determine what they think is a fair and correct decision," she said.

If the court finds the MPs liable to pay any amount, they will have to see if they are able to do so, said Ms Lim, who is AHTC's vice-chairman.

"If we don't, we may have to consider other options, perhaps raising funds. If we are not able to... the law will take its course," she added.

The lawsuit also alleged that the town councillors awarded contracts to an architectural firm that put in a higher bid without proper justification, in breach of duties owed to AHTC.

In a statement sent earlier yesterday, the three MPs rejected all the allegations, saying: "We have not benefited a single cent.

"In the course of these proceedings, we will be furnishing more information so that all concerned will be clearer on the issues and why we made the decisions and acted as we did," they said in the statement.

Law firm Tan Rajah & Cheah has been engaged to defend the claim for the three MPs, as well as two other defendants, Mr Chua Zhi Hon and Mr Kenneth Foo, who are appointed members of the town council.

Ms Lim said they will file further court documents for the case in the next few weeks, including a substantive defence three weeks from now.

The last two defendants are Ms How Weng Fan, who is the owner of FMSS, and FMSS itself.

The MPs did not want to get into further details like their last contact with Ms How, or the merits of their case, saying it is before the court.

The independent panel has asked Mr Low and Ms Lim, Ms How and FMSS to account for more than $33 million, for payments made to FMSS from July 2011 to July 2015.

It contends that the payments are void and is claiming equitable compensation for any losses suffered.



Last night, Mr Low rejected suggestions that the suit could damage the party's reputation or his internal standing within the party.

"I don't think Singaporeans have lost faith in us, we acted in good faith, I believe Singaporeans will trust us," he said.

Adding that he does not really care about his own popularity, he said it is important to keep one's conscience clear in politics.

Mr Low said: "If we lose our seats, the younger generation of the WP will be prepared to come forward to serve Singaporeans, so I am not worried."










AHTC lawsuit: We acted in good faith, says Low Thia Khiang
By Charissa Yong, The Straits Times, 27 Jul 2017

Workers' Party MPs Low Thia Khiang, Sylvia Lim and Pritam Singh responded to questions on the lawsuit against them. Here is an edited extract of their press conference, held before a Meet-the-People Session at Mr Low's Bedok Reservoir ward in Aljunied GRC


WILL THE SUIT ERODE TRUST IN THE TOWN COUNCIL AND WP?

Mr Low We leave it to the residents and voters of Singapore to make their judgment. I say once again here, my conscience is clear. We acted in good faith.


ON NEEDING TO ACCOUNT FOR AN AMOUNT OF $33 MILLION.

Ms Lim I think that is calculated to be the total value of the payments made. But as we said earlier, we reject the allegations that these payments were unlawful and wrong.


WHAT IF THEY ARE FOUND LIABLE FOR ANY AMOUNTS?

Ms Lim We have to look into the amount and see if we have the means to pay. If we don't, we may have to consider other options, perhaps raising funds. If we are not able to, I suppose the law will take its course.


ANY CONCERNS THAT A SUCCESSFUL LAWSUIT COULD SEE THEM LOSE THEIR SEATS IN PARLIAMENT?

Ms Lim We are aware of what the law provides for. But we welcome this opportunity to actually go into detail to explain to the court and to the public why we made certain decisions at that point in time... Of what the considerations were, and why we still stand firm today that what we did was in the best interests of the council based on the information we had at the time.


MR PRITAM SINGH'S PERSPECTIVE?

Mr Singh 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.


ON WHAT CAN BE DONE TO RESTORE THE FAITH AND CONFIDENCE OF CONSTITUENTS.

Mr Low I don't think Singaporeans have lost faith in us. We acted in good faith. I believe Singaporeans will trust us. (The) 2015 election was a testimony to us. It was worse than this. MND (Ministry of National Development) or HDB was coming up with adverse statements during the election. And the PAP (People's Action Party) brought the issue to the ground. They distributed pamphlets door to door. But we are prepared to be judged by the people... I have been in politics for more than 20 years. I think people know me.





4 committee members accused of breaching financial rules
By Danson Cheong, The Straits Times, 27 Jul 2017

The members of Aljunied-Hougang Town Council's (AHTC) tenders and contracts committee - Mr Pritam Singh, Ms Sylvia Lim, Mr Chua Zhi Hon and Mr Kenneth Foo - had breached Town Councils Financial Rules for 10 construction projects costing between $71,500 and $1,668,711, a lawsuit against the members claims.

They had failed to call a tender for each project, and did not accept the lowest bid for seven projects, according to a statement of claim filed by AHTC at the High Court.

The Town Councils Financial Rules stipulate that tenders must be called for projects above $70,000 in value, and the reasons for not accepting the lowest bid must be spelt out carefully.


The tenders and contracts committee was chaired by Mr Singh, who is also the chairman of AHTC. Mr Chua was a former member of the Workers' Party (WP) Youth Wing executive committee, while Mr Foo was WP deputy organising secretary and a candidate in Nee Soon GRC in the 2015 General Election.

Outlining why it wants to take the four defendants to task, AHTC said that instead of issuing separate tenders for each project, the council had invited a tender for consultants on a "fixed fee basis".

These pre-approved consultants would be on a panel, and the town council would then choose from this panel consultants to manage projects.

The town council selected two architects - LST Architects and Design Metabolists - to provide services in such a manner.

The statement said that despite having decided to select consultants in this manner, the council was still required to pick the "lowest-priced consultant".

It pointed out that in all 10 projects, LST Architects was engaged despite it charging higher fees in seven of them.

In one instance, where a $1,668,711 contract was awarded to LST Architects, Design Metabolists had submitted a bid of $210,000.

AHTC said in its statement that the higher-priced contracts were awarded "without adequate justification and/or recording the circumstances and reasons for doing so".

The additional cost of hiring LST Architects over Design Metabolists amounted to $2,794,560.

AHTC alleges that the committee members had breached their duty to the town council as they had an obligation to comply with the Town Councils Financial Rules. It is demanding damages or "equitable compensation" from them for their failure to call separate tenders for the 10 projects.

Alternatively, the town council is demanding damages of $2,794,560 - which is the additional amount that AHTC spent when it hired LST Architects instead of Design Metabolists.










HDB seeks advice from A-G's Chambers
By Royston Sim, Assistant Political Editor, The Straits Times, 27 Jul 2017

The Housing Board has asked the Attorney-General's Chambers for advice on the lawsuit that the Aljunied- Hougang Town Council (AHTC) has filed against its town councillors.

In a statement yesterday, HDB said it has received notice about the claim brought by an independent panel appointed by AHTC to help recover improper past payments.

HDB said it is studying the claim, and noted that the claim document sets out allegations of breaches of fiduciary duties and improper payments of town council funds, among other things.

AHTC has alleged that all payments it made to its then managing agent, FM Solutions and Services (FMSS), and service provider, FM Solutions and Integrated Services (FMSI), are null and void as its town councillors had acted in breach of their fiduciary duties.

It is demanding that Workers' Party (WP) chief Low Thia Khiang; town council vice-chairman Sylvia Lim; Ms How Weng Fan, owner of FMSS; and FMSS give an account of $33,717,535 in payments made to FMSS and FMSI from July 15, 2011, to July 14, 2015. If any sum has been wrongfully paid out, AHTC wants "equitable compensation" for it.



In its statement, HDB said the claim document contains "serious allegations of misconduct by various defendants".

Mr Low, Ms Lim and town council chairman Pritam Singh yesterday rejected the allegations that they acted in breach of their fiduciary duties. In a statement, the WP MPs said they acted in good faith and in the best interests of residents, and would contest the lawsuit.

Citing the document, HDB said: "Ms Sylvia Lim and Mr Low Thia Khiang misled the town council and gave false or inadequate reasons to justify a waiver of tender and secure FMSS' appointment as managing agent."

It also highlighted how the claim said the appointments of FMSS and FMSI were made "in bad faith" for improper purposes, and were "so unreasonable" that no reasonable town councillor would have made the same decision.

HDB noted that the independent panel is asking the court to rescind the contracts with FMSS and FMSI, and is seeking compensation for monies wrongfully paid out.

This is to be taken as the entire sum of $33,717,535, subject to Ms Lim, Mr Low, FMSS, FMSI or Ms How showing which payments were lawful, it said.





Independent panel wants to put AHTC's arbitration case on hold
By Charissa Yong, The Straits Times, 27 Jul 2017

The independent panel bringing a lawsuit against members of the Aljunied-Hougang Town Council (AHTC) also wants to suspend an arbitration case between AHTC and its former managing agent firm.

The arbitration is over payments that the firm, FM Solutions and Services (FMSS), is claiming from AHTC for services it provided under two contracts.

The first contract was from July 2011 to July 2012, and the second from July 2012 to July 2015.

Soon after the second contract ended, FMSS sent the town council a letter of demand asking for the money it said it was owed.

The parties entered mediation talks in October 2015, and arbitration proceedings after that when mediation did not succeed.

Last Friday, the independent panel, which was appointed by AHTC in February and is acting in its name, filed a writ of summons seeking a court order for arbitration to be put on hold.

In a separate lawsuit, the panel alleged that all payments made to FMSS are void, as town councillors Low Thia Khiang and Sylvia Lim had acted in breach of their fiduciary duties in signing the contracts.

The panel also alleged that the FMSS contracts themselves are void and should be rescinded.

The Straits Times understands that this is the reason why the panel is seeking a stay on the arbitration.

According to case details seen by ST, the pre-trial conference for this matter will be on Aug 10.









AHTC lawsuit raises questions over liability, implications for Workers' Party
By Rachel Au-Yong and Priscilla Goy, The Straits Times, 27 Jul 2017

The legal action taken against three Workers' Party (WP) MPs and several others in relation to more than $33 million paid to Aljunied-Hougang Town Council (AHTC)'s former managing agent FMSS and service provider FMSI will take time to play out, observers said yesterday.

But questions have been raised as to what happens if the defendants are found to be liable for improper payments, how much they might have to pay and the implications if they are unable to do so - including on the WP's future.

Singapore Management University law don Eugene Tan said: "The lawsuit could force those being sued to enter into serious negotiations for an equitable restitution that is acceptable to AHTC."

Observers say the necessary recovery of payments will likely be determined in court, and it is too early to say what can be recovered.

If they are indeed found liable, the defendants would have to compensate AHTC. If they cannot pay up, they risk being declared bankrupt and having their assets seized, lawyers interviewed said.

Mr Rajan Chettiar of Rajan Chettiar LLP said this means for those living in private property, their homes may be subject to seizure. "They can't borrow from banks and can't travel freely," he added.

TSMP Law joint managing director and senior counsel Thio Shen Yi said bankruptcy "would be an added problem for MPs, who would lose their seats".

But he said: "The onus is on the town council (to make the case) that the various members acted dishonourably. It is possible to act in good faith and still screw up."

Observers said the legal action was to be expected, given that questions had been raised over improper payments by the town councillors since the Auditor-General issued a special report in February 2015 on lapses and conflicts of interest in AHTC's accounts.



The town council has been unable to submit a clean set of accounts since it was formed after WP won Aljunied GRC in the 2011 General Election.

As a result, Deputy Prime Minister Tharman Shanmugaratnam in February 2014 directed the Auditor-General to do a special audit of its FY2012/2013 accounts. Last October, audit firm KPMG also noted that over $33 million in payments to FM Solutions and Services (FMSS) and FM Solutions and Integrated Services (FMSI) were co-signed by persons with conflict of interest or FMSS employees.

Associate Professor Lawrence Loh of the National University of Singapore's Business School said: "The lawsuit is a natural sequence of procedures that follow from the unique circumstances in the awarding of contracts by AHTC to its managing agent and service provider."

As for the political impact on the WP, Associate Professor Tan said the lawsuit is "another milestone in the long-running saga". He added: "It is not a new set of allegations, so the political impact of the suit is likely to be minimal."

However, Institute of Policy Studies deputy director Gillian Koh said the judgment will be "far more consequential" with regard to how people see the WP and its leaders than any previous actions.

There will be some who will insist the lawsuit is politically motivated, she noted. "But to do that, you would also have to argue that the WP's auditors, KPMG and the WP-appointed independent panel led by Mr Philip Jeyaretnam have also been acting with political motivation - a notion that is quite audacious and fanciful."









AHTC takes legal action against Workers' Party town councillors over past payments
Independent panel seeking to recover AHTC overpayments is behind lawsuit
By Charissa Yong and Danson Cheong, The Straits Times, 26 Jul 2017

Aljunied-Hougang Town Council (AHTC), which had appointed an independent panel to help recover improper payments, is taking several of its town councillors to court.

They include Workers' Party chief Low Thia Khiang, as well as the town council's chairman Pritam Singh and vice-chairman Sylvia Lim.

The Straits Times understands the legal action was initiated as part of the work of the panel tasked with looking into improper payments made by AHTC.

The three WP MPs were served yesterday evening with a statement of claim against them by AHTC, Ms Lim confirmed last night.

"We will respond further shortly, after we have studied the claim," she told The Straits Times.

The independent panel has the power to commence legal action on behalf of the town council for overpayments and payments without proper certification of work being done, among other things. This can include mediation, arbitration and other court proceedings.

The panel's other powers include making demands and coming to settlements on behalf of AHTC.

The Housing Board had asked AHTC to appoint a third party to recover the improper payments made from town council funds.



The independent panel appointed in February is chaired by Senior Counsel Philip Jeyaretnam. Its other members are Senior Counsel N. Sreenivasan and KPMG managing partner Ong Pang Thye.

When contacted, Mr Jeyaretnam and Mr Sreenivasan declined to comment on the lawsuit. Mr Ong could not be reached for comment. Mr Daryl Fong of Shook Lin & Bok, who was named as AHTC's lawyer in case details seen by The Straits Times, also declined to comment.

The writ of summons was filed last Friday by the town council in the High Court, over a breach of fiduciary duties. According to case details, AHTC is claiming $622,593.78 in liquidated claims from multiple parties, as well as $4,167,501.71 in unliquidated claims. Additional sums may be involved.

Besides the three Aljunied GRC MPs, other defendants named are: Mr Chua Zhi Hon, a former member of the WP Youth Wing executive committee; Mr Kenneth Foo, deputy organising secretary of the WP and WP candidate in Nee Soon GRC in the 2015 General Election; Ms How Weng Fan, owner of the town council's former managing agent firm FM Solutions and Services (FMSS); and FMSS.

A pre-trial conference date of Aug 31 has been listed.

Besides this case, AHTC also filed another writ of summons in the High Court against FMSS last Friday. This was in relation to an arbitration case over a financial dispute emerging from the lapses at the town council.

In a report last year, audit firm KPMG found that governance lapses at AHTC between 2011 and 2015 had put public funds running into the millions of dollars at risk of improper use.

It traced some of the improper payments to AHTC's then managing agent FMSS.

Ms How and her late husband, Mr Danny Loh, were owners of FMSS and held key management and financial control positions in the town council at the same time.

This meant that they effectively approved and made payments to themselves when they paid FMSS, the KPMG report found. It also raised the possibility of civil and criminal liabilities.

The report was part of the ongoing audit of AHTC following lapses flagged by its own auditors as well as by the Auditor-General's Office in a special report in February 2015.





AHTC lawsuit: WP 'risks losing support' if it fails to handle case well
Observers weigh in on how suit may hurt WP's standing, and whether it will fracture the party
By Charissa Yong and Danson Cheong, The Straits Times, 28 Jul 2017

The Workers' Party (WP) risks losing support among residents if its leaders do not handle the civil lawsuit filed by Aljunied-Hougang Town Council (AHTC) well, political observers said yesterday.

They gave two reasons why the latest turn of events was serious: First, it is now before the courts.

Second, the independent panel that directed the lawsuit in AHTC's name was appointed by the WP MPs themselves in February.

"The town council is not only being investigated, it is being sued. This is quite a big step back for them because they were the ones who appointed the members of the independent panel," said National University of Singapore (NUS) political scientist Reuben Wong.

He was one of five political watchers interviewed on how the lawsuit might affect the WP's standing among constituents and Singaporeans, and whether it would fracture the party itself.



AHTC wants party leaders Low Thia Khiang and Sylvia Lim to account for over $33 million in payments to then managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI).

It also alleges that they breached their fiduciary duties by, among other things, directing long-time WP supporter How Weng Fan and husband Danny Loh to set up FMSS.

Some will see the lawsuit as the latest salvo by the authorities against the WP, while others will be genuinely concerned, said NUS Associate Professor Bilveer Singh. "To the first group, no matter what, their faith in the party will not be affected. They will see it as continued persecution by the ruling People's Action Party (PAP)," he said.

But to the second, "much more discerning" group, the lawsuit is a credible cause for concern, he said. "They will ask, should we continue to support them? This is a society that does not tolerate mismanaging of public finances."

Observers noted that the town council's financial issues already cost the WP votes during the 2015 General Election. It held onto Aljunied GRC with a razor-thin margin of 50.96 per cent of the vote, down from 54.72 per cent in 2011, when it first won the constituency.

AHTC has been unable to submit an unqualified set of accounts since it was formed after the WP won Aljunied GRC, a point PAP candidates repeated in the 2015 polls.

Last October, audit firm KPMG also found that over $33 million in payments to FMSS and FMSI were co-signed by persons with conflict of interest or FMSS employees.

Associate Professor Wong said of the suit's impact on the WP: "If the court case does not develop in their favour, they will lose some more votes."

Added ISEAS - Yusof Ishak Institute research fellow Norshahril Saat: "If they do not come out strongly now, and fail to prove their innocence, residents will definitely be affected."

Residents had mixed views on the lawsuit, with some worried and calling for transparency, while others were unconvinced or unperturbed.

Private tutor Lisa Wu, 35, hoped a thorough investigation would shed light on the accounts.

The Upper Serangoon Road resident said: "I would appreciate transparency, and I think the WP is in a rather precarious position as it did not win by a large margin in the most recent general election."

Tutor Sharlynn Ng, 28, disapproved of the conflicts of interest in the way FMSS was appointed. "Those kind of things should be avoided. Just find another contractor," she said.

But a 50-year-old businessman and Lorong Ah Soo resident, who gave his name only as Mr Eng, said the saga had gone on for too long. He said: "We should be focusing on other important things, like how to improve our lives, especially when the economy is so bad now."

A 35-year-old IT manager who lives in Bedok Reservoir and wanted to be known only as Mr Zhou, said: "As long as the estate remains in good condition, where the lift is still working and the rubbish is still cleared regularly - which is still the case - it is of no concern to me."



Political observer Derek da Cunha said the WP should have been more open once it took over Aljunied GRC. He said: "It should have been absolutely upfront... about the institutionalised difficulties it faced in transitioning a GRC from the government to opposition control."

Publicly, more prominent party members are closing ranks behind their leaders, declaring support on Facebook. But observers noted how Aljunied GRC MP Chen Show Mao challenged Mr Low for the WP's top post in internal elections last year.

Prof Singh said: "To what extent is this issue of credibility going to intensify and ossify the internal divisions? If the party does not manage this, it might split two ways."

This would be a tragedy for opposition politics and a step back for Singapore's democratisation, he said. "But it will also be a lesson that if you are dirty, you will be destroyed," he added.

ISEAS - Yusof Ishak Institute research fellow Mustafa Izzuddin said the WP now needs to present a united and confident front. "What would be required is strong leadership by the Central Executive Council to convince its members, volunteers and supporters that the leadership is on top of things, and there is no danger the party will collapse despite the lawsuit," he said.

Additional reporting by Sean Lim and Revathi Valluvar





AHTC lawsuit: Key claims and Workers' Party response
An independent panel has brought a lawsuit on behalf of Aljunied-Hougang Town Council against its town councillors. The allegations in its statement of claim span three broad areas.
By Danson Cheong, The Straits Times, 28 Jul 2017

APPOINTING FMSS AS MANAGING AGENT

Workers' Party MPs Sylvia Lim and Low Thia Khiang had allegedly misled or made false representations to other town councillors in order to get FM Solutions and Services (FMSS) appointed as managing agent without a tender, which was against Aljunied- Hougang Town Council's (AHTC) "best interests".

This appointment was made in "bad faith and/or for improper purposes", including to benefit Mr Danny Loh - who died in 2015 - and his wife How Weng Fan, who owned FMSS.

AHTC also alleges that Mr Loh and Ms How did not declare their interest in FMSS to town councillors at a town council meeting in August 2011. Mr Loh and Ms How also "dishonestly assisted" the breaches of fiduciary duty of Ms Lim and Mr Low.


ALLOWING A FLAWED SYSTEM

AHTC alleges that Ms Lim and Mr Low had breached their fiduciary duty as they had set up or allowed a "flawed system of governance", which led to the improper payments to managing agent and service provider FM Solutions and Integrated Services.

As a co-signatory of cheques to FMSS, Ms Lim allegedly failed to conduct proper checks before signing off on the payments.

AHTC has asked Mr Low, Ms Lim, Ms How and FMSS to account for $33.7 million in payments made to FMSS, and seeks "equitable compensation" for any losses suffered from improper payments.


ENTERING INTO IMPROPER CONTRACTS WITH ARCHITECTURAL FIRM

As members of the town council's tenders and contracts committee, Ms Lim, Mr Pritam Singh, Mr Chua Zhi Hon and Mr Kenneth Foo allegedly breached the Town Council Financial Rules by not calling separate tenders for 10 construction projects. They also picked the more expensive bid for seven of these projects, which cost AHTC an additional $2,794,560.


WP'S RESPONSE

Mr Low, Ms Lim and Mr Singh have rejected all the allegations against them. They said that they acted in good faith and in the best interests of residents.

They added in a statement on Wednesday that they "have not benefited a single cent".

"We are taking legal advice and will contest the lawsuit and lay out our case vigorously in court," the trio said in their statement.





Scale and systemic nature of AHTC issues 'different'
By Danson Cheong, The Sunday Times, 30 Jul 2017

After news of the Aljunied- Hougang Town Council (AHTC) lawsuit broke, netizens drew comparisons between financial woes there and two recent governance issues in the headlines.

These were governance lapses at government agencies flagged by the Auditor-General's Office (AGO), and the corruption probe into the former general manager of Ang Mo Kio Town Council (AMKTC).

AHTC, on the directions of an independent panel, is taking some of its most senior town councillors - including Workers' Party (WP) chief Low Thia Khiang and party chair Sylvia Lim - to court to recover allegedly improper payments.

But observers note that these three issues are different in several ways, chief among them the scale and the systemic nature of the issues facing AHTC.

For one thing, AHTC has been unable to submit an unqualified set of accounts since it was formed after the WP won Aljunied GRC in 2011. This issue continued when it was reconstituted as AHPETC after the WP won Punggol East in a 2013 by-election.

Concerns over the council's finances led to Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam directing the AGO to do a special audit of the town council's FY2012/2013 accounts. After its report was published in February 2015, audit firm KPMG was directed to conduct a thorough audit as well.

In October last year, KPMG found that over $33 million in payments to the council's former managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services, were co-signed by persons with conflict of interest or FMSS employees.

In one of its audit reports, KPMG concluded that these failures were pervasive, and "there is an issue larger than the sum of individual lapses at AHTC".



In Parliament last year, Senior Minister of State for Finance and Law Indranee Rajah said AHTC's problems were "of a systemic nature", but there has been no such systemic problem in Government.

She was replying to a question from MP Liang Eng Hwa on how the AHTC governance issues differed from those flagged by the AGO in its annual audit of government agencies.

Ms Indranee also noted there was no question of personal gains or conflicts of interest in any of the lapses highlighted by the AGO, and the ministries and agencies have taken steps to rectify the weaknesses identified.

Earlier this month, the AGO released its latest report in which it rapped several agencies for lapses in controls over information technology systems, lack of financial controls and inadequate oversight over large-scale development projects.

The Ministry of Finance said in response that the public sector's system of managing public funds remains sound, and committed to take steps to fix the lapses.

Similarly, the ongoing Corrupt Practices Investigation Bureau (CPIB) probe into AMKTC's former general manager is an isolated incident. CPIB started investigating the council's former general manager and secretary, Mr Victor Wong, for alleged corruption last year.

Mr Wong, an employee of AMKTC's managing agent CPG Facilities Management, was removed from his positions at AMKTC in November last year.

When contacted last week, CPIB said it was still "looking into the matter". That being said, a CPIB investigation is criminal in nature, whereas the lawsuit that has been filed against AHTC is a civil matter.

But Associate Professor Lawrence Loh, head of the Centre for Governance, Institutions and Organisations at the National University of Singapore's Business School, pointed out that the fact that the independent panel had taken a "legal approach" strengthened the credibility of the process.

"The bottom line is to push for good governance and it is necessary that the approach to push this adds to the practice of good governance," he said.





Some time yet before AHTC case is heard in court
By Charissa Yong, The Sunday Times, 30 Jul 2017

The defendants in the civil lawsuit brought by Aljunied-Hougang Town Council (AHTC) were served with the statement of claim last week.

Law firm Tan Rajah and Cheah has been engaged to defend the claim for the three Workers' Party MPs, Mr Low Thia Khiang, Ms Sylvia Lim and Mr Pritam Singh.

It will also represent two other defendants, Mr Chua Zhi Hon and Mr Kenneth Foo, who are appointed members of the town council. Mr Chua was a former member of the WP Youth Wing executive committee, while Mr Foo is WP deputy organising secretary.

Another three defendants will be represented by Mr Leslie Netto of Netto & Magin LLC. They are AHTC's former managing agent firm FM Solutions and Services (FMSS); the firm's owner How Weng Fan; as well as Ms How in her capacity as personal representative of the estate of her late husband, FMSS co-owner Danny Loh, who died in June 2015.

Ms How, through her lawyer, declined to comment.

Ms Lim told reporters last week that she and the four other WP defendants will file court documents in the next few weeks.

First, the memorandum of appearance, which confirms they will defend the lawsuit, will be filed by the middle of this week.

Two weeks from that, they will enter their substantive defence - points that rebut the statement of claim filed against them by AHTC.

This is likely to detail why they reject allegations that they had acted in breach of their fiduciary duties; that they had set up a faulty system that allowed the appointment of FMSS; and that they entered into contracts with architects in breach of duties owed to AHTC.

A pre-trial conference, during which a registrar or judge will give court directions for administrative matters, has been set for Aug 31.

After this, a court date will be set. At the hearing, AHTC will present its legal arguments and the defendants will present their defence.

AHTC wants Mr Low, Ms Lim, Ms How and FMSS to account for $33.7 million in payments made to FMSS, and seeks "equitable compensation" for any losses suffered from improper payments.

Ms Lim said the MPs will explain why "what we did was in the best interests of the council based on the information we had at the time".

"We will be furnishing more information so that all concerned will be clearer on the issues and why we made the decisions and acted as we did," Ms Lim, Mr Low and Mr Singh added in a statement last week.

The court will have to decide if it finds the defendants liable for any amount and in this scenario, the defendants will have to get the funds required to compensate the town council. But this process will take time. Said lawyer Rajan Chettiar of Rajan Chettiar LLC: "It will be a long way before this goes to trial, more than a year or so."

SEPARATE MATTERS

On a parallel track, AHTC is also seeking to suspend an ongoing arbitration case between itself and FMSS, which is claiming payments for services from AHTC, that it says is owed to it.

The pre-trial conference for this matter has been set for Aug 10.

Separately, the Housing Board has asked the Attorney-General's Chambers for advice on the AHTC lawsuit.

The AHTC lawsuit is a civil matter, which means there is still the possibility of criminal prosecution by the AGC further down the road if it finds there are grounds for such a course of action.






Key dates
By Joanna Seow, The Straits Times, 28 Jul 2017

MAY 2011: Workers' Party (WP) wins Aljunied GRC and retains Hougang in the general election.

AUGUST 2011: WP formally takes over the running of Aljunied-Hougang Town Council. AHTC appoints FM Solutions and Services (FMSS) as its managing agent on a one-year contract.

APRIL 2012: WP calls for a tender for managing agent services, and only FMSS submits a bid.

JANUARY 2013: WP wins Punggol East in a by-election.

FEBRUARY 2013: AHTC becomes Aljunied-Hougang-Punggol East Town Council (AHPETC).





FEBRUARY 2014: Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam directs the Auditor-General's Office (AGO) to audit AHPETC's accounts after independent auditors raise questions over its financial statements.

FEBRUARY 2015: The AGO releases a special report on major lapses at AHPETC, including the management of sinking funds and governance of related party transactions leading to conflicts of interest. The report is debated in Parliament.

SEPTEMBER 2015: WP retains Aljunied GRC by a smaller margin than in 2011, and Hougang, but loses Punggol East in the general election.

OCTOBER 2015: Punggol East becomes part of Pasir Ris-Punggol Town Council (PRPTC). AHPETC is reconstituted as AHTC.

NOVEMBER 2015: The Court of Appeal orders AHTC to appoint accountants who are subject to the Housing Board's approval.

OCTOBER 2016: Audit firm KPMG, appointed by AHTC to look into its books, issues a report noting that $33,717,535 in payments to FMSS and service provider FM Solutions and Integrated Services (FMSI) were co-signed by conflicted persons or FMSS employees. AHTC denies that there was a "significant lack of oversight" over its managing agent.

FEBRUARY 2017: Following KPMG's report, an independent panel chaired by Senior Counsel Philip Jeyaretnam is appointed by AHTC to look into improper payments made by the town council.

MAY 2017: Accounting firm PwC releases a report that calls into question the propriety of all payments made under FMSS. PwC had been brought in by PRPTC to review past payments made by then AHPETC in relation to Punggol East.

JULY 2017: AHTC, under the independent panel's direction, initiates legal action against town councillors, including WP chief Low Thia Khiang and party chairman Sylvia Lim. It asks them to account for more than $33 million in payments made to FMSS and service provider FMSI, saying that these payments are null and void as the councillors had acted in breach of their fiduciary duties. The Workers' Party MPs have denied the allegations, saying they acted in the best interests of residents.






* Workers' Party MPs file defence to AHTC lawsuit, say they acted in good faith and are not liable for payments made
They also say they do not owe any special duty of care to AHTC beyond what law states
By Tham Yuen-C, Assistant Political Editor, The Straits Times, 17 Aug 2017

Workers' Party MPs Sylvia Lim, Low Thia Khiang and Pritam Singh have filed their defence in the lawsuit brought against them by the Aljunied-Hougang Town Council (AHTC), saying they are not personally liable for $33 million in payments made by the town council to its former managing agent and service provider.

The MPs, who have been asked to account for the sum, also said they do not owe any special duty of care to the town council beyond what is stated in the laws governing town councils. They pointed out that they need only to fulfil obligations imposed by these laws.

Even so, they added, they had acted in good faith and in the best interests of the town council in the appointment of its managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI).

These arguments by the trio, who lead the AHTC, are set out in a 40-page statement of defence that also covers two other defendants, town councillors Kenneth Foo Sek Guan and Chua Zhi Hon.



It is the latest turn in the long- running saga since WP took charge of the town council after it won Aljunied GRC in 2011.

Last month, AHTC, represented by Shook Lin & Bok, initiated legal action against them under the direction of an independent panel the town council appointed in February to help recover improper payments.

The town council alleged that $33,717,535 in payments it made from July 15, 2011, to July 14, 2015, to FMSS and FMSI are not valid, as the town councillors had acted in breach of their fiduciary duties.

Last night, the three MPs said their defence would deal with all the allegations made against them and which they denied.

"We maintain that, at all times, we had acted in good faith and in accordance with our duties as town councillors. Our actions had the best interests of the residents of AHTC at heart and sought to ensure that AHTC was able to fulfil all its functions and duties, notwithstanding the difficult circumstances that we were faced with," they said in their statement.

The five defendants are represented by law firm Tan Rajah & Cheah, which said: "Their duties as town councillors are no more and no less than as set out in the Town Councils Act (TCA) and the Town Councils Financial Rules."

Under the TCA, the councillors are also protected from any personal claims against them for actions they have taken in their roles, their lawyers added.

The councillors also denied that the town council had made any improper payments or suffered any loss as a result of their conduct.

AHTC had asked for "equitable compensation" for any sum wrongfully paid out, which was made in its statement of claim filed in the High Court last month.

It also wanted Ms Lim and Mr Low to be liable for $1.2 million in total - the difference between the "inflated charges" of FMSS against the rates of previous managing agent CPG Facilities Management.



The town council had pinpointed the appointment of FMSS, without a tender being called, as the start of its financial woes. It said FMSS was set up by Ms How Weng Fan and her late husband Danny Loh on the instruction of Ms Lim and Mr Low.

Both MPs, refuting allegations of wrongdoing, said they did it to ensure services to residents would not be disrupted, under a system stacked against opposition parties.

They said CPG had told them it wanted to stop providing managing agent services to AHTC, even though its contract had not ended.

Given its desire to quit, they said they did not trust it to continue to do its best for the residents and felt it was "too politically risky to retain a reluctant and unwilling managing agent".

They also said they took steps to "ameliorate" any conflicts of interest that would arise from making Ms How the town council's general manager, and Mr Loh the secretary, by requiring all payments to FMSS to be co-signed by either the chairman or vice-chairman of the town council.

FMSS and Ms How, who are also named in the suit, are represented by lawyers from Netto and Magin.

Separately, the Attorney-General's Chambers (AGC), representing the Housing Board, has written to the court to ask for permission to follow the case at all hearings. The councillors objected to the request.

The AGC said the HDB has an interest in the proceedings, which are about the recovery of improper past payments.










'Risky to retain reluctant and unwilling managing agent'
By Danson Cheong, The Straits Times, 17 Aug 2017

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.





Firm with lower bid for projects 'significantly less efficient'
By Royston Sim, Assistant Political Editor, The Straits Times, 17 Aug 2017

The Aljunied-Hougang Town Council (AHTC) had awarded contracts to a contractor with a higher bid as it had found the firm with a lower price to be "significantly less efficient", said members of its tenders and contracts committee.

In their defence filed in court on Tuesday, Ms Sylvia Lim, Mr Pritam Singh, Mr Chua Zhi Hon and Mr Kenneth Foo denied that they had breached Town Councils Financial Rules for 10 construction projects.

A lawsuit against the members claims they had breached the rules by failing to call a tender for each project and not accepting the lowest bid for seven projects - thereby costing AHTC an extra $2,794,560.

The members said they appointed LST Architects for seven projects even though it charged higher fees as they found that Design Metabolists was "significantly less efficient than LST, resulting in project delays to the detriment of the residents".

They noted that AHTC had called a tender around September 2012 to appoint consultants to a panel for a period of three years.

LST Architects and Design Metabolists - the only two firms that made bids - were appointed.

AHTC then entered into separate agreements with each firm to provide certain services at pre-agreed rates for three years, they said.

The tenders and contracts committee was chaired by Mr Singh, the current chairman of AHTC. Ms Lim is Workers' Party (WP) chairman, Mr Chua was a former member of the WP Youth Wing executive committee, while Mr Foo was WP deputy organising secretary and a candidate in Nee Soon GRC in the 2015 General Election (GE).

The members contend that "there was no longer an obligation to call tenders for consultancy services for each of the 10 projects" as AHTC had complied with the requirement under the Town Councils Financial Rules and called a tender for consultants to be on the panel.

They also noted that the former Aljunied Town Council had appointed four firms, including Design Metabolists, to a panel of consultants from April 1, 2009, to March 31, 2012. Despite having pre-agreed rates for its panel, the town council chose to ignore these rates and awarded Design Metabolists three projects based on rates in fresh quotations or tenders, they said.

They said these projects were awarded to Design Metabolists before the 2011 GE, and AHTC had inherited them after Aug 1, 2011.

They added that the committee's role was limited to vetting tendering specifications drawn up by the managing agent, evaluating bids received and awarding the tender.





AHTC lawsuit: FMSS says all payments received were proper
By Tham Yuen-C, Assistant Political Editor, The Straits Times, 18 Aug 2017

The former managing agent of the Aljunied-Hougang Town Council (AHTC) said it had not received any improper payments from the town council, challenging findings to the contrary by the Auditor-General's Office (AGO) and audit firm KPMG as unmeritorious, inaccurate and incorrect.

The claim by FM Solutions and Services (FMSS) and its owner, Ms How Weng Fan, was made in a 16-page statement of defence filed in the High Court on Wednesday, in which they said that they had acted in good faith as managing agent and had not caused any losses to the town council.

FMSS and Ms How are being sued by AHTC over improper payments that the firm received from the town council from July 15, 2011, to July 14, 2015. Also being sued by AHTC are five of its own town councillors, including Workers' Party MPs Sylvia Lim, Low Thia Khiang and Pritam Singh, who are said to have breached their fiduciary duty in appointing FMSS as managing agent, a charge they deny. The five had filed their defence in the High Court on Tuesday.

The town council, represented by Shook Lin & Bok, had initiated the legal action last month under the direction of an independent panel it appointed in February to help recover improper payments. It has pinpointed the rushed appointment of FMSS in 2011, without a tender being called, as the start of AHTC's accounting woes, and has said that $33,717,535 in payments made to the managing agent were improper and invalid.

In making its claims, AHTC referred to the findings of the AGO - which conducted a special audit of the town council after it failed to submit clean financial statements since it was formed after the 2011 General Election - and those of KPMG, which AHTC had appointed to look into its books following an order from the Court of Appeal. Both the AGO and KPMG found a flawed system of governance at the town council that was absent of any checks and balances to ensure payments to FMSS were legitimate. Ms How and her late husband Danny Loh, FMSS' owners, were respectively general manager and secretary of the town council and had approved payments to their own company.



FMSS and Ms How - by herself and in her capacity as the representative of Mr Loh's estate - are represented by law firm Netto & Magin. They also charged that the findings are "allegations without merit" and denied its "correctness and accuracy".

Ms How has never publicly commented on the audits implicating her company in the saga since WP took charge after it won Aljunied GRC in 2011.

In her joint defence with FMSS, she also asserted that the town council is barred, or stopped, from getting back its money from FMSS. This is because AHTC had voluntarily entered into a contract with FMSS, paid for the managing agent services in accordance with contractual terms, and benefited from the services provided, the defence argued.

It is "unconscionable for (AHTC) to impute fault" on FMSS, Ms How and Mr Loh and to demand they cough up money legitimately received under the contracts awarded by AHTC itself, said the defence.

AHTC had said in its claim that FMSS and Ms How had knowingly received payments known to be improper. But FMSS and Ms How said they had "acted honestly and reasonably and ought to be excused by the court", even if they had breached any trust.

FMSS and Ms How also denied any wrongdoing in the rushed appointment of FMSS, and the appointment of Ms How and Mr Loh to decision-making positions, saying this was done in good faith to avoid the disruption of services to residents caused by the town council's then managing agent, CPG Facilities Management, prematurely terminating its services.

They also said: "Sylvia Lim and Low were of the view that the functions of the secretary would not cause a conflict of interest as transactions would have to follow safeguards contained in... (the) Town Councils Act and Town Council Financial Rules."

They further said they did not owe any fiduciary duties to the council, especially since they were not council members, had no voting rights and merely acted on the instruction of town councillors like Ms Lim and Mr Low. And even if Mr Loh and Ms How could be considered fiduciaries, they "cannot be held to a standard equal to that of town councillors".







** WP town councillors abused court process in citing 'irrelevant' and 'confusing' information, says AHTC
By Danson Cheong, The Straits Times, 1 Sep 2017

The Workers' Party (WP) town councillors who are being sued for allegedly making millions in improper payments have raised confusing and irrelevant information to explain away their actions, said Aljunied-Hougang Town Council (AHTC) lawyers.

In fresh documents filed in the High Court on Wednesday, they said the town councillors - in bringing up WP chief Low Thia Khiang's experience in Hougang, and claiming the system was skewed against them - have sought to introduce information that "amounts to pleadings that are scandalous, frivolous and an abuse of process".

This could "tend to prejudice, embarrass, and delay the fair trial of the action", they added.

The lawyers, who are from law firm Shook Lin & Bok, were responding to the defence filed on Aug 15 by Mr Low and fellow WP MPs Sylvia Lim and Pritam Singh, as well as town councillors Chua Zhi Hon and Kenneth Foo.

AHTC is suing them, its former managing agent FM Solutions and Services (FMSS) as well as the firm's owner How Weng Fan over improper payments the town council made from July 2011 to July 2015.

The lawsuit was initiated under the direction of an independent panel appointed by AHTC to recover the money.



As part of their defence, the town councillors included two annexes in which they said they had no choice but to appoint FMSS as managing agent without calling a tender in 2011 because they did not want services to residents to be disrupted.

The annexes said, among other things, that AHTC's then managing agent CPG Facilities Management would not be sincere in managing an opposition town council, and the PAP may use the town council system to "trip up" the newly elected WP MPs.

The WP, which ran Hougang town council from 1991, beat the PAP team in Aljunied GRC in the 2011 General Election.

The town councillors also said they appointed a new managing agent because CPG did not have a contractual obligation to extend its services to Hougang.

Refuting this, AHTC said CPG was required to do so under its contract. AHTC pinpointed the rushed appointment of FMSS as the start of its accounting woes - more than $33 million in payments made to the firm, run by Ms How and her late husband Danny Loh, were said to be improper and invalid.

But the town councillors, Ms How and FMSS have denied these claims. They argued that under Section 52 of the Town Councils Act, they are protected from any personal claims against them for actions they have taken in their roles.

To this, AHTC said the provision does not apply as the town councillors had breached their "core fiduciary duties" and "acted in bad faith, for improper purposes". It added that the provision covers "claims brought by a party other than AHTC", and does not apply to them.

Ms How and FMSS had separately said in their defence, filed on Aug 16, that AHTC is stopped, or legally barred, from getting back its money. They said AHTC had voluntarily entered into a contract with FMSS, paid for the services in accordance with contractual terms, and benefited from the services provided.

But AHTC argued that this defence did not apply, as Ms How, who was AHTC's general manager, and Mr Loh, who was its secretary, had knowingly received money that was given to them in breach of fiduciary duty.

When approached yesterday, FMSS and the WP town councillors declined to comment.

However, Mr Singh said any response would be "undertaken through the legal process".






SDP takes issue with WP chief's defence in AHTC lawsuit
By Charissa Yong, The Straits Times, 7 Sep 2017

The Singapore Democratic Party (SDP) has taken issue with a legal defence filed by Workers' Party MPs that cited the SDP as having poorly managed several town councils.

In a statement yesterday, the SDP objected to the claim by WP chief Low Thia Khiang, which was submitted as part of his defence in a lawsuit brought by the Aljunied-Hougang Town Council.

Mr Low and his fellow Aljunied GRC MPs, Ms Sylvia Lim and Mr Pritam Singh, along with five others, are being sued over $33 million in improper payments the town council made from July 2011 to July 2015.

In defending himself, Mr Low had harked back to his experience in 1991, after he first won the Hougang single-seat constituency, saying it had been difficult to take over a town council previously run by the People's Action Party.

He also said the SDP's newly elected MPs in the single-seat constituencies of Bukit Gombak and Nee Soon Central, Mr Ling How Doong and Mr Cheo Chai Chen, "faced similar challenges when they took over the running of their respective town councils".

He added that based on feedback he "received from the ground", "poor town council management was part of the reason why the SDP lost both seats at the next General Elections in 1997".

Referring to this, the SDP said it was "manifestly unfair to say, or give the impression, that the Bukit Gombak and Nee Soon Central town councils were poorly managed".



The SDP, which is not involved in the lawsuit, said evidence like annual reports from 1991 to 1997 prove the opposite is true.

In a statement on its website, it said the reports showed its town councils had recorded yearly accumulated budget surpluses and conducted maintenance and repairs of the estates duly and efficiently.

It added that financial audits of the accounts did not flag any major problems.

The Bukit Gombak Town Council, for instance, had "accumulated enough savings to beautify and upgrade the housing estate", such as by building a clock tower, it said.

The SDP also said Mr Low's statement seemed to imply the takeover of town councils from the PAP is fraught with difficulties which contribute to the poor quality of management by opposition parties.

"This is untrue. While there will always be issues during the handover process when town councils change management, these problems are not insurmountable," it added.

The SDP said it had approached the WP as well as Tan Rajah & Cheah, the law firm representing the MPs in the lawsuit, to try to resolve the matter, to no avail.

"That said, we wish the WP well in the suit and all its future endeavours," it said.

The lawsuit was initiated under the direction of an independent panel appointed by AHTC to recover improper payments made.

The town council is suing the WP MPs, two of its town councillors, as well as its former managing agent, FM Solutions and Services (FMSS), and the company's owner, Ms How Weng Fan.

It alleged that $33,717,535 in payments made to FMSS and and its sister company, FM Solutions and Integrated Services, were not valid as the town councillors had acted in breach of their fiduciary duties.
















*** Pasir Ris-Punggol Town Council sues 3 Workers' Party MPs
By Charissa Yong, The Straits Times, 12 Sep 2017

Three Workers' Party MPs are facing a second lawsuit, this time over claims relating to Punggol East, a constituency now in the hands of the People's Action Party.

Party chief Low Thia Khiang, party chairman Sylvia Lim and assistant secretary-general Pritam Singh are being sued by Pasir Ris-Punggol Town Council (PRPTC), which now manages the affairs of Punggol East.

The trio, who are MPs of Aljunied GRC, have also been sued by the Aljunied-Hougang Town Council (AHTC).

Both lawsuits are linked to $33 million spent between July 2011 and July 2015. AHTC wants the MPs to account for the sum and to repay any money which was wrongfully paid out.

The money was allegedly paid improperly to AHTC's former managing agent FM Solutions and Services (FMSS).

FMSS, its owner, Mr How Weng Fan, and two other town councillors - former member of the WP Youth Wing executive committee Chua Zhi Hon, WP deputy organising secretary Kenneth Foo - are also included in both lawsuits.



PRPTC said yesterday that it had filed the lawsuit in July to "discharge its duty to its residents to recover what is due".

Punggol East was managed from 2013 to 2015 by the WP's Aljunied-Hougang-Punggol East Town Council (AHPETC).

It came under PRPTC after the WP lost the constituency in the 2015 General Election. AHPETC was later reconstituted as AHTC.

In its statement, PRPTC noted that it had to bring legal action as AHTC, in its current form, no longer has legal rights to make claims and seek repayment of money related to Punggol East.

The lawsuit by AHTC was initiated by an independent panel acting on behalf of the town council.

The panel was tasked with looking into improper payments made by AHTC and to recover the money.

AHTC had alleged that the three MPs breached their core fiduciary duties to the town council by appointing FMSS as managing agent.

Mr Low, Ms Lim and Mr Singh said yesterday that they had received the legal documents from Pasir Ris-Punggol Town Council.

"Our lawyers are reviewing the document. We will issue a statement after discussing the matter with them," they said in a statement posted on the WP Facebook page.
















PAP town council seeks return of over $479,000
By Danson Cheong, The Straits Times, 19 Sep 2017

Time and again, members of the former Aljunied-Hougang-Punggol East Town Council (AHPETC) - which was run by the Workers' Party - had opted for more costly contracts when they had the choice to extend existing contracts at much lower prices.

This led to additional costs of $479,000 in the management of Punggol East constituency, said lawyers for the Pasir Ris-Punggol Town Council (PRPTC) in a claim filed with the High Court obtained by The Straits Times yesterday.

They sought to show this was a pattern in the management of AHPETC. They also sought to show that its town councillors had breached their fiduciary duties and made allegedly improper payments to contractors.

PRPTC, represented by Drew & Napier, had initiated a lawsuit in July against WP chief Low Thia Khiang, party chairman Sylvia Lim and assistant secretary-general Pritam Singh. It now manages Punggol East after the People's Action Party wrested control of the single seat from the WP in the 2015 General Election.

PRPTC alleges the decisions made by the town councillors had caused it to suffer "loss and damage", and is claiming equitable compensation. Also named in its suit are Aljunied-Hougang Town Council's (AHTC) former managing agent FM Solutions and Services (FMSS), its owner How Weng Fan, and two other town councillors, Mr Chua Zhi Hon and Mr Kenneth Foo.



Separately, all seven are also being sued by AHTC, which is acting under the direction of an independent panel.

Both lawsuits are linked to the more than $33 million paid to FMSS and a related service provider between July 2011 and July 2015. AHTC wants the town councillors to account for the sum and repay any money that was wrongfully paid out.

The WP won Punggol East in the January 2013 by-election. From 2013 to 2015, it was managed by the WP's AHPETC, which was later reconstituted as AHTC.

PRPTC said in a statement last week that it had to file its own suit as AHTC, in its current form, no longer has legal rights to make claims and seek repayment of money related to Punggol East.

In its claim, PRPTC listed instances where town councillors had caused "improper payments" to be made to third parties.

It cited, for instance, a contract for conservancy and cleaning works for a zone in Punggol East. AHPETC had an option to extend the contract for a year after it expired in March 2015.

Instead, AHPETC called a fresh tender and awarded it to the same company - Titan Facilities Management. But Titan's new charge was 67 per cent higher. This amounted to an extra $423,147.

Extra costs of $27,249 were racked up in a similar fashion for servicing and maintenance of fire protection systems. For maintenance services, AHPETC chose a more expensive contractor for Punggol East, leading to extra costs of $25,920. For pest control services, AHPETC also chose a more expensive contractor - which cost Punggol East an extra $2,700.

PRPTC also claims that in November 2015, before AHPETC handed over Punggol East, it made 22 payments totalling $536,059, even though "supporting documents and/or evidence of work done were missing and/or incomplete".

That same month, payments were also made on 56 invoices, despite not being "properly authorised and/or certified" by the property manager, as mandated by the Town Councils Financial Rules. The invoices totalled $674,388.

In alleging the town councillors had breached their fiduciary duty - including the duty of not making a profit except through "legitimate entitlements" - PRPTC also said Ms How and FMSS had "been enriched" from improper payments at its expense.

It is asking the court to award it Punggol East's share of the equitable compensation or damages, plus an interest of 5.33 per cent a year on this sum.

Yesterday, Mr Singh told The Straits Times that the claim would be dealt with "through the legal process". Both AHTC's and PRPTC's lawsuits are scheduled for a pre-trial conference on Thursday.







Related








MND v AHPETC: Judge blasts WP-run council but rejects MND's oversight plea

Workers' Party Town Council "technically insolvent"

AHPETC: MND applies to court to appoint Independent Accountants to safeguard S&CC funds

AHPETC paid Managing Agent estimated S$1.6m a year more than other TCs: MND

Parliament: Debate on AGO's audit report on AHPETC, Day 1

Shanmugam: AHPETC setup designed to let friends benefit

Pritam Singh to AHPETC residents: Ask me where is your money?

Parliament: Debate on AGO's audit report on AHPETC, Day 2

AGO Audit of Workers' Party-run town council FY2012-13 accounts flags major lapses

AHPETC does badly in S&CC arrears, corporate governance in Town Council FY2013 report

AHPETC auditors' disclaimer of opinion on financial statements for FY2012

No comments:

Post a Comment