Workers' Party MPs found to have breached duties, liable for damages suffered by AHTC

(From left) Workers' Party ex-chief Low Thia Khiang, WP secretary-general Pritam Singh and WP chairman Sylvia Lim. (Yahoo News Singapore file photos)
(From left) Workers' Party ex-chief Low Thia Khiang, WP secretary-general Pritam Singh and WP chairman Sylvia Lim. (Yahoo News Singapore file photos)

SINGAPORE — Three Aljunied GRC MPs – the Workers’ Party (WP) chief Pritam Singh, Sylvia Lim and Low Thia Khiang – were on Friday (11 October) found to be liable for damages suffered by Aljunied Hougang Town Council (AHTC), which is said to have made millions in improper payments under their watch.

High Court judge Kannan Ramesh said that Lim and Low had breached their fiduciary duties, while Pritam had breached his duties of skill and care in the hiring of the town council’s managing agent FM Solutions & Services (FMSS).

This resulted in the town council paying at least $33.7 million to FMSS from July 2011 to July 2015.

During that period, Lim was chairman of the town council, while Low was the WP secretary-general. Pritam, meanwhile, was a member of the town council’s tenders and contracts committee.

Waiver of tender was fait accompli

The breaches occurred as a result of awarding managing agent contracts and essential maintenance services contracts to FMSS.

In 2011, FMSS was awarded the contracts without a tender being called. According to the WP town councillors, this was due to urgent and very special circumstances which allowed for a waiver for such tenders under the Town Council Financial Rules.

But Justice Ramesh said there was no urgency of circumstances to justify the waiver; it was instead a fait accompli.

“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,” said Justice Ramesh in his 329-page judgment.

“I am not suggesting that Mr Low Thia Khiang and Ms Sylvia Lim were expected to have no regard to any political considerations in making their decisions, which would surely be unrealistic. However, they were expected to not subordinate the interests of AHTC, not to mention their statutory and fiduciary duties, to their own political interests,” added the High Court judge.

Systemic control failures in AHTC’s payments

Justice Ramesh also said there were systemic control failures in AHTC’s payments to FMSS and its service provider FM Solutions and Integrated Services (FMSI).

“It is not in dispute that conflicted persons, ie, persons with a shareholding interest in FMSS, were involved in the approval process for payments to FMSS and FMSI. These conflicted persons held direct ownership interests, and key management and operational positions in FMSS and FMSI, and concurrently held key management and operational positions in AHTC,” he said.

Added the judge, “This created a conflict between their obligations to act in the interest of AHTC on the one hand, and their obligations to FMSS and their profit motive arising from their interests in FMSS and FMSI on the other hand. In (auditor) KPMG’s report, this was described as an area of pervasive control failure with serious conflicts of interest, involving an unacceptably high degree of abdication of control to the conflicted persons. This exposed public funds to the risk of improper use. I agree that in the absence of safeguards, this created an inherent risk of overpayment or payment for work that was not adequately or satisfactorily completed.”

Quantum of damages to be assessed

At this point, it is unlikely that the judgment will affect Singh Lim and Low’s position as MPs, as it arises from civil proceedings. The MPs can decide whether to appeal against the verdict.

The case will now move on to a second round of hearings to determine the quantum of damages suffered by the town council, and how much it can recover from the MPs.

AHTC had asked for “equitable compensation” for any sum wrongfully paid out.

Although there had been a misapplication of AHTC’s monies, it received services in return. The loss by the town council is the difference between the amount of money paid and the value of net benefits obtained.

If the WP MPs cannot pay up, they will be made bankrupt and lose their parliamentary seats.

The full judgment is available on the Supreme Court’s website.

WP’s response to judgment

In a joint statement published on their blog, the three WP MPs said that they are reviewing the judgment carefully and will take the advice of their lawyers before announcing their next step.

Separately, Pritam said in a public WhatsApp group that the AHTC’s work “continues in earnest”.

“This afternoon, (WP MP) Faisal (Manap) and I were involved in a briefing at the AHTC office in Hougang with a team from the Municipal Services Office to discuss the evolution of the OneService app amongst other things, while Mr Low and (WP MP) Mr Png (Eng Huat) were a few hundred metres away at a meeting at the HDB Hougang branch office discussing the Neighbourhood Renewal Program in Hougang SMC,” he added.

He also thanked friends and supporters and said, “We have many more miles to go, together.”

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