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AHTC trial: Only S$15,710 recoverable, not S$33.7 million, say lawyers for Workers’ Party MPs

SINGAPORE — Back in court to round up their arguments six months after the Aljunied-Hougang Town Council (AHTC) trial begun, lawyers for the Workers’ Party (WP) Members of Parliament (MPs) said the lawsuits’ claim of S$33.7 million was “entirely speculative” and that only S$15,710 was recoverable.

SINGAPORE — Back in court to round up their arguments six months after the Aljunied-Hougang Town Council (AHTC) trial begun, lawyers for the Workers’ Party (WP) Members of Parliament (MPs) said the lawsuits’ claim of S$33.7 million was “entirely speculative” and that only S$15,710 was recoverable.

In making their final submissions to Justice Kannan Ramesh on Tuesday (April 9), the Tan Rajah & Cheah team led by Senior Counsel Chelva Rajah also stressed that the claims by the plaintiffs — the Pasir Ris-Punggol Town Council (PRPTC) and an independent panel acting on behalf of AHTC — were not for monies that were “misappropriated” or “unaccounted for”.

Rather, their claims merely called into question the manner in which the defendants managed town council monies, the lawyers added.

WP MPs Sylvia Lim, Low Thia Khiang and Pritam Singh are among eight defendants embroiled in two multi-million-dollar civil suits brought by the town councils in a saga that has gone on for almost six years. The suits allege that improper payments of $33.7 million were made by the town councils between 2011 and 2015 to FM Solutions and Services (FMSS) and FM Solutions and Integrated Services (FMSI).  

The other defendants are former town councillors Chua Zhi Hon and Kenneth Foo, as well as FMSS founders How Weng Fan and her late husband Danny Loh.

Over the course of the 17-day trial, the plaintiffs alleged that the payments made by the town councils were improper and void as these were paid out under the auspices of “conflicted persons”. Ms How was AHTC’s deputy secretary and Loh, who died in an accident in 2015, was AHTC’s secretary.

In their written submissions, AHTC’s lawyers said Mr Rajah’s team had “mischaracterised” the town council’s claim of S$33.7 million as a “blanket claim”. They said AHTC’s claim was for “equitable compensation” in respect of any losses suffered due to the breaches uncovered.

“(The defendants) are liable for substitutive equitable compensation of S$33,717,535 unless they can show an offset,” said the Shook Lin & Bok team led by Mr David Chan.

“AHTC’s primary case in respect of reparative equitable compensation is that Sylvia Lim, Low Thia Khiang, Danny Loh and How Weng Fan fall into a well-established category of fiduciaries and have committed culpable breaches of their duties.”

The defendants then have to show that losses “would still have occurred” even without their breach of fiduciary duties, added the AHTC lawyers.

Meanwhile, the lawyers continued to assert that AHTC became bankrupt and was in deep financial trouble at the end of 2014, while FMSS’ profits increased by 300 per cent.

“This is a case where the defendants have so recklessly managed, or abetted the reckless mismanagement of AHTC, such that AHTC’s own auditors had to issue a disclaimer of opinion with 13 grounds of qualifications, leading to AGO (Auditor General’s Office) and KPMG eventually uncovering a total of 185 control failures in AHTC’s governance,” said the lawyers.

S$32M ‘NOT FOUND TO BE IMPROPER PAYMENTS’

Mr Rajah told the court on Tuesday that some S$32 million was “not found to be improper payments by KPMG”.

In written submissions, his team noted that AHTC’s accountants from KPMG had themselves concluded that the “detectable” improper payments amounted to no more than S$1.52 million, of which only S$624,621 was recoverable. According to KPMG, claims for the remaining sums were “not determinable”, the lawyers reiterated.

“This suggests that for these payments, KPMG could not ascertain whether AHTC had suffered any loss,” they said, citing KPMG executive director Owen Hawkes who said on the stand that it was not possible to determine what part of the payments ought to be recovered.

The bulk of the “recoverable” amount of S$608,911 was project management fees paid to FMSS, which KPMG claimed was wrong as they were for works that were not “serious cyclical repairs and redecorations”.  

However, the Tan Rajah & Cheah team said KPMG did not undertake any investigation on-site to evaluate if that was the case, and failed to take into account the past practice of Aljunied Town Council. When it was still controlled by People’s Action Party (PAP) MPs, the town council had classified similar services rendered as project management fees, they said.

Excluding this sum, the “recoverable” amount only came up to S$15,710.

The lawyers added that even the plaintiffs did not know whether there was any loss arising from “control failures” in the rest of the S$33.7 million being claimed.

As for payments to third parties that are also under claim, only S$1,965 out of more than S$5.4 million identified as improper was “determinable”, they noted, although the plaintiffs wanted reparations for S$2.79 million that was paid to LST Architects. The sum was seen as an unnecessary cost as AHTC had chosen the more expensive firm out of two choices of consultants.

Mr Rajah’s team also took issue with how the lawsuits relied “solely” on the reports by KPMG and PricewaterhouseCoopers (PwC) — the two accounting firms hired by AHTC and PRPTC respectively to build their case in October last year — as they were not “factual witnesses”.

The lawyers also noted a discrepancy in the way AHTC and PRPTC had referred to their accountants in their closing arguments, stating that PRPTC called its accountant an “expert witness” and not a “factual witness” as AHTC had, suggesting the latter was “less certain of its position”.

Mr Rajah said the lawsuits uncovered “not a single instance of people taking money wrongly and putting into their pockets”.

“In a situation like that, you have breaches. They might not have complied with rules and regulations... (But) where is the loss, your Honour?” he added.

“We acted in what we believe is in the best interest of AHTC. We have to put FMSS on because we were going to be left without a willing managing agent. We wanted LST to be the architect because we believe they were the better and most appropriate architect.”

Pointing out that Section 52 of the Town Councils Act stated that no suit or legal proceedings shall lie personally against any member, officer or employee of a Town Council for anything done “in good faith”, Mr Rajah said: “That’s what my clients had been doing in this case — trying to do their best out of a difficult situation.”

CASE OF ‘POLITICAL OPPORTUNISM’: LAWYER    

In response, Mr Chan told the court that the plaintiffs’ issue “was really the payments system” set up by the conflicted persons, and that an absence of meaningful oversight and a lack of discipline had led to losses.

It was precisely this “controlled environment” where Ms How and Loh were allowed to approve payments to be made to themselves that resulted in auditors not being able to determine what the improper payments amounted to, Mr Chan said.

“Their case now is that S$33.7 million was paid out pursuant to underlying contracts. We say that we don’t know! We don’t know if work was performed, and if a paper trail was put in place. Only the management is able to ascertain if indeed the work was performed,” he added.

Mr Chan then reiterated that the defendants had “ulterior motives” to protect the former staff of WP-controlled Hougang Town Council, to favour Ms How and Loh by introducing a profit element for them, and to position FMSS as an alternative service provider to those already engaged by the PAP.

In closing, PRPTC’s lawyer Davinder Singh said that this case had uncovered a “disturbing picture of political opportunism”.

“It is one thing to leverage on your own merits and strengths to advance your political cause, and it is another to use the hard-earned money of innocent residents to improve your political standing and to score political points,” said the senior counsel.

Framing what the defendants did as “morally wrong”, Mr Singh said: “Today in this court of law, it is critical that the country knows that the system must work and it must work honestly, or else, there would be consequences.”

Mr Singh argued that residents would have stopped paying their service and conservancy charges if they “were told what they know today” and the “system would have collapsed”.

“The reason it didn’t collapse was because they were misled into thinking that their monies were being put into the best possible use,” he said. 

Following the one-day hearing for the lawyers to make their closing submissions, Justice Ramesh said he will deliver his verdict at a later date when it is ready.

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AHTC Workers' Party high court PRPTC

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