Town councils did not consider WP MPs predicament at the time payments were made, argued defence lawyer

Defence lawyer acting on behalf of the Workers’ Party (WP) Members of Parliament (MPs) sued by the Aljunied-Hougang Town Council (ATHC) and the Pasir Ris-Punggol Town Council (PRPTC), Leslie Netto, argued that the town councils have neglected to take into account the context of the situation in their lawsuits.

The defence highlighted on Monday (8 Oct) an instance in which the town council was being “stripped of its own town council management computer system (TCMS) at the time of the takeover by the three WP MPs – former secretary-general Low Thia Khiang, current secretary-general Pritam Singh, and Sylvia Lim — and the other defendants.

As a result, the WP MPs, ATHC, and FM Solutions and Services (FMSS) staff were forced to configure and expand a computer management system on their own to manage the constituency.

Mr Netto represents FMSS director and shareholder How Weng Fan and her late husband Danny Loh — owner of FMSS — as well as the solutions firm itself, who are among the defendants being sued for alleged breach of fiduciary duties and making “improper” payments amounting to S$33mil.

According to Mr Netto, Ms How will testify that the TCMS was terminated by PAP-owned IT company Action Information Management (AIM), following WP’s takeover of of the former Aljunied Town Council (ATC) after their win in the 2011 General Election, and that FMSS’ rates could have cost less than ATC’s former managing agent CPG if the maintenance costs for the TCMS were taken into consideration in the audit report.  

He added that Mr Loh, Ms How and their firm “worked tirelessly” to upscale the Hougang SMC software to accommodate the size of a GRC (Group Representative Constituency), which is evidently larger than a SMC (Single Member Constituency), all whilst receiving “no remuneration” in the process. 

“Despite this, AHTC was subjected to continuing audit from 2012 to 2016,” Mr Netto emphasised, adding that “AHTC was still in the process of upscaling the computer system” in the early stages, “and yet, no one, not even KPMG or PwC, mentions this withdrawal of this vital TCMS and its effects.”

The software sold to AIM by the former management was “integral for recording management matters and financial documentation,” he noted.

Mr Netto added that the fact that the town councils’ lawsuits were “based on audit reports and not facts” was odd, and highlighted that the defendants “intend to challenge the accuracy and the correctness of these audit reports” as a result.

Another significant detail added by Mr Netto was that although Ms How and Mr Loh were officers of AHTC as deputy secretary and secretary respectively at the time, they were obligated to submit reports to AHTC during town council meetings. 

They were also obligated to seek sanctions from the superintending officer at the time (Ms Lim), who was “thorough” in her inspection and “made many inquiries”.

“No basis” to expect WP MPs and town councillors to perform fiduciary duties beyond what is stipulated by Town Councils Act: SC Rajah

Senior Counsel Chelva Retnam Rajah in his opening statement last Friday (8 Oct) argued that there is “no basis” to indicate that his clients are obligated to perform fiduciary duties beyond what is provided in the Town Councils Act and The Town Councils Financial Rules.

SC Rajah, acting on behalf of the WP MPs and two other town councillors, referred to s.52 Town Councils Act, which states that “no suit or other legal proceedings shall lie personally against any member, officer or employee of a Town Council or other person acting under the direction of a Town Council for anything which is in good faith done or intended to be done in the execution or purported execution of this Act or any other Act.”

He argued, based on the provision, that MPs have “full latitude and autonomy” in their management of their respective town councils with minimal Government intervention due to the concept of a town council itself which was established on political aims.

Citing the statement of former National Development Minister S Dhanabalan during a Parliamentary debate regarding the Town Councils Bill in Jun 1988 who said that MPs in charge of town council management have the liberty to employ the individuals they wish to employ, as well as to determine the salaries and fees paid to employees and service providers.

SC Rajah further added that among the aims of the Government in creating town councils was to encourage residents to be more conscientious in choosing their MPs, as “it is for the electorate to bear the responsibility of their choice in electing the MPs who would represent them” and manage their housing estates.

Audit reports reflect WP MPs “complete and reckless disregard of their duty” to protect residents and public funds: PRPTC’s lawyer

PRPTC’s counsel Davinder Singh in his opening statement on Friday (5 Oct) argued that findings from audit reports by KPMG and PwC revealed the alleged “complete and reckless disregard of their duty” to protect the interests of their GRC and public funds as a whole.

“Improper payments were made to benefit the elected members’ supporters who owned FMSS,” Mr Singh alleged, adding that “The system of checks and balances in the town council was so lacking and flawed that it allowed conflicted persons to enrich themselves almost at will.”

Acting on behalf of AHTC, lawyer David Chan said in his opening statement that there were 186 instances of non-compliance or “control failures” found in reports by KPMG in relation to AHTC’s spending from 2016 to this year, and that such instances were “pervasive, cutting across the key areas of governance, financial control, financial reporting, procurement and records management.”

Mr Chan added: “The circumstances were such: On one hand, we had FMSS and FMSI raising invoices; and on the other hand, we had conflicted persons with profit interests in FMSS and/or FMSI certifying that work had been done for those same invoices.”