Soon after the 2011 General Election, Worker’s Party (WP) leaders waived a tender for appointing managing agent FM Solutions and Services (FMSS) for the Aljunied-Hougang Town Council (AHTC).
The leaders and AHTC councillors then faced accusations of breaching their fiduciary duties by an independent panel.
Among the accused are former WP chief Low Thia Khiang, party chair Sylvia Lim and current party chief Pritam Singh.
A 2019 High Court judgement found that Mr Low and Ms Lim had breached their duties to AHTC. Mr Singh, meanwhile, had breached his “duties of skill and care”.
The Court of Appeal has now found that the leaders and other AHTC members acted in good faith when they decided to waive the tender.
However, they were negligent in some areas, such as the payment process to FMSS and other third parties, which involved the misspending of S$33.7 million.
According to the case’s judgement on eLitigation, the Court of Appeal found that several AHTC members had acted in good faith by waiving the tender and awarding the first contract for managing agent (MA) services and Essential Maintenance Service Unit (EMSU) to FMSS.
Source: The Worker’s Party on YouTube
Further evidence also showed the councillors had taken the feedback they received seriously.
This proved that their managing agent at the time, CPG Facilities Management, might not be able to fulfil its role.
There was also no breach of duties in the awarding of the second contracts for MA and EMSU services. In these cases, the town councillors acted in good faith.
However, there was some negligence in the payment process to FMSS, service provider FM Solutions & Integrated Services (FMSI) and third parties.
They were grossly negligent in implementing the payment process to FMSS and FMSI. There was a risk of overpayment in the absence of safeguards. As such, they may be liable for damages.
Additionally, people with conflicts of interest oversaw the payment. This included How Weng Fan and her husband, Danny Loh — both of whom held key management and operational positions in AHTC while also having direct interests in FMSS and FMSI.
The court said there was no actual verification of payment for work done. Instead, it involved “tallying numbers to ensure that the figures were consistent.”
Town councillors were also aware of Ms How’s and Mr Loh’s conflict of interest as early as 19 May 2011. However, they let the situation continue for at least three years, from Jul 2011 to Jul 2014.
During this period, AHTC disbursed over S$23 million under the contracts.
The judge noted that the town councillors appeared to believe that FMSS was performing the appropriate work as stated on their contracts.
“In our judgment, this was a paradigm example of poor financial governance and a breach of the duty of care,” said the Chief Justice. The court will be dealing with the exact damages for the negligence at a later stage.
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Featured image adapted from The Worker’s Party on YouTube.
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