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Pritam: Work continues at AHTC as WP MPs study court's decision

Pritam: Work continues at AHTC as WP MPs study court's decision

Source: Straits Times
Article Date: 12 Oct 2019
Author: Rei Kurohi and Linette Lai

Work at the Aljunied-Hougang Town Council (AHTC) continues in earnest, Workers' Party (WP) chief Pritam Singh said, even as he and fellow Aljunied GRC MPs Sylvia Lim and Low Thia Khiang study a High Court judgment issued yesterday.

Work at the Aljunied-Hougang Town Council (AHTC) continues in earnest, Workers' Party (WP) chief Pritam Singh said, even as he and fellow Aljunied GRC MPs Sylvia Lim and Low Thia Khiang study a High Court judgment issued yesterday.

"We are reviewing the judgment carefully and will take the advice of our lawyers before announcing our next step," Mr Singh said in a Facebook post yesterday evening.

In a 338-page judgment released yesterday afternoon, High Court judge Kannan Ramesh found the trio liable in a case involving the misuse of town council funds.

Following the judgment's release, most of the 20 residents in Aljunied GRC and Hougang interviewed told The Straits Times that they were not surprised by the verdict, but hoped that the outcome would not disqualify the trio from being MPs.

A second round of hearings will be held to assess and determine the quantum of damages suffered by the town council, and how much it can recover from the MPs, if they decide not to appeal, or do not succeed in an appeal.

They could be disqualified from being MPs or contesting elections if they are unable to pay the damages and declared bankrupt.

Several residents said they hope voters will be able to decide whether to still support the WP MPs at the polls.

"It is not a criminal case. They have not committed a crime. They made a mistake, and I am sure they won't make the same one again," said administrative assistant Rasyidah Suradi, 34, from Serangoon.

"I think they should be given a chance, and the voters will decide."

Information technology administrator Raju Selvaraj, 46, said he will wait for the final verdict before making any judgment.

He also noted that the alleged amount of improper payments is "no small sum".

FM Solutions and Services (FMSS), the managing agent hired by Mr Low and Ms Lim in 2011, is said to have received some $33.7 million in improper payments from the town council from July 2011 to July 2015.

"If they really did something wrong, they should be accountable for it. I hope they can offer an explanation or even an apology," Mr Raju added.

A 37-year-old Singapore Armed Forces regular serviceman, who wanted to be known only as Mr Khoo, said he will be "thinking carefully" before casting his vote in the next general election.

"The case seems complicated, but it is really about trust. It feels like they haven't been totally transparent about how they handled it. As leaders, they must show they can be trusted."

The fallout on the WP's leadership, the party's status and its place in Singapore's politics and society could be serious if the damages are large enough to bankrupt the MPs, National University of Singapore political scientist Bilveer Singh said.

He added that there is also likely to be increased public scrutiny of similar fiduciary failures and lapses, whether by the opposition or the ruling People's Action Party.

"The lesson from the Workers' Party case is that no one in Singapore who is an elected official and holds the public trust should be in any way allowed to mishandle precious public funds, be it in the Government or the opposition," he said.

Political observer Derek da Cunha said the judgment was a cloud over the WP, and this could make it politically advantageous for the PAP to call for a December election, if the Electoral Boundaries Review Committee releases its report in the next two weeks.

"This is not just because of the cloud over the Workers' Party, but it also obviates the need for the Government to turn next year's Budget into an election Budget," he said.

"There is also the other issue of uncertain economic conditions in 2020, which has become an increasingly obvious issue."

Next step is to determine amount defendants must pay town councils

The next stage of a long-running civil suit brought against eight defendants, including three Workers' Party (WP) MPs, involves determining what monies they owe and must pay to two town councils: Aljunied-Hougang and Pasir Ris-Punggol.

This amount hinges on the town councils showing the courts what their "true or proper loss" is.

In the case of Aljunied-Hougang Town Council (AHTC), the final amount owed would be derived from the $33.7 million which, Justice Kannan Ramesh said yesterday, consisted of improper payments that AHTC had made to its managing agent FM Solutions and Services (FMSS) between 2011 and 2015.

Meanwhile, Pasir Ris-Punggol Town Council (PRPTC) is suing the same defendants over claims related to Punggol East constituency.

The single-member constituency changed hands in the 2013 by-election and came under AHTC, which was renamed AHPETC. The People's Action Party took back the constituency in the 2015 polls.

Yesterday, Justice Ramesh said the final sum AHTC can recover, including funds related to Punggol East constituency, must take into account the services it received.

This sum is the difference between what was paid and the value of the net benefits obtained by AHTC, he wrote.

The three MPs leading AHTC then were former WP chief Low Thia Khiang, chairman Sylvia Lim and current WP chief Pritam Singh.

The trio are consulting their lawyers on the judgment. Should they appeal, they have to file it by next month.

Justice Ramesh's verdict brings to a close the trial's first tranche, which is to determine liability.

If there is no appeal, the next stage of the trial would be to determine damages.

Yesterday, the judge noted the $33.7 million consisted of payments from two major contracts AHTC had awarded to FMSS and its sister company. He said the payments could be taken to involve the misapplication of the town council's funds.

But since the AHTC had received the relevant services, the "loss cannot possibly be as much as the full amount disbursed under the impugned contracts", he added.

During the trial last year, the town councillors' lawyer Chelva Rajah said the maximum amount they should pay is around $620,000.

He had argued that auditing firm KPMG, which looked through the town council's books, could detect only $1.5 million in improper payments. It concluded that only $624,621 was recoverable, while the rest was "undeterminable".

The legal burden of proving loss falls upon the plaintiffs, said Justice Ramesh, adding that they must prove the defendants' breach was the "but-for" cause of their loss.

The "but-for" cause is a legal term to show that something would not have happened but for the contributing factor.

The judge also gave guidelines for the other remedies sought by AHTC and PRPTC on the defendants' breach of fiduciary duties.

For example, they can try to get FMSS and its co-owners, Ms How Weng Fan and the estate of her late husband Danny Loh, to repay any profits earned from the AHTC contracts. But the plaintiffs would have to choose between recovering these profits or asking the defendants to compensate them for the losses.

The judge also noted that the contracts are voidable as they were entered into in breach of fiduciary duty, which means the plaintiffs may seek to rescind them.

But doing so would require AHTC to return the benefits, which in this case are the services.

He refuted the plaintiffs' argument that the contracts can be declared void from the start as they are unlawful, saying AHTC did not lack the capacity to enter into these contracts.

The judge also rejected PRPTC's submission that the defendants are responsible for wrongful payments under the Town Council Financial Rules. There was no evidence these were made without authority or were wrongful because of an incorrect certification, he added.

The judge has allowed the plaintiffs to seek from the town councillors and the other defendants the costs of investigating their breaches of duty.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.



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Singapore Law Watch / 13 Nov 2019

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