Media Reply by the Ministry of National Development on Court of Appeal’s Judgement in the lawsuit brought about by Sengkang Town Council (SKTC) and Aljunied-Hougang Town Council (AHTC) on AHTC’s Town Councillors
The findings highlight the importance of payment controls in estate management and may prompt closer scrutiny of how town councils procure and fund residential services.
The Court of Appeal found gross negligence involving $23 million of AHTC payments to FMSS, while conflicted persons or FMSS employees co-signed $33.7 million paid to FMSS and FMSI.
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Media Reply by the Ministry of National Development on Court of Appeal’s Judgement in the lawsuit brought about by Sengkang Town Council (SKTC) and Aljunied-Hougang Town Council (AHTC) on AHTC’s Town Councillors
1 MND notes with concern the Court of Appeal’s judgement in the lawsuit brought by SKTC and AHTC. The Court of Appeal has found that AHTC’s Town Councillors (including Ms Sylvia Lim, Mr Low Thia Khiang and Mr Pritam Singh) and two former AHTC employees were grossly negligent in implementing AHTC’s payment process. The involvement of conflicted persons and the absence of safeguards created an inherent risk of overpayment.
2 The Court of Appeal found that the Town Councillors and two former AHTC employees had been grossly negligent when making $23 million worth of payments to FMSS, out of public funds. The Court of Appeal also found that all the payments to FMSS and FMSI, totalling $33.7 million, were “co-signed by Conflicted Persons or FMSS employees”.
3 In addition, Ms Lim was found to have not acted in good faith when she awarded the contracts to Red-Power Electrical Engineering Pte Ltd at rates that were four to seven times higher than those offered by incumbent vendors, Digo Corporation Pte Ltd and Terminal 9 Pte Ltd for the same services.
4 MND will continue to monitor the proceedings brought by SKTC and AHTC against the Town Councillors, including the assessment of damages by the High Court, as public funds are involved.
Ministry of National Development
7 July 2023
Annex: Summary of findings
· The Court of Appeal conclusively determined that AHTC’s Town Councillors (Ms Sylvia Lim, Mr Low Thia Kiang, Mr Pritam Singh, Mr Chua Zhi Hon, Mr Kenneth Foo) and two former AHTC employees (Ms How Weng Fan and Mr Danny Loh) were ”grossly negligent“ in implementing AHTC’s payment process, which led to the persistence of “control failures” in the payment process.
· The Town Councillors had appointed Ms How and Mr Loh, who were long-time supporters of the Workers’ Party, as the General Manager and Secretary of AHTC respectively. This is despite Ms How and Mr Loh being major shareholders in FM Solutions & Services Pte Ltd (FMSS) and FM Solutions & Integrated Services Pte Ltd (FMSI), which served as the Managing Agent and Essential Maintenance Services Unit (EMSU) contractor to AHTC.
· Between 2011 and 2015, Ms How issued payment claims to AHTC on behalf of FMSS, and subsequently approved the payments to FMSS on behalf of AHTC. Mr Loh also issued payment claims to AHTC on behalf of FMSI, while Ms How approved the payments to FMSI on behalf of AHTC. This involvement of conflicted persons and “the absence of safeguards” created an inherent risk of overpayment.
· In addition, Ms Lim was found to have not acted in good faith when she awarded the contracts to Red-Power Electrical Engineering Pte Ltd at rates that were four to seven times higher, instead of renewing contracts with incumbent vendors, Digo Corporation Pte Ltd and Terminal 9 Pte Ltd, which offered the same services at significantly cheaper rates.