'Gross negligence': WP leaders knew of conflicts of interest but didn't address them, rules Court of Appeal

PHOTO: The Straits Times file

The Court of Appeal ruled today (Nov 9) that several senior Workers' Party (WP) leaders are liable for "gross negligence" in implementing the payments process when running Aljunied-Hougang Town Council (AHTC).

The WP leaders involved are chairman Sylvia Lim, Leader of the Opposition Pritam Singh, and the former secretary-general Low Thia Khiang.

The ruling meant that the trio may be liable for damages reaching up to the tune of $33.7 million being paid.

The five-member court said that the WP leaders had largely acted in good faith when they awarded the management agency contract to FM Solutions and Services (FMSS) without a tender soon after the 2011 General Elections.

This was in a reversal to a 2019 High Court judgment that found Low and Lim to have breached their fiduciary duties to AHTC, while Pritam had breached his "duties of skill and care".

But the WP leaders had failed to address the potential conflict of interest involved, even though they were aware of the risk of overpayments or improper payments, said the court. 

Chief Justice Sundaresh Menon, who delivered the judgment, said: "This state of affairs was allowed to persist for at least three years - from July 2011 to July 2014 - and in that period of time, AHTC disbursed over $23 million.

"The character of such neglect, in sum, was at least potentially grave. We are thus unable to see how such conduct that amounted to gross negligence can be said to have been done in good faith."

The court also found that Lim had an additional area of negligence for failing to renew certain contracts and instead, awarding them to a different firm.

The Court of Appeal's verdict is the latest development in a long-drawn political saga.

Sued over improper payments

In 2017, an independent panel appointed by AHTC, and the People's Action Party-run Pasir Ris-Punggol Town Council (PRPTC) sued Lim, Pritam and Low over $33 million in improper payments made under their watch.

This comes after the WP leaders awarded a contract without a tender to FMSS after the party won Aljunied GRC in 2011.

The company was set up by WP supporters How Weng Fan and her late husband, Danny Loh, with the former also AHTC's deputy secretary at that time.

In 2019 High Court Judge Kannan Ramesh found Low and Lim liable for the losses suffered after breaching their fiduciary duties to AHTC.

PHOTO: The Straits Times file

'Example of poor financial governance' 

In Wednesday's ruling, the court noted that the WP leaders were aware of the existence of How's and Loh's potential conflict of interest two weeks after the general election - but failed to properly address it.

While the party leaders had imposed a requirement that cheques to FMSS had to be signed by either the town council chairman or vice-chairman, CJ Menon said that it appeared to the court that the WP leaders took it on faith that the company was performing the work it was being paid to do, and trusted it to carry out the work properly and diligently.

CJ Menon added: "While this may explain why they were open to appointing FMSS to provide the services in question, it does nothing to address the need for a system to verify the payments to FMSS.

"This was exacerbated by the manifest conflicts of interest which were clearly perceived and understood by all concerned. In our judgment, this was a paradigm example of poor financial governance and a breach of the duty of care."

Potential damages will be assessed at a later date.

chingshijie@asiaone.com

No part of this story or photos can be reproduced without permission from AsiaOne.