SINGAPORE - The Workers' Party-run town council said on Friday (Jan 17) that it would comply with an order compelling it to restrict the powers of MPs Sylvia Lim and Low Thia Khiang, but accused the Government of making a U-turn over the matter.

It added that it had reservations about whether the order was applicable to the two MPs, who were found to have breached their fiduciary duties.

But it has decided to comply for two reasons.

One, ignoring the order could land the secretary or chairman of Aljunied-Hougang Town Council (AHTC) in jail.

Two, the town council is intent on focusing its energies on the main task of running the estates.

In a letter to the Ministry of National Development, AHTC chairman Faisal Manap said: "The town council wishes to direct its energies towards fulfilling its core functions of managing and maintaining the HDB estates in Aljunied-Hougang town for our residents."

"As such, the town council will comply with the rectification order."

In response to media queries, MND said: "We are glad to note AHTC's decision to comply, and trust that they will continue to discharge their duties and responsibilities in the best interests of their constituents."

The rectification order, issued by Minister for National Development Lawrence Wong earlier this month, required AHTC to temporarily restrict the powers of Ms Lim and Mr Low in making certain financial decisions at the town council.

It followed a High Court judgement in October that found the duo had breached their fiduciary duties towards the town council in hiring a managing agent company without calling a tender. The two MPs are appealing the judgement.

Almost a month after the ruling, Deputy Prime Minister Heng Swee Keat introduced a motion in Parliament asking the duo to recuse themselves from financial matters at the town council, and expressed disappointment that they had not done so voluntarily.

Related Story 4G leadership must and will maintain high standards of trust and integrity: DPM Heng Swee Keat on AHTC motion

AHTC later discussed the issue, but eventually voted 17 to 1 against recusal.

On Friday, AHTC released Mr Faisal's letter to MND expressing surprise that Mr Wong had invoked Section 43D(2)(b) of the Town Councils Act to issue the order.

Mr Faisal, citing the Nov 5 debate on the motion, described the latest development as "a shift by the Government from its earlier position in Parliament".

First, he said, Minister in the Prime Minister's Office and Second Minister for Finance Indranee Rajah had "affirmed" that it was up to the town council to take action and Parliament could not compel it to do so.

He added that Minister for Social and Family Development and Second Minister for National Development Desmond Lee had said Section 43(D) was passed years after the two MP's actions, and that the law could only be invoked after an investigation was carried out or if there had been a report or compliance review under the amended Act.

As such, said Mr Faisal, "we share these opinions of the minister that section 43(D) is not applicable to the facts due to the concerns about retroactivity and the pre-conditions not being met".

"We are thus doubtful as to the propriety of the rectification order issued under Section 43(D)(2)," he added, even as he said that AHTC would comply.

To this, MND said it made the order only after careful consideration and seeking legal advice.

The ministry added: "It is appropriate given the serious nature of the Oct 2019 High Court judgment."

To comply with the order, the town council said it had on Thursday (Jan 16) removed Ms Lim's powers to unilaterally incur or approve expenditure and accept or waive any quotation or tender. Mr Low was not authorised to make such decisions in the current arrangement.

The votes of the two MPs will also not be taken into account at committee meetings involving procurement and expenditure, and a resolution will be passed at February's town council meeting to remove them as cheque signatories.

In the meantime, they will not be allowed to sign any cheques, said AHTC.

In a separate statement, AHTC also made public its explanation to the MND on why it had not required the two MPs to stop making financial decisions.

Among its considerations were that Ms Lim and Mr Low had taken a political decision in the aftermath of the 2011 General Election to award the managing agent contract without tender, and did not personally benefit from doing so, said AHTC.

The two MPs had also proven themselves capable of handling financial matters over the years and the High Court judgment had not declared otherwise, it added.

The town council also said it had implemented measures, including requiring segregation of duties in procurement and payment.

MND, which oversees town councils, had said earlier that it had carefully considered AHTC's letter.

But it added when it issued the rectification order: "We note that the reasons provided by AHTC for not requiring Ms Lim and Mr Low to recuse themselves from all of AHTC's financial matters do not relate directly to, and more importantly, do not detract from the grave and serious court findings on Ms Lim's and Mr Low's conduct.

"Further, while we note the measures that AHTC has put in place, it is not apparent - and AHTC has not demonstrated - how they would be effective to guard against a recurrence of irregularities arising from the acts of dishonest town councillors."

The ministry said it would review the order after the Court of Appeal hears and decides on the appeal against the High Court judgment.

Besides Ms Lim and Mr Low, WP chief Pritam Singh and five other parties were also held accountable for improper payments made by AHTC in the civil case brought against them by the town council, which was seeking damages over a sum of $33.7 million.

The case centred on their role in awarding contracts to FM Solutions and Services and FM Solutions and Integrated Services without calling for tenders.

Pasir Ris-Punggol Town Council had also sued to recover its share of losses incurred when Punggol East constituency was run by AHTC from 2013 to 2015.

Almost all parties are appealing against the judgment, save for AHTC.