Four more former NKF directors now part of suit

Tor Ching Li
chingli@newstoday.com.sg

THE High Court yesterday approved an application for the remaining four former directors on the old National Kidney Foundation (NKF) board to be included in the civil suit filed by the new NKF.

This means that every member of the former board will be involved in the charity's attempt to recover some $12 million in salaries, benefits and losses incurred following failed contracts for IT-related services. The suit is slated for hearing next January.

Currently, only three of the seven former directors are being sued by the new NKF: Former chairman Richard Yong, former treasurer Loo Say San and board member Matilda Chua.

KhattarWong lawyer Chia Boon Teck, acting for Mr Yong and Mr Loo, applied for the remaining board members to be named as "third parties" at a pre-trial conference yesterday.

These comprise certified public accountant Alwyn Lim; Associate Professor Lawrence Chia; lawyer Kweh Soon Han; and Chow Kok Fong, managing director of Equitas Corporation. They now have two weeks to file a defence, and will appear for a third-party hearing in court on July 3.

Should the High Court find Mr Yong and Mr Loo guilty of breaching their duties as directors, the rest of the former board can now be held liable as well, and end up paying costs and damages to the new NKF — even though they were not sued by the new board.

The other two persons named in the civil suit are former chief executive T T Durai and his friend Pharis Aboobacker. The latter, who is located in Chennai, India, has yet to come to Singapore despite having been served a writ of summons and statement of claims.

If he fails to return, a default judgement can be made against him.

The High Court has also expressed interest in examining the 17 boxes of documents — a total of 55,000 pages' worth within — sent to Mr Chia's KhattarWong office by Mr Aboobacker regarding the dealings between the old NKF and two of Mr Aboobacker's companies: Forte Systems and Protonweb Solutions.

These two companies held NKF contracts, worth $7.5 million in all, for call-centre services and software development that failed to meet specifications.

Mr Chia expects this to be arranged with the prosecution within the week.

"The court has agreed to give us more time to examine the documents," said Mr Chia. The pre-trial conference for all parties to decide on the next course of action will be held on July 24. Mr Durai's pre-trial conference for his criminal case will be heard on the same day.

Mr Durai and the entire NKF board resigned last July after a public outcry over the details of his salary, which were revealed in the course of a defamation suit he brought against a local newspaper.

Senior Counsel K Shanmugan represents the NKF, while Senior Counsel Chelva Rajah will act for Mr Durai.

Four more former NKF board members included in civil suit

Time is GMT + 8 hours
Posted: 19 June 2006 1813 hrs
By Valarie Tan, Channel NewsAsia

SINGAPORE: Four more former directors of the National Kidney Foundation have been included in the civil suit filed by the new NKF management.

The High Court on Monday granted an application for the new NKF to sue Alwyn Lim, former chairman of the NKF finance committee; Chow Kok Fong, CEO of Changi Airport Managers and Partners; Kweh Soon Han, partner at law firm Kweh Lee and Partners; and Lawrence Chia, Associate Professor at NUS.

The 4 men join Richard Yong, Loo Say San and Matilda Chua who are currently facing charges.

The High Court had approved an application made by lawyers for Yong and Loo to hold all former directors accountable for the lack of corporate governance in the old NKF.

The lawyers will now proceed to make claims against the 4 parties in the case on July 3 at the High Court.

The 4 men will then have 2 weeks to file their defence.

Former NKF CEO TT Durai and his friend, Pharis Aboobacker are the other 2 names sued in the case. - CNA /dt

NKF case mystery man sends 17 boxes

His papers may help ex-directors who want to rope in the rest

Derrick A Paulo
derrick@newstoday.com.sg

He is the mystery man in the National Kidney Foundation (NKF) saga. Few had heard of Mr Pharis Aboobacker until independent auditor KPMG opened NKF's books last year.

Of the $12 million in claims sought by the new NKF board as a result of those findings, the biggest amount comes from payments to his companies. Yet, the Indian national has not stepped into Singapore despite being named a defendant in the civil suit.

On Friday, however, the elusive one was behind what may turn out to be the most significant move in the suit.

He sent 17 boxes of documents — 55,000 pages in all — from India to the law offices of KhattarWong, which is defending former board directors Richard Yong and Loo Say San against NKF's claims.

In those slightly wet cartons are all the details about the old NKF's dealings with his computer software company Forte Systems and his call centre company Protonweb Solutions.

Presumably, at least. The team at KhattarWong will now have to painstakingly trawl through the contents. But Mr Chia Boon Teck, who is the duo's lawyer, does not mind at all.

"My clients had tried to contact Mr Aboobacker, all his contacts, but nothing. Then out of the blue, I got an email in mid-May from a lawyer in India, who said he's representing him," said Mr Chia.

"But Mr Aboobacker was reluctant to get involved. A lot of phone calls were exchanged. And in the end, we didn't think they would follow through. Who would send all this without talking about costs? So, imagine my surprise."

The two companies in questions have been asked to return $5.28 million. NKF claims that they did not deliver up to the specifications. Mr Yong and Mr Loo are denying, among others, that the payments represent a breach of duty as directors.

Their lawyer was a busy man yesterday as the noose from the civil suit gets set to widen, with his clients doing some lassoing of their own.

The High Court yesterday received an application that could implicate the entire board of the old NKF. Currently, only three former directors — Ms Matilda Chia being the third — are facing claims from NKF.

But Mr Yong and Mr Loo, previously the chairman and honorary treasurer respectively of the executive committee, object to being singled out in the legal action by NKF.

So, their lawyer has filed a summons for leave to issue a third-party notice which could eventually rope in their erstwhile co-directors.

It is up to the High Court to decide on the application. If it gives the nod, which may be as early as June 19, up to four other directors may have to answer to the NKF's claims and could contribute to the cost of liability, if any is found.

Based on the two men's defence, which was amended also on Friday, certified public accountant Alwyn Lim, who was chairman of the finance committee and the main money man for the old NKF, figures prominently in some matters the duo are contesting.

The other three directors of the old board were: Mr Chow Kok Fong, the chief executive officer of Changi Airport Managers and Partners, a wholly-owned subsidiary of the Civil Aviation Authority of Singapore; Mr Kweh Soon Han, a partner in Kweh Lee and Partners; and Associate-Professor Lawrence Chia of the National University of Singapore.

The former two ceased to be directors in 2004. None of them was charged with criminal offences.

As for the criminal cases against Mr Yong and Mr Loo, a pre-trial conference is set for June 19. Investigations into the NKF scandal also led to other charges filed against former NKF chief executive T T Durai, Ms Chua and former NKF employee Ragini Vijayalingam.

It is likely these cases will be heard before the NKF civil suit.

The Court has fixed the tentative period for the civil hearing from Jan 8 to Feb 9 next year. That is only to determine if the defendants are liable. If they are, another trial is needed to determine damages.

With an additional 17 boxes of documents and possibly up to four third-party individuals, the NKF saga could drag on for a long time.

I had no part in failed contracts, says T T Durai

Tor Ching Li
chingli@newstoday.com.sg

The former chief executive of the National Kidney Foundation (NKF), Mr T T Durai, has denied allegations of mismanagement during his 13-year stewardship of the charity, pointing fingers at his board members and staff instead.

Mr Durai, who is one of five parties being sued by the new NKF for an estimated $12 million to recover salaries, benefits and failed IT-related contracts, filed his defence late on Wednesday.

Three ex-directors — former chairman Richard Yong, treasurer Loo Say San and Ms Matilda Chua — and Mr Durai's friend and business associate, Mr Pharis Aboo-backer, are also being sued by the NKF for breach of duty.

In the 40-page document — in which Mr Durai recounted his contributions to the NKF since he started volunteering in 1970 — it was stated there was "no impropriety" in the executive committee's decisions on salaries and benefits, and said he had deferred judgment to his board members on the IT contractual matters.

In their defence filed earlier, the three former board directors sang a different tune.

They denied any wrongdoing in their dealings at the NKF, insisting that it was Mr Durai who should be held accountable for all the day-to-day operations.

Mr Durai and the entire NKF board resigned last July after an unsuccessful defamation suit against a local newspaper threw up details of Mr Durai's salary, bonuses and benefits.

Meanwhile, Mr Aboobacker — whose IT companies Forte Systems and Protonweb Solutions had entered into contracts with the NKF worth millions and were paid despite not delivering up to specifications — was located in Chennai last week and issued a writ of summons.

If he does not turn up in Singapore, a judgement can be made against him by default.

Contrary to a 332-page KPMG audit report in December — that describes the NKF as an organisation which was run "on the ideas, whims and caprice of the chief executive", who was surrounded by a "coterie of long-serving assistants" — Mr Durai's defence pleads ignorance and non-participation in issues such as the failed IT contracts.

For example, the defence states that he "took no part in the NKF's evaluation of whether Forte was a suitable party to implement the IT system or in the decision-making process to award the contract to Forte".

In contrast to Mr Yong and Mr Loo's defence — which states that Mr Durai had recommended that the NKF outsource the setting up of an Indian call centre to Mr Aboobacker — Mr Durai claims that the decision was made by the executive committee based on their own judgement.

The NKF lawsuit contends that even though Mr Durai was not formally a director, under the Companies Act, he is liable to the charity as if he were a director as he had "engineered a structure within the NKF which subverted the proper checks and balances which should have acted to restrain excesses and misdeeds".

In an 85-page statement of claim filed in the High Court in April by NKF lawyers Allen & Gledhill, the organisation listed 15 separate "breaches of duty" committed by Mr Durai.

These include misleading the public, overstating costs, taking "improper" levels of compensation and permitting others to obtain improper payments.

But Mr Durai's defence sets out that he was "never a director of the NKF and he did not breach his duties as the CEO of the NKF".

Mr Durai is being represented by the law firm Tan, Rajah and Cheah.

New NKF's $12m claim

If the lawsuit is successful, Mr Durai, the three directors and Mr Pharis Aboobacker will be liable to pay:
• $2.1 million in salaries, bonuses and other benefits 'improperly' paid to Mr Durai
• $556,464 in legal costs incurred when Mr Durai and the old NKF brought a defamation suit against the Singapore Press Holdings
• $4.08 million for loss of donations in the form of Lifedrops income
• $5.28 million paid to three companies linked to Mr Aboobacker

Legal application made to include all former NKF directors in civil suit

Time is GMT + 8 hours
Posted: 09 June 2006 2037 hrs
By Pearl Forss, Channel NewsAsia

Lawyers for former NKF directors Richard Yong and Loo Say San have applied to include all the former NKF directors in the civil suit being filed by the new NKF.

Currently, only three out of seven of the former board members are being sued by the new NKF to recover more than S$12 million in damages.

The three include Yong, who was also the former chairman of the old National Kidney Foundation (NKF) and Loo, who was also the former treasurer, as well as Matilda Chua.

The new NKF management had alleged that former CEO TT Durai had manipulated the board of directors.

But in their amended defences, Yong and Loo said that though they relied on Durai's experience, skills and professionalism, at no time did they take any instruction from Durai.

They also claimed that the internal or external auditors of NKF did not raise any alarm that ought to have alerted them to any of the allegations raised in the statement of claims.

On allegations that there was a "lack of any remuneration policy" leading to the high pay of certain NKF staff, both men said that an audit committee did attend to this matter.

They added that decisions made by the finance committee were reported to the executive committee and board of directors at all times.

But both Yong and Loo stated that Matilda Chua's generous pay performance bonuses were within the authority of Durai and they were "unsure of the dates and figures".

Yong and Loo also denied that Durai made the Heads of Department report to him alone, hence allowing Durai to assume control without any effective checks and balances by the board.

Yong and Loo claimed that although Heads of Department reported to Durai on a daily basis, they also reported to the executive committee at its meetings.

On allegations that Durai frequently caused NKF to adopt irregular accounting techniques to avoid costs of a fund raising event to exceed 30 percent of gross proceeds, both men said this was an accounting issue that was handled by NKF's finance department.

They claimed that at no time did finance department, project auditors or external auditors raise any alarms that there might have been any breach of the 30/70 rule, and the NKF finance committee consistently reported that the NKF's fund raising costs never exceeded 30 percent.

It was a National Council of Social Services guideline that expenses must not exceed 30 percent of total donations collected from the public for charity fundraising.

On the new NKF's statement that allowing NKF to raise funds and train personnel overseas was not according to NKF's memorandum of association and hence a breach of fiduciary duties, Yong and Loo claimed that they believed it was permissible to do so for the benefit of the charity.

Both men also claimed that every overseas trip they made using NKF's expenses was directly or indirectly related to fund raising or staff recruitment, though the new NKF alleged that expensive overseas trips "did not generate any identifiable concepts or ideas for fund raising."

Yong and Loo were both volunteers at the NKF and never received any remuneration.

Yong volunteered for 18 years and Loo, 9 years.

Chia Boon Teck, the defence lawyer for Yong and Loo, said: "We took our client's instructions and decided that if there is any lack of corporate governance, then really it should be all the directors who would have to answer for the lack of corporate governance and not just a select few."

The other former directors who are being roped in the case include Alwyn Lim Kah Ho, Lawrence Chia Hock Leong, Kweh Soon Han and Chow Kok Fong.

Meanwhile, in a surprise move, 17 cartons of documents were received by Yong and Loo's lawyers on Friday afternoon.

The papers were sent by Pharis Aboobacker who is in India.

He is Durai's friend who is also being sued by the new NKF for more than $5 million.

It is alleged that Pharis Aboobacker's companies, Forte Systems and Protonweb Solutions, did not fulfil contracts signed with the old NKF and still received payment.

Yong and Loo's lawyers believe the papers, which contain information on NKF's dealings with both companies, might be able to prove that the old NKF's transactions with Forte and Protonweb were aboveboard.

NKF's civil and criminal suits will be heard in court again on 19 June.

Trial for the civil suit is expected to begin on 8 January next year. - CNA/ir

Durai denies former NKF exco delegated absolute power to him

Time is GMT + 8 hours
Posted: 08 June 2006 1956 hrs
By Pearl Forss, Channel NewsAsia

SINGAPORE : The National Kidney Foundation's former chief executive TT Durai has filed his defence for the civil suit brought against him by the new NKF board, denying most of the claims made against him.

He also denied that the executive committee had delegated absolute power to him.

The new NKF management has alleged that Durai engineered a structure within the organisation that subverted proper checks and balances which should have acted to restrain excesses.

But in his 40-page defence, Durai claimed he had kept the executive committee informed of all that was going on in the NKF.

He said that the committee had free access to all records and could query anything that was being reported and decide on any proposals put forward.

On his pay, Durai denied that his bonuses depended upon the success of fund raising, saying this factor was only one consideration.

He claimed all salary increases, bonuses, overtime payments and unutilised leave compensation paid to him were decided by the exco.

He added that NKF's policy of not disclosing the salaries of its employees was not to mislead the public or conceal any improper benefits.

The new NKF alleged that Durai inflated the monthly treatment costs of patients and misrepresented patient numbers to gain public sympathy and increase donations.

Durai claimed, in his defence, that he was never involved in the computation of treatment costs of dialysis patients and that patient numbers were given to him by the various departments, which obtained the information from external administrators of programmes funded by NKF.

The old NKF had also awarded contracts worth over S$5 million to Protonweb Solutions and Forte Systems, both owned by Pharis Aboobacker.

While Durai admitted that Aboobacker is a friend, he claimed he took no part in NKF's evaluation to award an IT contract to Forte Systems.

He added that the executive committee had awarded the call-centre project to Protonweb Solutions because it was the cheapest option.

The new NKF said that both companies were paid despite Forte not delivering the software on time and Protonweb Solutions not fulfilling the contract terms fully.

Durai also denied allegations that former chairman Richard Yong and former treasurer Loo Say San were his associates, and acted on his instructions.

Durai alleged it was Dr Khoo Oon Teik, who founded the NKF in 1969, who invited Yong to become a member of the exco.

As for former director Matilda Chua, Durai claimed it was "not unusual to make ex-gratia payments to departing staff".

Chua had received generous pay performance bonuses after she declared her intention to resign.

Her monthly salary was increased to S$12,500 in June 2000, and backdated to April 2000, without any exco approval.

Durai said this was because of her contributions in running the charity shows, and he claimed that the person who took over her position was paid even more.

As for expensive business trips, Durai said he flew first class as the tickets were available at a price not exceeding business class fares, and it was NKF policy that senior personnel were allowed to purchase such tickets.

Four pages in the defence statement were also spent documenting Durai's contribution to NKF, which included setting up 21 dialysis centres and three prevention centres, tying up with top medical institutions to improve the quality of medical treatment, helping the Health Ministry in setting up an emergency dialysis centre during the SARS crisis, and spearheading a five-year multi-organ donation campaign.

In their defence, Yong, Loo, and Chua claimed Durai was singularly responsible for the NKF's day-to-day operations.

The three are also being sued by the new NKF, which is seeking more than S$12 million in damages. - CNA /ct

Pharis Aboobacker found in India, served writ of summons over NKF case

Time is GMT + 8 hours
Posted: 07 June 2006 2300 hrs
By Pearl Forss, Channel NewsAsia

SINGAPORE : Pharis Aboobacker, who is being sued by the new National Kidney Foundation (NKF) to recover S$5.28 million paid to three of his firms, has been found in India and served the writ of summons.

The Indian national is a friend of former NKF CEO T T Durai.

His company Forte Systems and Protonweb Solutions had entered into contracts with NKF worth millions and were paid even when software was not delivered on time.

When the KPMG report on NKF was made public, Pharis was not in Singapore and could not be contacted.

Three weeks ago, lawyers for the new NKF obtained a writ to serve it on him overseas, and last week Pharis was located in Chennai, where the writ of summons was served.

If Pharis does not come back to Singapore, a judgement can be made against him by default.

NKF will then have to decide if they will proceed to take legal action in India's courts. - CNA/ms