I don't really have much to say about the NKF trial at this point. I'm posting the article below mainly for future reference.
ST Jan 9, 2007
Durai controlled NKF for personal profit, court told
He ran foundation like his sole fiefdom, says lawyer
Destruction of evidence among new disclosures
By Associate Editor, Bertha Henson
IN ONE corner of the courtroom was the former face of the National Kidney Foundation (NKF) - former chief executive T.T. Durai. With him were former chairman Richard Yong and former treasurer Loo Say San.
Together with former board member Matilda Chua, who sat conspicuously apart from them, they had been named as members of Mr Durai's 'inner circle'.
Or 'cronies', as NKF lawyer K. Shanmugam preferred to describe them - until Judicial Commissioner Sundaresh Menon told him to drop it.
Mr Shanmugam then described them as 'the people who completely abdicated their responsibilities and behaved completely dishonourably'.
The lawyer was on his feet all day, the first day of what is expected to be an eight-week battle between the new NKF and old one.
The new NKF is seeking more than $12 million from the four and the absent Mr Pharis Aboobacker, an Indian national who was behind several botched NKF deals.
It is arguing that the four breached their duties as directors, using the charity to their own advantage and causing it to pay out more money than it should.
As was the case the last time the NKF went to court - in July 2005 to sue Singapore Press Holdings (SPH) for defamation - disclosures came fast and furious.
In 2005, the public was told, among other things, of Mr Durai's generous pay and perks, which included first-class air travel.
Yesterday, what caused the most gasps was how Mr Durai had 'sat through the night' destroying computer files and documents after NKF withdrew its defamation suit on July 13, 2005. A few days later, the tax authorities moved into the NKF building in Kim Keat to sequester all its files.
The destroyed files had to do with Mr Durai's connections with companies run by Mr Aboobacker.
Clearly, Mr Durai and his inner circle knew that they had something to hide, Mr Shanmugam told the court.
Like auditor KPMG's report on the NKF, made public last January, Mr Shanmugam yesterday painted a picture of Mr Durai as a man who pulled all the strings.
Mr Durai's power in the NKF was so great that he should be considered a de facto director or shadow director, and subject to the responsibilities that directors have under the Companies Act. This responsibility was more onerous, given that he was running a charity, which was dependent on public donations.
At the very least, he was guilty of neglecting to discharge his duties as its CEO, putting his personal interests before the charity's.
'First, Mr Durai systematically set about taking complete control by subverting all the organs of the company,' said Mr Shanmugam.
'Then, secondly, he put up a shield against all external authority, such that the company, the charitable foundation, became his sole fiefdom, and then used it for personal advantage and profit.'
Mr Durai's strategy was simple: pack the board with his friends, get them to delegate authority to the Executive Committee, and get the Exco to transfer power to him.
He decided how much information to disclose, and was not above lying.
The Exco, for example, was not told about SPH's attempts to settle the defamation action instead of going to court.
They were told instead that SPH would fight the case.
Nor were they informed of a Queen's Counsel's advice on the risks of going to court as financial management issues would form part of SPH's scrutiny.
Instead, they were told that the NKF had a good case, for which Mr Durai was hoping to get $20 million in damages, an unprecedented sum in Singapore courts.
It wasn't just the Exco that was hoodwinked.
Mr Durai also orchestrated mass campaigns to champion his cause, ghost-writing letters to the press. the court was told.
In public, Mr Durai took the stance that the NKF was a transparent organisation, accountable to the regulatory authorities.
He also announced the setting up of an internal audit committee with much fanfare and pointed to the presence of a Finance Committee.
But this was just so much 'smoke and mirrors', said Mr Shanmugam.
The audit committee did not meet for almost three years because Mr Durai would not back its recommendations.
The Finance Committee dealt mainly with investments, not financial oversight.
The truth was that Mr Durai was averse to any kind of oversight, whether by its first overseer, the National Council of Social Service, or its second, the Health Ministry.
It made clear that the NCSS had no business looking into its accounts.
The relationship got so bad that the NKF left the umbrella body in 2000 to come under the Health Ministry's supervision.
Even then, it resisted attempts by the ministry to have an observer at its meeting, preferring to treat her as a 'spy''.
Said Mr Shanmugam: 'It's a disparity between the public position and the reality that is disconcerting.'
That lack of transparency was most apparent when it came to the question of how much he was being paid.
His total pay package was such a closely-guarded secret that Exco members learnt about it only from news reports on the defamation case.
Mr Shanmugam, who will complete his opening statement today, has lined up 26 witnesses. They include a witness who saw Mr Durai destroy documents.