Jan 9, 2007

Day 1 - NKF Trial

This is K Shanmugam, one of Singapore's top names among litigation lawyers. Click on the image to read his profile.

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.


Anonymous said...

The sheer irony! (Almost) everything Shanmugam said about the way Durai ran the NKF, stacked the exco with 'cronies', shunned oversight, and lacked transparency and accountability, and tried to manipulate the media sounds like what we know about the way a certain government is being run. The message seems to be that is ok for the government to run without checks and balances, but not ok for charities though I still don't understand the reason. I hope to see the day a new government or a new PAP audits its predecessor and exposes all its lapses the way the new NKF is exposing the lapses of the old NKF.

Disparaged citizen said...

What is interesting is that the NKF situation could have persisted for a longer time IF Durai had accepted SPH's settlement offer. A point which wasn't touched upon in the news.

Anonymous said...

Aye. There is definitely a scary resemblance on the tactic used by Durai when you compare them to the way of how a certain government run thing.

Anonymous said...

Why this matter is turned into a civil suit is anybody's guesses.Why no criminal charges were filed against them?

Anonymous said...

It must be painful to shoot one's own kind one's (and a member of one's inner circle at that) when he has become a liability. But then again, not everyone is capable of being sentimental.

It'll be interesting to see what the defendants' case is and whom they call as witnesses.

Anonymous said...

Since it is left to the civil suit, I doubt jail would be given. If that is so, some may feel it is a wayang show. Can anyone confirm if civil suits can result in a jail sentence?

Anonymous said...

The criminal suit is under way as well and it will take place after the civil one.

Anonymous said...

People must realise that the NKF under Durai is nothing more than a microcosm of the PAP.

Had Durai not think himself invincible and went ahead to take on folks at SPH (who are higher up in the food chain than Durai), all of us would probably still be in the dark. And the charity shows, with all the lucky draw prizes, faked tears, incessant chants of the cursed 1900 number, showbiz folks doing circus stunts.... this whole bizarre spectacle of misguided charity will go on even now in 2007.

And don't forget Ho Ching's famous letter written letter in support of Mr Durai.

NKF is the tip of the iceberg, the symptom of a much greater disease that needs to be eradicated. But will the people care?

Anonymous said...

I believe the case would still have been blown up even if Durai accepted the offer. His greed and hunger for power would have driven him to commit other mistakes. Btw, they can't trial both civil and criminal at the same time. So one after the other. I think Durai and his board will have a 'good time' these 2 years, frozen assets and all...

Anonymous said...

Bizzare, TT Durai has just surrendered tis afternoon.

Anonymous said...

'First, Mr Lee systematically set about taking complete control by subverting all the organs of the government,' said Mr Shanmugam.

'Then, secondly, he put up a shield against all external authority, such that the government, the country, became his sole fiefdom, and then used it for personal advantage and profit.'

Anonymous said...

Hi Anonymous

Which Mr Lee are you referring to? I'm sure you are not referring to him. Otherwise be careful, you may be slapped with a lawsuit before you even wake up tomorrow.

What Shanmugam has revealed today regarding Durai's alleged excesses & corrupt practices is nothing new or surprising. It would indeed come as a surprise if all our GLC are squeakly clean and are not involved in some kind of wheeling and dealing in this corporate world.

Just look at Temasek's deal with Thaksin's Shin Corp. We are still in the dark as to what has really happened - did we really incur such massive losses as reported in the foreign media. Maybe ST should start investigating Temasek for more tranparency & report any similar excesses. Then this is what I would call investigative reporting without fear or favour.

Anonymous said...

Sigh, TT Durai has surrendered prematurely. I was looking forward to meeting the ugly skeletons in the closet actually and cameo appearances of million-dollar ministers' wives.

Anonymous said...

Curiouser & curiouser... it seems the whole point of the trial was for the new NKF to put all the blame on the NKF (and conveniently leave out all the lapses of the government & regulatory authorities) & for Durai to 'plead guilty'. Was Durai so overwhelmed by the evidence even before any was presented? What happened during the course of the opening statement to warrant such a 180 degree change of mind? Or was this the 'strategy' all along?

Talk about show trial...

Anonymous said...

Looking more and more like a wayang. Uniquely Singapore!

Gilbert Koh aka Mr Wang said...

Shanmugam is less devastating than Davinder in cross-examination. But Shanmugam has more tricks up his sleeve in terms of court procedures and tactics.

Time for some speculation.

I wouldn't be surprised if Shanmugam had somehow suddenly sprung the "Mr Durai had sat through the night destroying computer files and documents" element on Durai in court.

In other words, Durai hadn't expected it. Durai may or may not even have known that the authorities had found that out. Durai would have thought it even more unlikely that Shanmugam could have found that out.

When that element was sprung in court, Durai might have panicked. The reason is that he will also be facing a criminal trial later.

Durai doesn't want to be forced to answer Shanmugam's questions in court about the destruction of computer files. Because if he answers those questions now, he will be putting himself in a corner. He will end up with a lot less room to manoeuvre in the criminal trial, because he will already have been pinned down to a specific position, by his own statements in the civil case.

What that means is that in the criminal case, he has far fewer options as to how he can spin his defence. Obviously he won't be able to say anything materially inconsistent with what he had earlier said in his civil trial, because he would look utterly discreditable in the eyes of the judge.

That may be why Durai threw in the towel so quickly, in this civil suit. He wants to maximise his chances for the criminal trial.

Anonymous said...

Durai reminds me of the Lees. Only know how to talk big and act tough, say what not afraid of being put on the stand and examined in court. But when the time comes all fold quietly without a whimper. Cowards really. NKF is really a snapshot of the PAP gahment and Durai a reflection of them self-proclaimed elites.

Anonymous said...

Mr Wang,

I'm no lawyer, but is it possible for the plaintiff to surprise the defendant on the first day of trial with the fact there was a witness who saw Durai destroying computer files? I thought the purpose of discovery was to avoid surprises.

Gilbert Koh aka Mr Wang said...

Discovery is the pre-trial process of each side allowing the other side to inspect its documents. In our case, there's no discovery issue - it's just one witness whose evidence will be that he saw Durai destroying docs. The witness himself has no documents for the defendants to discover.

Anonymous said...

Thanks for explaining. Isn't there a similar process for discovering witness' testimony beforehand, eg a list of witnesses, & what they are expected to testify to.

Gilbert Koh aka Mr Wang said...

Yes. It doesn't however preclude an "unexpected" witness from being introduced. What it does mean is that:

(a) Shanmugam would have to explain to the judge why he hadn't disclosed this witness earlier

(b) Durai will have the right to ask the judge to postpone / delay proceedings so that he and his lawyers can discuss further.

Anonymous said...

NKF - GIC, what is the difference? GIC is run just like NKF with hardly any accountability .... not even to the President (remember, a certain late President Ong who wanted more accountability) and the Parliament.

Who knows how many trillions we have in our reserve that only the "TT Durai's and his cronies" type can enjoy?

So, I can well agree with Michael re Shanmugam.

Same-same. Population still have wool over their eyes. Well done, NKF (Oops, I mean Pay and Pay ....).