PAP hits back on WP town council issue
Minister Khaw Boon Wan rebuts WP's Sylvia Lim's comments on AHPETC issue
There seems to be no let-up on what has become one of the major issues of this election - the Workers' Party-run town council.
Two People's Action Party (PAP) ministers hit back yesterday at assertions made by the WP on this issue in its first rally in Hougang on Wednesday.
Ms Sylvia Lim, the immediate past chairman of the Aljunied-Hougang-Punggol East Town Council (AHPETC), had denied the council was in trouble and accused the PAP of spinning four myths about it.
And WP chief Low Thia Khiang maintained that if WP had done something wrong, they would have gone to jail.
Law and Foreign Affairs Minister K. Shanmugam retorted yesterday: "So you can pretty much do anything you like as long as you don't go to jail. That is the standard WP has set for their candidates."
He added: "Another observation the High Court made was that if this kind of conduct had taken place in a public company, it probably would attract criminal sanctions."
On a break during a walkabout in Woodlands yesterday, National Development Minister Khaw Boon Wan went through the four issues Ms Lim had described as myths.
He said: "I think it's my duty to point out the distortions, what are the facts, what are the half-truths and what are the semi-truths."
WP RESERVED CONTRACTS FOR FRIENDS
What Ms Lim said:
The Town Council (TC) had called for open tenders, except for the management agent (MA) contract in 2011. This was because the former MA of Aljunied TC, CPG Facilities Management, wanted to terminate the contract. Computer software was also terminated with one month's notice by Action Information Management (AIM).
What Minister Khaw said:
Ms Lim said it was CPG that asked to terminate the contract in "late May" 2011. But contractually, CPG could not terminate unless the TC agreed. Ms Lim agreed.
FM Solutions and Services (FMSS) - AHPETC's MA from 2011 to July 2015 - was set up on May 15, 2011, seven days after the GE results. It was formed as a limited exempt private company, which means there was no need to file accounts.
CPG handed over to FMSS under Ms Lim's supervision. She thanked CPG for it. AIM's contract was extended twice at Ms Lim's request. She thanked AIM for extending.
AHPETC OVERPAID ITS MA
What Ms Lim said:
The allegation was not made by the Auditor-General's Office (AGO) or auditors, but by MND.
MA rates also vary across other TCs. MA rates for FMSS took into account MA rates under CPG and other additional costs.
The TC does not check profitability before awarding a contract.
What Minister Khaw said:
It was the AGO that uncovered overcharging by FMSS due to misrepresentation, and FMSS had to pay back.
Per unit MA rates for FMSS in 2011 was 20 per cent higher than CPG in 2010.
Now we also know that FMSS' profit margin was over 30 per cent.
The media reported that the TC had also been quietly trying to recover $450,000 and withheld payment to FMSS of $3.52 million.
FMSS ISSUED INVOICES AND CHECKED ITS OWN WORK
What Ms Lim said:
Cheques are counter-signed by her, Mr Png Eng Huat or Mr Pritam Singh (the TC's immediate past vice-chairmen).
Now AHPETC is managed in-house and is doing fine.
What Minister Khaw said:
The AGO found lack of controls over related-party transactions with FMSS. What happened before under FMSS could only be properly examined with a forensic audit. But WP refused such an audit.
AHPETC IN FINANCIAL DIFFICULTIES
What Ms Lim said:
The TC incurred significant but necessary costs in the initial stages. The TC has now managed to turn things around. It is in surplus if government grants are disbursed.
What Minister Khaw said:
The TC had no clean and unqualified accounts for the last four years. The latest is still qualified.
The AGO audit concluded that until the TC's weaknesses are resolved, there's no assurance that public monies can be safeguarded. This is why grants had to be withheld.
Ms Lim asked and MND agreed to disburse the grants for the sinking fund on provision of the TC's current financial status. There have been three reminders but still no response.
But MND is still prepared to consider.
ABOUT THE AHPETC SAGA
The Aljunied-Hougang-Punggol East Town Council (AHPETC) ran into trouble after an audit by the Auditor-General's Office highlighted serious financial and governance lapses at the town council in February this year.
The issues included poor record and accounting systems, non-compliance with rules on the sinking fund and the lack of governance over related-party transactions. AHPETC's then managing agent firm, FM Solutions and Services (FMSS), was owned by the town council's key officials.
The Ministry of National Development's (MND) court application is now before the Court of Appeal, which has reserved judgment on MND's appeal to admit independent accountants for the Workers' Party-run town council and to add the HDB as a co-plaintiff to the case.
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