AHPETC issues remain unresolved and have worsened: Khaw

SINGAPORE — The issues at Aljunied-Hougang-Punggol East Town Council (AHPETC) have remain unresolved after four years and have worsened, said National Development Minister Khaw Boon Wan.

The Workers’ Party-run town council’s latest financial accounts, though submitted on time, remain qualified, said Mr Khaw, who was speaking to reporters before his walkabout at Woodlands this afternoon.

If a company’s accounts are deemed qualified by its auditors, it means they doubt that the picture of the company’s activities presented is accurate and fair.

While WP leaders spoke at length about the AHPETC during the party’s first rally yesterday, Mr Khaw said they had “continued to mislead” and did not address “important questions”.

“Recently we just found out that the shareholders of FMSS, their managing agent, were paid millions of dollars of all kinds of fees, paid out of the residents’ service and conservancy charges...They have also suspended paying their fees to FMSS, resulting in FMSS having to issue a lawyer’s letter to the Town Council,” said Mr Khaw, alluding to a recent The New Paper report that AHPETC was served a letter of demand by FMSS seeking S$3.5 million for services rendered between April and July.

“If they have been paying in accordance with what was in the contract, then why are they suspending payment and why are they trying to claw back the money,” questioned Mr Khaw.

“In gist, their town council paid more than everyone else. Their managing agent made more than everyone else. Their town council lost money more than everyone else. And they said everything is okay, because none of us are in jail.”

Minister Khaw Boon Wan issued a fact sheet addressing the Workers' Party's "myths" on the AHPETC issue. 

Here is the full text:

Sylvia Lim’s 4 “myths”

#1: WP reserved contracts for friends

What Sylvia Lim said:

• TC called open tenders, except for MA contract in 2011. 
• This was because CPG wanted to terminate.
• Computer software also terminated with 1 month notice by AIM.

Fact:

• According to Sylvia Lim, CPG asked to terminate in “late May” 2011.
• Contractually, CPG could not terminate, unless TC agreed. Sylvia Lim agreed.
• FMSS set up on 15 May 2011, 7 days after GE results. Formed as limited exempt private company; no need to file accounts.
• CPG handed over to FMSS under Sylvia Lim’s supervision. She thanked CPG for it.
• AIM contract extended twice at Sylvia Lim’s request; she thanked AIM for extendin

#2: AHPETC overpaid its MA

What Sylvia Lim said:

• Allegation not made by AGO or auditors, but by MND.
• MA rates also varied across other TCs. MA rates for FMSS took into account MA rates under CPG, and other additional costs.
• TC does not check profitability before awarding contract.

Fact:

• It was AGO which uncovered overcharging by FMSS, due to misrepresentation. FMSS had to pay back.
• Per unit MA rates for FMSS in 2011 20% higher than CPG in 2010.
• Now we also know FMSS profit margin was over 30%.
• Media reported that TC had also been quietly trying to recover $450,000 and withheld payment to FMSS of $3.52 mil.

#3 FMSS issued invoices and checked its own work

What Sylvia Lim said:     

• Cheques are countersigned by Sylvia Lim, Png Eng Huat or Pritam Singh.
• Now AHPETC is managed in-house and is doing fine.

Fact:

• 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.  WP refused such an audit.

#4: AHPETC in financial difficulties

What Sylvia Lim said:

• TC incurred significant but necessary costs at initial stages.
• TC has now managed to turn things around; it is in surplus, if grants are disbursed.

Fact:

• TC had no clean and unqualified accounts for last 4 years; the latest is still qualified.
• AGO audit concluded that until the TC’s weaknesses resolved, no assurance that public monies can be safeguarded.
• This is why grants had to be withheld.
• Sylvia Lim asked and MND agreed to disburse the grants for Sinking Fund on provision of TC’s current financial status. Three reminders. No response. But MND is still prepared to consider.