AHPETC, FMSS to hold mediation talks over payment dispute

SINGAPORE — The Workers’ Party-run Aljunied-Hougang-Punggol-East Town Council (AHPETC) and its former managing agent, FM Solutions and Services (FMSS), are headed for mediation talks next month to resolve a dispute over the cut that FMSS is seeking from the value of the projects that it had undertaken before its contract with the town council expired in July.

Yesterday, The New Paper reported that AHPETC was served a letter of demand by FMSS seeking S$3.5 million for services rendered between April and July.

Speaking at the WP’s press conference yesterday introducing its final batch of election candidates, AHPETC immediate past chairman Sylvia Lim clarified that a substantial portion of the claims have been settled, and both sides will settle their differences over the outstanding payments through mediation. Nevertheless, she declined to reveal the exact sum of the outstanding claims. Ms Lim added that the claims — which will be reflected in its accounts for the current financial year — will also not affect AHPETC’s financial position for FY2014/15.

The town council will post a surplus for FY2014/15 after taking into account government grants that the Ministry of National Development (MND) is withholding.

She added: “The mediation process is supposed to be amicable … and if for some reason, the (matter) is not resolved, the agreement (with FMSS) further provides (for resolution) by arbitration … There will not be any litigation process.”

The town council received the letter of demand in late July, after its contract with FMSS expired. Ms Lim said the disputes largely have to do with claims made by FMSS in relation to the town council’s projects. As project managers, they are able to claim additional fees in the form of a certain percentage of the project’s value. Most of these claims are for projects that are meant to be paid out of the town council’s sinking fund — meant for long-term maintenance of properties — and there would not be any impact on routine funds, Ms Lim said.

AHPETC had not seen the need to make this issue public, as it is up to the town council to determine if FMSS’ claims are legitimate, she added.

Meanwhile, the town council submitted its FY2014/15 annual report yesterday, which shows a surplus of S$1.7 million, after taking into account S$7.2 million in grants from the MND.

AHPETC’s audit committee chairman Png Eng Huat noted that all town councils would be in deficit without these grants, while Ms Lim said AHPETC was still in discussions with the MND over the release of the grants. There is only a “very narrow field of disagreement” at this point in time, she added.

As for the ministry’s accusation that AHPETC had overpaid FMSS, allowing it to pay large salaries to staff — an issue which set off a fresh volley of exchanges between the WP and PAP — Ms Lim said the party began directly managing the town council in July, and salaries paid will be disclosed in its financial statements, which will be made public.

She also reiterated that it is up to the MND to explain what it meant by FMSS “grossly profiteering” from its contract with AHPETC. “I think (the MND) should tell us what is an acceptable level of profit in (its) view and perhaps also tell us how much money has been made by Managing Agents managing the People’s Action Party town councils,” she said.