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SOPs drafted by Low Thia Khiang ‘not well thought out’, says witness at AHTC trial

SINGAPORE — There is no valid reason for audit firm KPMG to conclude that Aljunied-Hougang Town Council (AHTC) had no meaningful oversight over its former managing agent, FM Solutions & Services (FMSS).

KPMG’s accountant Owen Hawkes insisted in court that Aljunied-Hougang Town Council had a lack of oversight over its managing agent, alleging that the town councillors from Workers’ Party did not have proper standard operating procedures.

KPMG’s accountant Owen Hawkes insisted in court that Aljunied-Hougang Town Council had a lack of oversight over its managing agent, alleging that the town councillors from Workers’ Party did not have proper standard operating procedures.

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SINGAPORE — There is no valid reason for audit firm KPMG to conclude that Aljunied-Hougang Town Council (AHTC) had no meaningful oversight over its former managing agent, FM Solutions & Services (FMSS).

The need to have oversight was always at the back of the minds of those in charge, and that was why as early as the end of 2011, instructions were already being drafted to guide town councillors on what they must do to ensure things are being done properly by the managing agent.

This was what the court heard on Wednesday (Oct 10) from the lawyer defending opposition Members of Parliament (MPs) Low Thia Khiang, Sylvia Lim and Pritam Singh, as his clients’ trial entered the fourth day.

The three Workers’ Party (WP) MPs, who are in charge of AHTC, are facing trial to account for wrongful payments allegedly made to FMSS and the town council’s service providers between 2011 and 2015. Both AHTC — represented by an independent panel — and the Pasir-Ris Punggol Town Council (PRPTC) filed lawsuits against them.             

Senior Counsel Chelva Rajah said that on Dec 24, 2011, Mr Low had put together a list of “standard operating procedures” (SOPs) for his party’s MPs in their oversight of FMSS.

Mr Low sent an email to party chairman Lim with five proposed SOPs, saying it was a way that the town council could still “keep a watchful eye” on FMSS.

He intended for the town councillors to move out of hand-holding their managing agent into a “management phase”.

Mr Low gave the instruction as he felt that AHTC had just came out of its “critical transitional period” after taking over the town council from the People’s Action Party (PAP). In the period, the then-newly elected MPs had “put in much personal efforts to assist and check (its) management”, he wrote in that email.

One of the SOPs stated that AHTC’s chairman, who was Ms Lim then, would have to be notified of all procedural and management issues, so that she could take them up with FMSS after the elected town councillors had decided on what should be done.

However, KPMG’s forensics partner Owen Hawkes told the court that these were not considered SOPs, but were merely “elements of communication”, with no details underlining how FMSS would be monitored.

Mr Hawkes, who was being cross-examined by Mr Rajah for the third day, said: “(Mr Low) might refer to these as SOPs, but (they were) not in the sense of what I would consider an SOP.”

They were also “not well thought out”, “not clear” and “short”, the accountant added as he scrutinised each of them in court.

Mr Hawkes had recorded AHTC’s lack of meaningful oversight over FMSS and the company’s owners in his report.

TRUST AND CONTROL

Later in the day’s proceedings, Mr Hawkes also disagreed with Mr Rajah’s line of reasoning that FMSS’ husband-and-wife owners Danny Loh and How Weng Fan were “reliable and trustworthy” individuals known to the elected town councillors for “many years”.

“Trust is not the control, but is in fact the enemy of control,” he shot back.

Trusting somebody also does not mean that the person should be put in control, he said.

Furthermore, from an email exchange between Loh and his employee at FMSS, it became clear that FMSS was “not necessarily close” to the WP MPs, judging from how Loh took some conversations “offline” with his employee, Mr Hawkes said.

“Notwithstanding that you know somebody and trust them, you can’t forgo control,” Mr Hawkes added.

Mr Rajah said that there was “nothing sinister” about that chain of emails. It was just a private exchange between Loh and an employee named Wilson Lu discussing an email sent by Mr Singh on Sept 17, 2014 about the need to relook a “very high-cost contract”.

Mr Rajah earlier used the email thread to show the court that there was sufficient oversight on FMSS as Mr Singh did question them on tender specifications.

In the email Loh wrote to an employee, he said: “We will need to go on self-protection mode from now on. Sylvia has started to query why repair to external facade is under project (management services, which draws an extra 3.5 per cent of the value of the projects managed) and not under (basic) estate (services).”

Seizing the chance to size up the contents of Loh’s email revealed in court, Mr Hawkes said: “When they talk about ‘self-protection mode’, you are not talking about trust…

“If you trust somebody at the beginning, you might not necessarily trust them at the end, thus controls at the beginning are important.”

MINISTRY ‘ACCEPTED’ WAIVER

During the cross-examination, Mr Rajah sought to discredit Mr Hawkes’ finding that AHTC “improperly entered into” a working contract with FMSS in 2011 with an unjustified waiver of tender. The lawyer told the court that even the Ministry of National Development (MND) and its then-minister Khaw Boon Wan had “no difficulty” accepting AHTC’s waiver of tender.

He used as evidence an MND report dated April 30, 2013, which reviewed the controversial sale of a software in a town council run by the PAP to a PAP-owned company Action Information Management, as well as Mr Khaw’s statement on the review in Parliament on May 13, 2013.

Mr Khaw said then that the Town Councils Financial Rules (TCFR) "provide latitude" to town councils or their chairmen "to waive requirement to call for tender altogether”,

Turning to AHTC’s case, Mr Khaw then said: “Ms Sylvia Lim would be familiar with this because she exercised this latitude when her town council waived competition and appointed FMSS as its managing agent in 2011.

“MND left the appointment to her best judgment and did not object. We have to apply the Town Councils Act and the TCFR fairly, evenly and consistently."

With this, Mr Rajah asked Mr Hawkes: “So it would appear that the Ministry of National Development did not have difficulty in accepting that Ms Sylvia Lim exercised the rights to waive the requirement for tender with respect to the first managing agent (FMSS). Do you accept that?”

Mr Hawkes did not give a direct reply, choosing to stress Mr Khaw’s line that MND left the appointment to AHTC’s “best judgement” and did not object to the waiver.

The second witness for the plaintiffs, Mr Goh Thien Phong, is expected to take the stand on Thursday afternoon. Mr Goh is an accountant in charge of a team from accountancy firm PricewaterhouseCoopers. They conducted a review of the past payments of Aljunied-Hougang-Punggol East Town Council — the name of the town council during the period when WP was in charge of the Punggol East ward between 2013 and 2015.

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