Tuesday, 11 November 2014

Aljunied Resident's Open Letter to Sylvia Lim

Subject: Corporate Governance in Aljunied, or lack thereof
Dear Ms Lim,
I am an accountant and I live in Aljunied.

The Worker’s Party took over the town council in Aljunied in 2011. You are a small party, and it is the first time that you had won a GRC. I know it’s not easy to take over something so big, so I was prepared for some slip ups in service. Maybe cleanliness will drop. But money must be taken seriously.

Today, I can see that there is something very wrong. Those of us who pay S&CC are subsidizing those who don’t – most people realize from the numbers that the two-thirds who pay are subsidizing the one-third that are not.

But there is a deeper story that the numbers are telling. From MND's Town Council Management Report, arrears in Aljunied climbed from 2.6% in 2010 to 8.4% in 2011 after merger with Hougang TC. At the end of April 2013, it was a staggering 29.4%! The national norm is just 3%. This shows that you are likely taking the money from Aljunied and using it to cover the hole in Hougang. What makes matters worst, is that the hole is also getting bigger because they are not collecting money properly.

I read in Zaobao that Mr Low Thia Khiang says there is no need to worry about arrears. This is the same problem that he had in Hougang. He says, don’t worry residents will pay up. Take the compassionate approach, give them time. In the meantime, it is business as usual. But that’s not how he solved the problem in Hougang! He solved it by taking the fat cow of Aljunied, and slaughtering it to feed the big hole in his own ward. Before merging with Hougang, Aljunied had $3.3 million surplus – within two years, it had a deficit of $734,000.

How did it burn up $4 million in two years?!

The deficit numbers are those for 2011. God knows what they are today. I actually can’t see very much of what is going on in Aljunied.  I read that AHPETC refuses to file its mandatory report on arrears. But it’s likely that with Aljunied, we will have an even bigger hole.

A few years down the line, who is going to cover the Aljunied hole? We know that more than $20 million is unaccounted for in the town council accounts, project management fees are paid, and conservancy fees are written off. WP’s own auditors have refused to sign off on the accounts. That’s why the Finance Minister asked the Auditor General to go through the 2012 accounts.

The Workers’ Party says there are “takeover issues”. I understand the politics (I don’t really follow politics but I understand that there are political arguments), but as an accountant, I want to ask:

1. Why are the S&CC collections so bad? The other opposition run town councils do not have this problem. And why did the numbers drop so badly after the merger with Hougang? Is it because Aljunied is plugging the leak in Hougang?

2. Your surpluses have dropped from plus $3.3 million to minus $734,000. Why did this happen? Did the town council lose $4 million in two years? Why didn’t they pay into the sinking funds?

3. What are the processes in place for arrears? I am ok with people in difficulty getting some slack, but surely this cannot be 16,000 households! It’s not fair that 39,000 of us are taking care of these 16,000 – and not getting any information about why they don’t have to pay. Does the Town Council have some kind of welfare committee that assesses these people? Or they just don’t care who doesn’t pay?

Maybe I am wrong to just look at the numbers. Maybe there are larger issues at play. But I think we have to recognize that there is an issue of governance. You can’t just say “Ok, this is the price we have to pay for politics.”

These are questions that the media, the PAP MPs and even members of the public should be asking. But I know that many people, even the Straits Times, are scared of questioning the Worker’s Party nowadays. Try it and you see all the online people scolding you.

But numbers don’t lie.
As we tell our clients, accounting is difficult. But accountability is simple. You either did the right thing, or you did wrong.

Facts I have found from Internet ...

1. The WP town council is managed by FM Solutions and Services (FMSS), a company set up four days after the WP won Aljunied in the 2011 elections. FMSS is the “managing agent” (MA) and is owned by a husband and wife team, both strong supporters of WP

2. The town council has given away more than $26 million in contracts to them - $5.2 million without a tender. This MA is paid 50% more than PAP town councils – and this year, the rates might hit 70% more. So they pay more but they are very bad at collection in S&CC.

3. During the debate in Parliament, you, the chairman of the town council explained the managing agent rates. Her estimate of the MA rate for FY2012 was $7.58 (more than 50% higher than the Tampines rate of $4.99).  At $7.58, the MA contract value for the whole estate for 3 years is $15.8 million. But Ms Lim, you had declared to HDB that the contract value was $16.8 million.

Accounting is difficult. But accountability is simple. You can’t take money in Aljunied and use it to cover the hole in Hougang. Who is going to cover Aljunied next year?

I look forward to hearing your reply.

1 comment:

  1. A senior Singapore government explains that the Town Council Act is toothless by design ... SG Leaks