In response to The New Paper’s article that FMSS had served a letter of demand on AHPETC for the sum of $3.5m, AHPETC issued the following Open Letter to the residents of AHPE. As with most of their communication, AHPETC has once again been selective with the truth and at times distorting the facts to suit their own lies.
SG Bumiputra sat down to study Sylvia Lim’s letter and the following are the distortions and untruths I discovered.
SECOND OPEN LETTER TO RESIDENTS OF ALJUNIED-HOUGANG-PUNGGOL EAST TOWN
In my First Open Letter to you in June 2015, I explained three main points concerning various allegations made against Aljunied-Hougang-Punggol East Town Council (AHPETC). These were:
1. AHPETC does not and cannot reserve contracts for “friends” due to the public tender process;
2. The alleged “overpayment” by AHPETC to its former Managing Agent (MA), when compared to rates paid by PAP TCs in 2014, was an exaggeration, looking at the rates paid by PAP TCs in 2011, 2012 and 2013 according to data provided by the Ministry of National Development (MND);
[Distortion: FMSS’ MA rates were consistently higher than other TCs, in the four years that it was AHPETC’s MA (not just 2014) ). Now we also learnt that the margin of profit was 30% and the four FMSS owners made more than $3.2m a year.]
3. The MA rates that AHPETC agreed to pay its MA in 2012 were arrived at taking into account the MA rate paid by the PAP management of Aljunied TC to its former MA.
If you missed the first open letter, you can read it online at http://www.ahpetc.sg/sylvia-lims-open-letter-to-residents/.
In this Second Open Letter, I would like to clarify and reassure all residents that AHPETC places your interests at the heart of its work and continues to make improvements to its financial management.
This letter will cover the issue of Conflicts of Interest and AHPETC’s financial position.
1. Conflict of Interest and Related Party Transactions
There have been allegations concerning related party transactions between AHPETC and its former MA, FM Solutions & Services Pte Ltd (FMSS).
First, there is no longer any issue, as AHPETC is now directly managed and does not outsource its work to an MA. The previous MA contract expired on 14 July 2015, and there were no bidders to take over the MA services after 14 July 2015.
Since 15 July 2015, AHPETC has been self-managed. This means that AHPETC is now directly hiring staff to handle estate, finance, administration and other tasks, instead of outsourcing the work to an MA.
Under direct management, AHPETC’s contractors continue to deliver services under the existing contracts, now supervised by TC’s directly hired staff.
Second, there was never any conflict of interest whatsoever between the Workers’ Party (WP) or any of its Members of Parliament (MPs) and FMSS. Neither WP nor any of its MPs or members has any interest in the business of FMSS. None of the directors and shareholders of FMSS is a member of WP.
[Untruth: The late Mr Danny Loh and Ms How Weng Fan are long time WP supporters. They acted as assentor and proposer to the WP team of candidates led by Mr Yaw Shin Leong in Ang Mo Kio GRC in the 2006 General Election. Ms How has worked for Mr Low TK in Hougang since graduating from university. FMSS was formed on 15 May 2011, exactly 1 week after the results of the GE. CPG only informed Sylvia Lim of their wish not to continue as MA in late May.]
Third, there have been accusations that when the MA was working at AHPETC, the husband and wife team who owned FMSS could freely sign payments to themselves. This is not true. When WP took over in 2011, one of the first decisions made by the new Aljunied-Hougang Town Council was to require any cheques to the MA, no matter how small the amount, to require the counter-signature of AHPETC Chairman and Vice-Chairmen who have no interest in the MA’s business
[Untruth: While the payment amounts may have been pre-agreed by contract, the TC still has a duty to ensure that the services that the MA was contracted to provide were performed duly and properly. The question is, when the Chairman and Vice-Chairmen counter-signed these payments, did they take steps to counter-check that the contracted services - for which the millions were being paid - had been duly performed? The answer is clearly NO since their own auditors have observed poor governance over related third party transactions involving FMSS. And the AGO discovered specific instance of overpayment/overcharging by FMSS because it misrepresented the facts to the TC who approved the payment rates in ignorance.]
2. Financial Position of AHPETC
Some people have accused AHPETC of bankruptcy and running huge deficits that are not sustainable, and also warned residents of other towns not to vote for WP so as not to subsidise AHPETC. These allegations are misguided.
AHPETC filed its audited accounts for FY 14/15, on time, by 31 August 2015. Though these accounts show AHPETC in annual deficit, this is because AHPETC has still NOT received its annual S&CC operating grant of $7.2 million from the government, which would normally have been paid to all Town Councils in April 2014. Taking into account the $7.2 million in grant which AHPETC expects to receive, AHPETC’s annual income and expenditure statement would show an annual surplus of $1.7 million.
[Untruth: MND had to withhold the grants because the TC could not file a clean set of accounts for years. Its own auditors and the AGO itself raised numerous disclaimers and concerns. As these grants are public funds, MND has a duty to safeguard how they are used and managed. Nevertheless at the request of the TC for release of the grants to pay their outstanding SF deficits, MND agreed and asked for AHPETC latest cash flow position. The TC refused to give the information despite repeated reminders viz on 2 May, 15 Jun and 6 Aug 2015. Even the High Court Judge Quentin Loh remarked that the TC had itself to blame for not securing the grants.]
The past operating deficit was largely the outcome of higher tender price for various service contracts and start-up costs.
The current positive position came about through a combination of steps taken by AHPETC. These included lowering its utilities costs by using contestable energy, reducing its general and administrative expenditure, and increasing its revenue.
Throughout the difficult initial years, AHPETC management believed that it could improve the TC’s financial position, and the latest audit shows that it has. We expect to further consolidate and improve AHPETC’s financial position going forward.
We have done our best to serve residents, and I would like to express appreciation to our staff for their contribution to the progress we have made and to our residents for their support and understanding.
ALJUNIED-HOUGANG-PUNGGOL EAST TOWN COUNCIL
From this simple episode, it is obvious that Ms Sylvia Lim and the Workers’ Party are skills in the art of misinformation. Sandwiched between truths, the lies are hard to distinguish from the truth.