Friday 13 February 2015

Parliament: Debate on AGO's audit report on Worker's Party-run AHPETC, Day 1



AHPETC lapses 'astounding', says Khaw
WP takes audit seriously, says Low; he cites inexperience, politics of handover
By Rachel Chang, Assistant Political Editor, The Straits Times, 13 Feb 2015

THE Auditor-General has confirmed the Government's fears that "something is seriously wrong" at the Worker's Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC), National Development Minister Khaw Boon Wan said yesterday.

Calling the lapses found at AHPETC "astounding" and "clearly unacceptable", he said at the start of a four-hour parliamentary debate: "The Auditor-General's findings... paint a picture of financial mismanagement, incompetence and negligence in corporate governance.

Given the serious questions raised about AHPETC's management of public funds, Mr Khaw said the Government will withhold $7 million in grants from AHPETC until it sets its house in order. It will also seek to change the law to give it greater powers to investigate errant town councils and take them to task.

"MND is studying what other legal recourse the aggrieved parties may have," he said.

In a report released on Monday, the Auditor-General's Office (AGO) said it found five areas of lapses in governance and compliance at AHPETC, such as failing to deposit the correct amounts in its sinking fund and failing to properly disclose and evaluate conflicts of interest.

Speaking in public for the first time about the findings, WP leaders acknowledged mistakes, but said these largely stemmed from human error and inexperience.

They also called for depoliticisation of the transition process after an election, noting that the WP had to build a town management operation from scratch when it took over Aljunied GRC in 2011, as the managing agent hired by the previous People's Action Party regime requested release from its contract, while the IT systems provider abruptly terminated its services.

WP chief Low Thia Khiang said that in the years since, none of the managing agents serving PAP town councils has bid for tenders issued by AHPETC because of political reasons. So, AHPETC has relied on FMSS, which is majority-owned by AHPETC's secretary and general manager. The uneven playing field was such that "if an opposition party aspires to be the next government, it may need to build an army of civil servants first. This is a strange political situation for any functioning democracy to be in".

This argument was rejected by Law Minister K. Shanmugam, who said that when WP took charge of the town council in 2011, the contract of the managing agent CPG Facilities Management still had two years to run. This would have provided continuity. Instead, WP let it go and FMSS was set up exactly one week after its electoral victory - indicating that the move could have been premeditated.

His remarks drew a lively exchange as ministers and WP leaders clashed over whether AHPETC had misled residents and mismanaged public money.

Both Mr Low and WP chairman Sylvia Lim emphasised that the AGO found no evidence of corrupt practices or missing money in its exhaustive examination of AHPETC, merely lapses due to human error.

But Mr Shanmugam disputed this. He charged that money had been lost through overcharging by FMSS. In failing to either probe this or exercise oversight over its staff who owned FMSS, the WP MPs have "unlawfully" breached their fiduciary duties to protect the financial interests of residents, he said. The debate continues today.











Shanmugam: Like giving people's money to friends
By Janice Heng, The Straits Times, 13 Feb 2015

LAW Minister K. Shanmugam yesterday likened the manner in which the Workers' Party (WP) runs its town council to taking money from the man in the street and giving it to their friends.

"You have a business, with cash, valuables belonging to other people. You don't know exactly what you have. You put a friend in charge," he told Parliament.

"They take what they want of the cash. You overpay them several million dollars. You don't check."

He gave this illustration in layman's terms as he took the WP to task over lapses uncovered by the Auditor-General's Office (AGO) in its audit of Aljunied-Hougang-Punggol East Town Council's (AHPETC) accounts.

Several senior AHPETC officers are party supporters who also have ownership interests in FMSS, the town council's managing agent, in what the AGO noted is a clear conflict of interest.

AHPETC chairman Sylvia Lim (Aljunied GRC) later shot back: "We utterly reject the minister's assertions or insinuations that the manner in which we appointed the managing agent to run the town council was to benefit our friends."

But Mr Shanmugam repeated several times that the town council structure that the WP had set up was "unlawful" and could not be accepted.

"Auditors say your accounts are in a mess, the accounts are unreliable. In fact, you say yourself that you can't produce the accounts.

"Auditors say you have no clear idea of what has happened to the cash. And you come and you say, 'No money is lost'.

"One can only wonder at such a statement. The law takes an extremely strict view on related party transactions when conflicts of interests are involved," he said.

Taking the WP MPs to task for a lack of transparency and accountability, Mr Shanmugam pointed to how they had consciously appointed the related parties to run the town council.

He added: "The rhetoric from the WP is always about helping the poor man. The reality is that the WP took money from the man in the street to give to their friends in FMSS."

Noting that FMSS' fees are higher than those of managing agents in other town councils, he calculated that the annual difference was $1.6 million, amounting to $6.4 million over four years.

These higher fees were just one of the ways in which AHPETC "was run for the benefit of FMSS", he said.

"This is not just a question of negligence or inexperience. You don't need many years of experience to know that you should not let your friends do what they like with public funds."





'Something seriously wrong at AHPETC'
If such lapses were found in a listed firm or charity, there would be calls for top officials' removal: Khaw Boon Wan
By Rachel Au-Yong, The Straits Times, 13 Feb 2015

IF LAPSES of the kind uncovered in the Workers' Party-run town council were found in a listed company or charity, there would be calls for the removal of the top decision-makers and directors, National Development Minister Khaw Boon Wan said yesterday.


Punishments are prescribed in the Companies Act and the Charities Act for those who breach rules, he said, but town councils are not under such laws.

Instead, they come under the Town Councils Act, which deliberately takes a light-touch approach to regulation and enforcement.

He said MPs were given more authority and responsibility over the HDB estates in their constituencies: "The strategic intent was to bring home to the MPs that how they manage and run their town council will affect their electoral fortunes at the next election, and to voters, that the MPs they elect will be responsible for looking after their housing estates.

"This would enhance accountability, push MPs to focus on what mattered to residents and... encourage voters to scrutinise more closely the capabilities and track record of election candidates."

He was highlighting the seriousness of the findings in the Auditor-General's Office's report on Aljunied-Hougang-Punggol East Town Council (AHPETC).

The report, which found lapses in governance and compliance with financial rules, confirmed that "something is seriously wrong at the AHPETC". It painted a picture of financial mismanagement, incompetence and negligence in corporate governance.

Its MPs were also "evasive, unresponsive and misleading", and stone-walled, deflected and made false claims in response to questions from auditors and others.

He criticised AHPETC in four areas: its lack of transparency, its appointment of a related party as its managing agent, paying the managing agent "abnormally high fees" and its failure to deal with problems quickly.

On transparency, he said AHPETC failed repeatedly to submit reports and when reminded, came up with excuses. This led to concerns over whether critical cyclical maintenance works could be carried out on time.

On conflicts of interest, he asked why AHPETC did not disclose that its secretary Danny Loh and general manager How Weng Fan owned the managing agency company. Mr Loh and Ms How are married to each other.

He cited the agency's high fees - 20 per cent more than the previous agent's, and 50 per cent higher than a town council of comparable size. While AHPETC said the higher rates included services previously contracted out, Mr Khaw asked if claims of an upgraded financial system were true. "Apparently, it could not even track and make simple monthly arrears reports," he said, noting it resorted to tabulating accounts manually.

He criticised its MPs' failure to deal with issues quickly: "What we have consistently gotten from (them) is side-stepping... Finally, last month, AHPETC declared they had 'embarked on a road map to enhance its aggregated arrears reporting module some time in November 2014'. This is their response to a problem in June 2013 - 17 months earlier! It is simply astounding."









Come clean, Shanmugam tells WP MPs
He calls for transparency on conflicts of interest in running of town council
By Janice Heng, The Straits Times, 13 Feb 2015

LAW Minister K. Shanmugam yesterday asked Workers' Party (WP) MPs to "come clean" about conflicts of interest in the running of their town council.

In a 45-minute speech to the House, Mr Shanmugam accused the MPs of unlawfully setting up a structure that saw millions in public money collected from residents of areas run by Aljunied-Hougang-Punggol East Town Council (AHPETC) being channelled to "friends" in managing agent FMSS and contractor FMSI.

He was taking the WP to task over lapses found by the Auditor-General's Office (AGO) in its year-long audit of AHPETC's financial statements for the financial year 2012/2013.

The AGO had cited these conflicts of interest as a key problem, saying that unless the lapses were addressed, there was no assurance that public funds were properly spent, accounted for and managed.

AHPETC chairman Sylvia Lim told the House that the WP had not withheld information about this conflict of interest, and there was no loss of money.

But Mr Shanmugam rejected this claim, saying AHPETC had overpaid its managing agent.


He noted that the facts that have emerged raise major questions about the conduct of the AHPETC town councillors, and what they did with the money of their residents.

One of his charges was that AHPETC had overpaid FMSS, which is owned by husband-and-wife pair Danny Loh and How Weng Fan, as well as Mr Yeo Soon Fei.

Mr Shanmugam noted that FMSS was set up by the couple on May 15, 2011, seven days after the WP won Aljunied GRC in the General Election.

He noted that the town council gave FMSS the contract to be its managing agent in 2011, and three more contracts, worth about $27 million altogether.

Ms How became general manager of AHPETC, Mr Loh its secretary and Mr Yeo, the deputy general manager. "Why set up FMSS? It was a convenient vehicle to which millions of dollars went from the town council," Mr Shanmugam said.

FMSS' fees are higher than those of managing agents in other town councils, he added. He calculated that the annual difference was $1.6 million, amounting to $6.4 million over four years.

These higher fees were another way in which AHPETC "was run for the benefit of FMSS", he said.

He also noted the conflict of interest in how senior town council officers with ownership interest in FMSS signed off on payments.

"The payments they were verifying and approving on behalf of the town council were going directly into their pockets," he said, citing $6.6 million in payments the FMSS owners had endorsed.

By allowing these payments of "millions of dollars" to a related party, the town councillors were in breach of their "fiduciary duties", or responsibility to properly manage residents' monies.

Civil action could be taken as a result, he added.

Another front on which Mr Shanmugam attacked the WP was their lack of full disclosure of these ownership interests, and the lack of recorded discussion of the subject - as required by financial reporting standards. "The behaviour of a party which claims to champion transparency and accountability is shocking," he said.

He also said that, contrary to what AHPETC has asserted, the town councillors could not maintain no public money had been lost due to its payments to FMSS.

Besides the alleged overpayment of fees, the lack of "any adequate check or control" could have resulted in other losses, he added.

Taking the individual WP MPs to account, and pressing them to state their positions on the issue, Mr Shanmugam said: "Any honest town councillor will admit that all this is unacceptable and will want to set right what has gone wrong."

This, he added, meant coming clean on the facts, relooking all contracts and payments and recovering overpayments, and taking legal action where necessary.

"Will the town councillors do that?" he asked.








Law Minister K. Shanmugam said the audit of Aljunied-Hougang-Punggol East Town Council (AHPETC) found it had allowed millions of dollars in payments to related parties, without accountability, and at a loss to the town council.

 Here are extracts from his speech, in which he spoke of the conflict of interest involving married couple Danny Loh and How Weng Fan, who are key staff of the town council and owners of its managing agent FMSS and contractor FMSI.



THE WAY PAYMENTS WERE MADE IS UNLAWFUL

Loh and Ms How issued invoices on behalf of FMSS and FMSI.

Ms How and Yeo (Soon Fei, deputy general manager), acting on behalf of the town council, then certified the work for payment - to their own company. Ms How then approved the payment vouchers, cheques to be issued by the town council - for payment to her own company FMSS and FMSI. Loh, then on behalf of the town council, signed the cheques for payment to his companies. The cheques were then co-signed either by Ms Sylvia Lim or Mr Png (Eng Huat, Hougang MP). About $6.6 million was paid out in just one financial year in this way. This was the period covered by the AGO audit...

How much would be the total amount paid to FMSS, in this way, from May 2011 up to now? It will obviously be much more than $6.6 million.

If similar payments were made in the other years, then it won't be much less than $20 million. We don't know the full amount, because there has been no audit for the period May 2011 to January 2015. This process is unacceptable. It is also unlawful.

NO GUARANTEE THAT MONEY WAS NOT LOST

Of the millions that were paid to FMSS, who knows how much was justifiable?

Ms Sylvia Lim and Mr Low (Thia Khiang) have been quick to say that despite all the problems, no town council monies have been lost. Really? Can she or anyone else honestly say that no monies have been lost?

When the town councillors act in breach of their fiduciary duties and pay Loh and Ms How millions of dollars, that is not a loss to the town council? Overpayment to a related party is not a loss?





Party taken to task over transparency, accountability
By Charissa Yong, The Straits Times, 13 Feb 2015

THE Workers' Party (WP) is guilty of the very issue it previously charged the People's Action Party (PAP) with: that of not being transparent and accountable, Mr Sam Tan (Radin Mas) said yesterday.

He recalled that the WP repeatedly stressed the importance of accountability and transparency in Parliament while campaigning during the 2011 General Election as well as the Hougang and Punggol East by-elections in 2012 and 2013 respectively.

"The WP MPs and candidates sounded very eloquent and righteous over this matter," said Mr Tan, who spoke in Mandarin.

He was among seven MPs who spoke during the debate on the Auditor-General's report on the 2012/13 accounts of the Aljunied- Hougang-Punggol East Town Council (AHPETC).

Mr Tan said WP MPs again "showed strong resolve over accountability" in a 2013 Parliament debate about the sale of IT software by PAP town councils to a party-owned company, Action Information Management (AIM).

"Today, we are here again discussing the town council management issue. However, this time around, it is the WP-run AHPETC that is in the spotlight. And it is far worse this time," said Mr Tan, who is Minister of State (Prime Minister's Office).

In the case of the now-defunct AIM, the National Development Ministry looked into the software sale and found no loss or misuse of public funds from the transactions. But in the case of AHPETC, the WP did not handle its own conflict of interest problem properly, he said.

Its key town councillors were also majority owners of its managing agent company - something that was not recorded in AHPETC documents. This lack of transparency in disclosures "was also the point raised by WP when talking about the AIM issue", he recalled. "I am glad to hear (AHPETC and WP chairman Sylvia Lim) has said that in the future, they will try to solve all these problems. I think this is a very positive response."





WP 'backs move to boost oversight of town councils'
By Walter Sim, The Straits Times, 13 Feb 2015

THE Workers' Party (WP) supports the Government's move to strengthen oversight of town councils, its chief Low Thia Khiang said in Parliament yesterday.

The party, he added, also takes seriously the Auditor-General's report released earlier this week.

It showed major lapses in governance and compliance with financial rules by the Aljunied-Hougang-Punggol East Town Council (AHPETC).

Mr Low's words of support follow National Development Minister Khaw Boon Wan's announcement in Parliament that the Town Councils Act is to be amended to address weaknesses.

In his first response since the report's release, the opposition politician also urged the Government to look into the "depoliticisation of the transition process", when town councils change hands, to protect residents' interests.

He said AHPETC's problems stemmed from difficulties it faced in attracting managing agents after the WP won Aljunied GRC in May 2011.

"It would seem that managing agents serving PAP (People's Action Party) town councils are unwilling to serve as managing agents in non-PAP town councils, and that the reason appears to be political rather than professional," he said.

To illustrate his point, he said that although three companies collected documents in a public tender in 2012, only one made a bid.

In another tender last year, only one company - the largest managing agent of PAP town councils - collected the documents. No one submitted a bid.

"It looks like the only option for any opposition party to take over the town council will be direct management," he said.

Another hurdle was the abrupt termination of services by contractors of Aljunied GRC after the WP win, Mr Low said.

The WP had to scale up the system at single-seat Hougang for a GRC many times its size, and it had to do so within the 90-day transition period, he said.

Then, with his characteristic dry humour, he added: "Under our current system, it seems to me that any opposition party which aspires to be elected in a GRC will have to build a town management team to train a hundred staff officers first, (then) start shopping for an off-the-shelf accounting software.

"If an opposition party aspires to be the next government, perhaps it may need to build an army of civil servants first. This is a strange political situation for any functioning democracy to be in."

Pointing to the report, he said the Auditor-General did not find AHPETC to be engaged in any corrupt practices, or that any money was lost. He said the party has taken concrete steps to address and remedy the issues raised.

The episode should also be put into the proper perspective, he said, pointing out that AHPETC's performance in the annual town council grading exercise was "comparable to other town councils" in all aspects except in two areas: Management of arrears in service and conservancy charges, and corporate governance.

What the WP will do in future, "if such a privilege should happen", is appoint a consultant to look at internal controls in compliance with the Town Councils Act, while the MPs focus on taking over the town council to prevent disruption to major services, he said.

Mr Low and the WP MPs who spoke yesterday made it a point to thank voters for their support.

He also said the WP welcomes the PAP's scrutiny of its town council as this is what happens in a "First World Parliament", a reference to his party's campaign slogan in the 2011 General Election.





Debate over change of managing agent
By Walter Sim, The Straits Times, 13 Feb 2015

THE managing agent of Aljunied GRC at the time the Workers' Party took charge of it in May 2011 had asked to be released from its contract for "business reasons", WP chairman Sylvia Lim said in Parliament.

Hence, it became urgent for the WP to put in place systems and take over properly the management of the town council, said party chief Low Thia Khiang.

This meant WP had no choice but to appoint FM Solutions & Services (FMSS) for a one-year transition period, he added.

As a result, no open tender was called between July 2011 and July 2012, but this was in line with the Town Councils Act, given the circumstances, he said.

Law Minister K. Shanmugam, however, argued that the party was "playing the victim card".

As the town council's contract with managing agent CPG Facilities Management would expire only on July 31, 2013, there was still two more years to go, he noted.

"The contract was such that it could not be terminated by CPG.

"The Town Councils Act provides for continuity. There was no need to start from scratch. But it was up to the WP whether they wanted to let CPG go," he added.

Noting that FMSS was set up on May 15, 2011, exactly one week after the WP's electoral win in Aljunied GRC, he said the move was "premeditated".

FMSS is in the spotlight after an Auditor-General's Office report highlighted potential conflicts of interest as the firm's majority share owners Danny Loh and How Weng Fan are, respectively, the secretary and general manager of the WP's town council.

Ms Lim said there was no such ploy: "The request to be released came from CPG. Their lawyers drafted the Deed of Mutual Release. We respected their decision because we need to work with the managing agent, and we cannot have one that is reluctant to work with us."









Town council 'open about officers' links with FMSS'
By Tham Yuen-C, The Straits Times, 13 Feb 2015

WORKERS' Party (WP) chairman Sylvia Lim said the town council it runs never hid the fact that its senior officers were also owners of its managing agent, FM Solutions and Services (FMSS).

She also said the Aljunied-Hougang-Punggol East Town Council (AHPETC) has put in place measures to ensure transactions involving FMSS are subject to greater scrutiny.

Ms Lim, who is AHPETC's chairman, made these points in Parliament yesterday as she led her party's clarifications of the lapses found by the Auditor-General's Office (AGO) in a year-long audit of its accounts. Opening her 35-minute speech, she said: "We, the MPs of Aljunied, Hougang and Punggol East, are concerned about these matters."

One major lapse was the town council's failure to manage conflicts of interest in $25.9 million worth of transactions with FMSS and FM Solutions and Integrated Services (FMSI), which provides rescue and maintenance services.

The town council's senior officers are secretary Danny Loh Chong Meng, general manager How Weng Fan, and deputy general managers Yeo Soon Fei and Johnson Lieow Chong Sern. They are also owners of FMSS, and Mr Loh is the sole owner of FMSI.

AHPETC, Ms Lim said, had always acknowledged these links.

She also said that for a small company like FMSS, it is unavoidable for its directors to hold key positions in the town council they manage. But since the release of the AGO findings this week, she said media reports had created "misimpressions... that the town council secretary and its general manager... are freely being given contracts without tender and paying themselves handsomely without accountability".

This was not the case, she said. The managing agent did not have powers to award tenders or evaluate those it participated in. Instead, a committee of the party's MPs and appointed councillors made the decisions, she said.

Ms Lim also addressed the AGO's criticism of the town council not having checks on payments made to FMSS and FMSI.

The AGO had highlighted 84 invoices, worth $6.6 million, that Mr Loh and Ms How had issued as senior officers of FMSS and FMSI.

Then, as AHPETC officers, the duo approved or signed cheques for some of these invoices.

Ms Lim said about 96 per cent, or invoices for $6.4 million, were monthly payments for managing agent and lift services, based on rates agreed to in contracts. She said cheques made to FMSS also had to be co-signed by her, or either of AHPETC's vice-chairmen Png Eng Huat and Pritam Singh, since Sept 8, 2011.

On AHPETC being overcharged by FMSS for lift services in 2012, Ms Lim said she was responsible for the error. AHPETC had not called a tender for the contract, citing time constraints, and had set up a committee to assess the fee proposed by FMSS.

FMSS had promised to charge rates similar to those of former contractors, but it quoted a fee 30 per cent higher.

Explaining that FMSS had "used the wrong unit multiplier" to compute prices, Ms Lim said: "There was absolutely no intention on the part of the committee or the contractor to approve higher payment rates... I bear personal responsibility as I was chair of the evaluation committee."

About $122,000 has been returned to the town council.

She also said AHPETC has since introduced measures to better manage the conflicts of interest that could arise from its dealings with FMSS and FMSI.

For instance, since 2013, the MPs for Aljunied GRC, Hougang and Punggol East have attended project meetings to assess if ad hoc works being commissioned were necessary. Mr Muhamad Faisal Abdul Manap (Aljunied GRC), who chairs the town council committee that decides on maintenance and improvement works, said if there were doubts on the projects, he would do a site inspection with the ward's MP.

AHPETC also plans to draw up checklists to ensure those deciding on contracts and tenders have all the necessary information on these relationships.

 "We have been honest in dealing with the lapses as highlighted in the Auditor-General's report... At present, there is a rigorous process in scrutinising proposals to ensure we are prudent in our expenditure. The town council, with the elected councillor, does not take the public funds for granted," said Mr Faisal.









AHPETC's situation 'unusual'
By Tham Yuen-C, The Straits Times, 13 Feb 2015

WHEN does a town council have to declare transactions involving a related party, and how should it do so?

Various Workers' Party (WP) MPs asked the authorities to make this clear during the debate on the findings in the Auditor-General's audit report of their town council.

The Aljunied-Hougang-Punggol East Town Council (AHPETC) had been criticised for not making adequate disclosures about dealings with its managing agent, FM Solutions and Services (FMSS), and another contractor FM Solutions and Integrated Services (FMIS). The shareholders in both are senior town council officers.

Yesterday, AHPETC and WP chairman Sylvia Lim said most town council secretaries and general managers are also senior staff of the managing agents: "Should all town councils then make such related party disclosures?"

 But Law Minister K. Shanmugam said AHPETC's situation is unusual, as no other town council in the last 25 years has had key employees who were also the owners of the managing agent.

"Their ownership interest and control of the managing agent is what distinguishes AHPETC from all other town councils. That makes any transaction between the town council and FMSS and FMSI a related party transaction that has to be disclosed," he said.





'Give answers to Parliament, not just residents'
The Straits Times, 13 Feb 2015

Mr K. Shanmugam (Nee Soon GRC): Let's turn to Mr Pritam Singh... In May 2011, you said, and I quote, "If there is one thread that runs through the Workers' Party manifesto, it is the thread of transparency and accountability", you thundered... There is a thread, all right, but it weaves and leaves a tangled web. Would you tell us what is your position on each of these questions I've asked?

Mr Pritam Singh (Aljunied GRC): I fully believe when I do my house visits this Saturday, some of these questions (on AHPETC's lapses) will come up. Likewise, they will come up for my fellow WP MPs. We will answer all of them. Why? Because of a duty to the residents. We will answer to them. Well, minister (Shanmugam), if you were a resident, I'll answer your question. Thank you.

Mr K. Shanmugam: I see a very interesting definition of transparency. We will answer residents, we won't answer in Parliament... But let's not debate it. If you have answers to the questions I've asked, please give it to us tomorrow (the next day's Parliament sitting) when you speak, rather than saying you will answer to your residents when you knock on their doors.

Mr Sam Tan (Radin Mas): Mr Pritam Singh says that he will explain and give the answers to his residents. I must say that I'm a resident of Aljunied GRC.

In fact, Mr Chen Show Mao is my MP. So, I will not bother you to come to my house during the house visit to explain to me.

You can give the answers in the name of transparency, professionalism and integrity and honesty to this House tomorrow.





Public's interests must come first
By Fiona Chan, Deputy Political Editor, The Straits Times, 13 Feb 2015

RITUAL suicide, political intrigue and a hint of corruption made yesterday's Parliament sitting one of the most exciting in months.

Ministers from the People's Action Party (PAP) faced off against the leaders of the opposition Workers' Party (WP), as the latter came under fire for mismanaging their town council accounts.

National Development Minister Khaw Boon Wan kicked off the four-hour parliamentary battle by underlining the seriousness of the accounting lapses by the Aljunied-Hougang-Punggol East Town Council (AHPETC), suggesting that "in the good old days", some Japanese executives might have committed harakiri (ritual suicide) over such lapses.

In response, WP chief Low Thia Khiang laid some blame for his party's financial errors on the "political" nature of town councils, saying it seemed no managing agent that served the PAP wanted to work with the WP after it won Aljunied GRC.

But it was Law and Foreign Minister K. Shanmugam who stole the show. Displaying a killer instinct honed over his years as a top litigator, he told the WP MPs to "stop playing the victim" and accused them of taking "money from the man in the street to give to their friends".

The packed House responded well to the showdown, with Cabinet ministers and WP supporters in the public gallery alike thumping their armrests to show support for their respective speakers.

Several MPs, including Prime Minister Lee Hsien Loong and Deputy Prime Minister Teo Chee Hean, were moved at times to interject from their seats, offering supporting points.

Drama aside, the debate threw up some serious questions.

While the WP put up a spirited showing, it failed to respond to the key issues of why it did not put on the record that its managing agent - FM Solutions and Services (FMSS) - was owned by some AHPETC senior managers, and why it paid the company unusually high managing agent fees.

Some lapses in the town council system as a whole also came into focus. One is the weakness of the Town Councils Act, which neither provides strict rules for town councils' financial accounting nor lays out clear penalties to deal with possible infractions.

Several times, Mr Shanmugam mentioned the "unlawful" nature of AHPETC's related-party transactions and breaches of trust over public money entrusted to town councillors. But it has yet to be made clear what laws have been broken and what legal recourse is available, and to whom.

Cognisant of the need for stronger town council legislation, the Government is already planning to allow more oversight and penalty powers over town council management, Mr Khaw said.

This is to protect public funds and safety, as town council revenues consist of residents' contributions and government grants, and are used for maintenance of common areas and facilities.

But if residents' interests are paramount, Mr Low countered, the Government should also fix another hole in town council laws - by putting in place measures to ensure the smooth transition of management in a constituency that changes political allegiance, such as guaranteeing the continuity of managing agent services.

Yesterday's debate revealed that while CPG Facilities Management, the managing agent of Aljunied Town Council under the PAP, had a contract lasting until 2013, it had asked to be released after the 2011 General Election, leaving the WP scrambling to find a replacement.

But Mr Shanmugam noted that the WP could have refused to terminate the contract, as CPG could not have unilaterally done so. He also disclosed that FMSS was formed just a week after the 2011 GE - before talks supposedly began to terminate CPG's services.

It is clear that the WP has to take responsibility for its failure to exercise proper care and diligence in handling AHPETC's related-party transactions with FMSS.

But it has been enlightening to see the parameters within which the first opposition party to win a GRC has had to operate, and the long-established rules that might need to be tweaked for clearer implementation and enforcement.

While the ruling party has no obligation to make things easy for the opposition, the key is to protect the public's interests. It is also in people's interests that the system is flexible and resilient enough to accommodate political changes.





WP must now walk the talk, take action

AHPETC paid Managing Agent estimated S$1.6 million a year more than other TCs: MND

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