Sunday 15 February 2015

Parliament: Debate on AGO's audit report on Worker's Party-run AHPETC, Day 2

MPs unanimously endorse motion on Auditor-General's findings of lapses at AHPETC







WP told it must act to recover public funds
Walk the talk, PAP urges WP as all MPs back motion on AGO report
By Rachel Chang, Assistant Political Editor, The Straits Times, 14 Feb 2015

LEADERS of the People's Action Party called on the Workers' Party (WP) yesterday to take all necessary steps, including legal action, to recover public money from its managing agent company, FM Services & Solutions (FMSS).

Charging that its Aljunied-Hougang-Punggol East Town Council (AHPETC) had paid FMSS fees that were $1.6 million more each year - over the past four years - than what other town councils pay, the PAP leaders said in Parliament that the WP must conduct a forensic audit of its accounts.

These actions, said National Development Minister Khaw Boon Wan, would be the "right thing to do" if the WP truly supported the motion before the House.

 This motion, which endorsed the Auditor-General's Office (AGO) findings of serious lapses at the only opposition-run town council and called for stiffening the law regulating town councils, was unanimously endorsed by all 85 MPs present, including the nine WP MPs, after a debate that totalled seven hours.

Thirteen MPs spoke over two tense days.

The AGO's scrutiny of AHPETC was the first national audit of a town council and came after the WP's own auditors could not give it a clean bill of health.

"Mr Low must walk the talk. Demonstrate your sincerity through real actions," said Mr Khaw, referring to WP chief Low Thia Khiang.

Earlier in the day, Mr Low said the WP MPs took collective responsibility for the accounting and governance lapses, and that they would rectify matters.

He said the WP had no choice but to accept FMSS' higher charges because no other managing agent company would bid for the business, for political reasons.

 But PAP leaders yesterday said the debate was fundamentally about the WP's integrity.

Education Minister Heng Swee Keat (Tampines GRC) said the WP had "betrayed the trust" of AHPETC residents, and rejected its argument that inexperience in running a big town council accounted for some of its lapses.

"How much experience do you need to know that you cannot be handing money to your supporters at the expense of overcharging your residents?" he asked.

In several heated exchanges, Mr Low and WP chairman Sylvia Lim sought to explain why FMSS' fees were 20 per cent higher than those of the previous managing agent hired by the PAP in Aljunied GRC.

FMSS is majority-owned by AHPETC's general manager and secretary, a married couple who are long-time WP supporters.

Building on speeches by WP MPs such as Ms Lee Li Lian (Punggol East), who told the House that contractors would not work with them when the constituency changed hands, Mr Low said only FMSS submitted a bid, making its fees the market rate that AHPETC faced when it took over the GRC.

"These rates were through an open tender. But the environment is such that there is no one tendering for the job. Nobody wants to work for me. That is the problem, Prime Minister!" he said, directing his explanation at PM Lee Hsien Loong, who was seated across the aisle from him.

Ms Lim said the WP had done due diligence into FMSS' bid. While at "the high end", it included an IT system from scratch. They also took into account that FMSS was a small company without the economies of scale other managing agents enjoyed, and thus faced higher costs, she said.

PAP MPs called the lack of bids issue a "red herring", as there are town councils who directly manage their towns without hiring managing agents, like Bishan-Toa Payoh GRC, said one of its MPs, Mr Hri Kumar Nair.

He and other PAP MPs took aim at what they described as the WP's "blase" and "arrogant" responses to the charges.

Mr Khaw wrapped up the debate by asking the WP to "take ownership and do their duty".

"If they cannot even run a town council well, how can they be entrusted with the even more critical responsibility of running the country?"









PATTERN OF DENIAL

 "I am very concerned about the pattern in which the WP has betrayed the people's trust. It has a consistent pattern of denial, deflection and protection of its managing agent, which suggests a serious rot is happening."

 - Education Minister Heng Swee Keat, accusing the Workers' Party (WP) of lacking integrity in dealings with managing agent FM Solutions and Services (FMSS), owned by key officers of the WP-run town council



NO GOING EASY ON PARTY

 "Why should the WP be let off easy just because it is the opposition? And why should its residents be forced to accept anything less than full accountability? This cannot be the right way forward."

 - Mr Hri Kumar Nair (Bishan-Toa Payoh GRC), on why the WP town council must be held to the same standards as other entities that have been audited by the Auditor-General's Office

LACK OF TENDERERS

 "If in the public tender for our managing agent contract there is more than one tenderer, that would be easier... Unfortunately, the environment is such that there is no one tendering for the managing agent job. Nobody wants to work for me. That is the problem, Prime Minister!"

 - WP chief Low Thia Khiang, on why the WP town council paid its managing agent higher-than-average rates

AGENT DOESN'T DECIDE

 "In a situation where FMSS is a tenderer in a tender called by the town council, (it) is kept at an arm's length and a (Chinese) wall is built between FMSS and the town council... At no point does FMSS make a decision on who to award the contract to."

 - Mr Pritam Singh (Aljunied GRC) of the WP, disputing allegations about possible conflicts of interest involving the WP town council's managing agent FMSS

PAP OR NOT, I WILL TRY TO HELP

 Madam, I am a reasonable man. I am also a generous man. I am also a very religious man. So, where possible, I try to help. Whoever. Doesn't matter. Whether you are PAP, non-PAP. Key point is, are you sincere in wanting to help your residents? If you are honest, you are clean, I would do my best to help you.

 - Minister for National Development Khaw Boon Wan, responding to Workers' Party (WP) chairman Sylvia Lim, who had asked if the National Development Ministry (MND) would be amenable to accepting the WP town council's financial statements if the accounts still had "a few" unresolved issues. On Thursday, Mr Khaw had said MND would withhold government grants from the WP-run Aljunied-Hougang-Punggol East Town Council until its accounting problems were fixed.






PAP MPs seek answers on 'missing public funds'
WP's Low explains why party paid its managing agent more than others
By Tham Yuen-C, The Straits Times, 14 Feb 2015

AFTER two days of heated debate over questionable accounting decisions made by the Workers' Party-run town council, the party's chief finally lost his signature cool yesterday.

At the end of a lengthy exchange in Parliament with Education Minister Heng Swee Keat, Mr Low Thia Khiang (Aljunied GRC) addressed Prime Minister Lee Hsien Loong - who was sitting directly across from him - and summed up his frustrations.

"Nobody wants to work for me," he said. "That is the problem, Prime Minister!"

In a nutshell, that was the WP's explanation for why its town council is paying its managing agent, FM Solutions and Services (FMSS), the highest fees in town. The question has hung over the House since the debate began on Thursday over the Auditor-General's Office's (AGO) findings of accounting lapses in the WP-run Aljunied-Hougang-Punggol East Town Council (AHPETC).


Law Minister K. Shanmugam on Thursday distributed a table showing that the managing agent fees AHPETC paid were nearly double the average fees at People's Action Party (PAP) town councils. He charged that AHPETC had overpaid its managing agent company - which is owned by some WP supporters who are also senior managers of the town council - by $1.6 million a year over the past four years.

PAP MPs yesterday continued to press the WP for answers on the high fees and potential conflicts of interest involving FMSS.

"Where did the money go?" said Mr Heng. "Why are you so protective of your expensive managing agent that messed up the town council's work? Because they are the party supporters and friends?"

Mr Hri Kumar Nair (Bishan-Toa Payoh GRC) also took issue with the claim by WP chairman Sylvia Lim (Aljunied GRC) a day earlier that the AGO report found no monies missing and uncovered no criminal or dishonest activity.

"The AGO cannot say if public monies have all been accounted for because documents which AHPETC are obliged to keep are missing," he said.

"And as any person knows, loss does not only occur when money is stolen," he added, referring to "substantial overpayments" to FMSS.

Mr Low countered that the issue was not about overpaying or awarding a contract to a friend.

He reiterated that AHPETC had awarded FMSS the managing agent contract in an open tender, and had done due diligence on the fees proposed. It did not help that FMSS was the only bidder in AHPETC's tender, Mr Low said.

"Unfortunately, the environment is such that no one tendered for the managing agent job."

It was a common refrain among the seven WP MPs who spoke during the two-day debate, often to outline the extra challenges AHPETC faced as a town council run by an opposition party.

Ms Lee Li Lian (Punggol East) said a cleaning contractor for Punggol East ran into "issues" with the Manpower Ministry shortly after she took over the ward in 2013, and had to quit. A subsequent tender call drew two bidders who later withdrew from the process "without any valid reasons".

Her fellow WP MP Pritam Singh (Aljunied GRC) recalled an exodus of former Aljunied Town Council staff after the WP took over Aljunied GRC in 2011. This led to difficulties in ensuring the continuity of accounts and was a factor in the town council's accounting lapses, he added.

As for FMSS, Ms Lim said the town council had done checks on its fees in 2012 and found that they were not much higher than the rates charged by Pasir Ris- Punggol Town Council's managing agent.

AHPETC had taken into consideration the fact that FMSS managed only one town and did not have the same economies of scale as larger companies running the other town councils, she added.

"It is possible that the (other) managing agents have reduced their rates since then. The information that we had in 2012, the rates were at a higher level than what was circulated in the table (on Thursday)," she said.

In a statement yesterday, a Ministry of National Development (MND) spokesman said the rates were based on the latest contracts the town councils had signed, and were submitted to MND last year.

The spokesman added that Pasir Ris-Punggol Town Council was paying $6.20 for residential units and $11.50 for commercial units in 2012, "much lower" than AHPETC's rates of $7.01 and $14.08 respectively.

Mr Low went on to add that the WP had also decided not to manage Aljunied GRC on its own as it was a much larger ward than Hougang.

"At the point in time, we were very concerned about taking over a much larger GRC," he said, adding: "We thought it would be better" to hire experienced staff who are "prepared to form a company to manage the town council".

Mr Heng argued that the WP's justification of having to scramble to learn the ropes of town council management also did not hold water.

PAP MPs also had to start from scratch when town councils were first set up in 1986, he said.

"But they had plenty of integrity and sense of responsibility," Mr Heng added.

Responding to the WP's argument that it had no option but to hire FMSS as the only bidder in its tender, Mr Nair said town councils could choose to hire and train its own staff.

"For the last 19 years, we have been managing the town council ourselves," he said of Bishan-Toa Payoh Town Council. "Mr Low also had no managing agent when he ran Hougang Town Council. So, this is a red herring."









Residents' trust was 'betrayed in three ways'
WP MPs fallen short of lawmakers' standard of integrity: Heng Swee Keat
By Charissa Yong, The Straits Times, 14 Feb 2015

THE Workers' Party MPs have betrayed the trust of their residents in three ways, Education Minister Heng Swee Keat said in Parliament yesterday.

They did so by failing to act in the best interests of their residents, by consistently evading questions and by promising one thing and doing another, he said.

Mr Heng, speaking on the second day of a heated debate on the governance and accounting lapses at Aljunied-Hougang-Punggol East Town Council (AHPETC), said that integrity must be a hallmark of all elected MPs as residents have placed their trust in them.

 "Running a town council in a clean, competent and accountable way is a test of the integrity of the MP and his sense of responsibility and accountability," he stressed.

The WP, which runs AHPETC, has fallen short of this standard of integrity in three ways, he said.

First, on the point of failing to act in their residents' best interests, Mr Heng said that the WP had "gotten them (the residents) a raw deal", as the fee paid to their managing agent was the highest among all town councils.

He also charged that the WP was compromising the long-term interests of its residents by not having regularly contributed to AHPETC's sinking fund, which the Auditor-General's Office (AGO) flagged in its report.

Mr Heng said this happened because the town council had cash flow problems, "and they put off paying into the sinking fund so they would have money to pay the managing agent".

Moreover, AHPETC cannot account for where the residents' money is, he said, pointing to its poor records and late accounts.

Second and worse, said Mr Heng, the WP's "consistent pattern of denial, deflection and protection of their managing agent" suggests that "beneath the surface, the town council is rotting". "And the rot is serious."

The responsibility for these failings "lies squarely with the MPs on the council", he said.

"They appointed the managing agent. They are responsible for supervising the managing agent, for setting up a proper structure (of governance)," he said.

National Development Minister Khaw Boon Wan, in his closing speech, agreed with this charge.

Mr Khaw said MPs set the standard of corporate governance in their town councils, and that "if the leader sets a bad example or condones bad behaviour by his senior staff, the other subordinates will likely follow suit".

The primary cause of the AHPETC's failings was "the dereliction of duty by the town councillors, condoning this, allowing it to happen, and making excuses for it when uncovered, instead of putting things right", he said.

Likewise, Mr Hri Kumar Nair (Bishan-Toa Payoh GRC) said the entire episode raised questions about the accountability and integrity of those who run AHPETC.

Mr Heng, too, criticised AHPETC for repeatedly defending its managing agent instead of taking it to task.

The third way the WP had betrayed its residents' trust, said Mr Heng, was that it repeatedly did the opposite of what it promised.

For example, it had promised, during its campaign in the 2011 General Election, to provide checks and balances on the Government, said Mr Heng. "They have created a system where there is no check, no balance. You can't even check yourself. Or you are not willing to check yourself... In fact, the real check in this instance came from the Government, the AGO," said Mr Heng.

The WP's actions were not isolated lapses but "a troubling pattern of dishonest and misleading behaviour", he said.

"This is wrong. This is a serious problem of integrity."


The integrity of elected MPs is important as good governance is critical to Singapore's future, said Mr Heng, who warned that countries where elected officials act without integrity - by putting their cronies' interests first - fail to grow and develop properly.

In these cases, it is the man in the street, the young and future generations who suffer the most, he said. "Unless elected MPs act with integrity and a deep sense of responsibility, and take the trust of the people seriously, we will not be able to maintain a system of good governance and pass this on to our future generations."

Mr Liang Eng Hwa (Holland-Bukit Timah GRC) said of the MPs' duty: "We must not let any errant practices erode the public confidence, trust and integrity of the finances of town councils."





Facing off over $12 million
The Straits Times, 14 Feb 2015

PEOPLE'S Action Party MPs Heng Swee Keat - who is also the Education Minister - and Hri Kumar Nair squared off against Workers' Party (WP) leaders Low Thia Khiang and Sylvia Lim yesterday over $12 million that the WP-run town council failed to transfer into its sinking fund on time.

The WP's view is that the money was kept in its bank accounts and was not lost even if it had not been placed in the sinking fund, but the Auditor-General's Office (AGO), which conducted a special audit of the town council, said it could not draw that conclusion.

Low Thia Khiang: Madam, I have a clarification. I remember minister (Heng) mentioned that there is $12 million lost. May I clarify whether he meant $12 million lost from the town council's account?

Heng Swee Keat: Madam Speaker, I said that if you look at the (town council's) accounts, that the $12 million was missing from the sinking fund, and this was caught by the Auditor-General.

Low Thia Khiang: Missing from the sinking fund? Was it missing or lost from the town council?

Heng Swee Keat: I said that it was missing. I hope that you have read the Auditor-General's Office report because it was very clear that the $12 million that ought to be put into the sinking fund was not there, was missing from the sinking fund, and the Auditor-General had to say you have to put this back.

The rules are very clear as to when you have to put (money) in the sinking fund. And even despite the reminders from the AGO, you were late and even now, not all of it has been put back.

Low Thia Khiang: Thank you. So, $12 million ought to be put into the sinking fund, and the $12 million is in the operating fund account? But it is not missing from the town council.

Heng Swee Keat: As I said, if not for the AGO doing this audit, Singaporeans and the residents of Aljunied, Hougang and Punggol East would be kept in the dark about what happened to your sinking fund.

Low Thia Khiang: Madam Speaker, I disagree. You will never be kept in the dark. You have to submit the audited accounts anyway.

Heng Swee Keat: That is indeed so, that you have to submit the audited accounts, but you didn't. Your audits were late for two years in a row, the first audit had four disclaimers, and the second had 13. So, from year to year, it got from bad to worse.





'Transfers were late, and should not have been'
The Straits Times, 14 Feb 2015

Sylvia Lim: Madam, first of all, I would like to clarify that what minister (Heng Swee Keat) said about us not transferring monies into the sinking fund until we were caught by the AGO is not correct. We actually made some transfers before even the AGO audit commented.

Of course, it is true that we did not make the transfers on time. It was not done deliberately.

And, as I mentioned in the House yesterday, we thought that it was acceptable to keep the monies in the operating fund, pay sinking fund expenses out of there and then net the thing off. So, there was some misunderstanding on our part of that, but we admit that the rule, read strictly, is clear and that we should have done the quarterly transfer.

Hri Kumar Nair: Can I just clarify with Ms Lim that last answer? She said that some monies were transferred back to the sinking fund before the AGO came in and, therefore, they must know what the rules are.

They would have only transferred back because they knew what the rules are. So, the question is why they didn't transfer everything back before the AGO came in.

Sylvia Lim: Madam, as I mentioned earlier, we were doing the calculation as to what sinking fund expenses have been paid out of routine funds. So, it took us quite some time to net off the thing, and AGO advised us that anyway. Later on, they advised us that this is a complicated way of doing things. So, it took us some time to do that. But as I mentioned earlier, we do agree that the transfers were late, and it should not have been done late.





How $3.3 million surplus turned into deficit
By Walter Sim, The Straits Times, 14 Feb 2015

THE Workers' Party (WP) yesterday sought to explain how its town council went from an operating surplus to a deficit in two years.

One key reason was a lift malfunction that sparked an overhaul of lift maintenance procedures in the Aljunied-Hougang-Punggol East Town Council (AHPETC), said Mr Pritam Singh (Aljunied GRC).

This resulted in a large increase in operating expenses.

Another reason was the town council's bigger population base, after Aljunied's town council was merged with Hougang's when the WP won the GRC in 2011.

Mr Singh was responding to Mr Hri Kumar Nair (Bishan-Toa Payoh GRC), who had asked how the former Aljunied Town Council's operating surplus of $3.3 million in financial year 2010 turned into a deficit of $734,000 in financial year 2012 under AHPETC.

"That money is not going to come back. This is something we still have not heard any explanation for," said Mr Nair.

Minister for National Development Khaw Boon Wan had also raised this point in Parliament on Thursday. He noted that the town council's income rose 14 per cent over the two years, but its spending "shot up disproportionately" by 30 per cent.

Part of this was because Aljunied had absorbed Hougang "and its bad finances", Mr Khaw added.

He also attributed the deficit to "the abnormally large fees" that AHPETC paid to its managing agent, which was owned by some key town council officers.

Yesterday, Mr Singh responded that the town council's costs had risen partly because of its larger population.

Payments for cleaning work rose by $1.6 million in the two years, while water and electricity bills rose by $1.2 million.

But the largest increment was in lift maintenance costs, which jumped $2.2 million in that time. This was deemed necessary as a resident who had been in a lift when it malfunctioned had a "very jarring experience", Mr Singh said.

"We were quite concerned about safety issues involving lifts and... decided to invest a bit more money and try and ensure that our lift maintenance procedures and contracts are up to the mark and satisfaction of the MPs."

In his speech, Mr Singh also went into detail to account for the more than $20 million that the Auditor-General's Office (AGO) had said it could not explain after conducting its recent audit.

Included in this sum was money that was recorded as having been received, but without the necessary supporting documents.

Mr Singh also noted that the AGO had said the HDB and National Environment Agency still owes AHPETC about $376,000 - some of it for more than two years now.

He added that the town council is now regularly monitoring and following up with its debtors. "This due diligence will have a positive knock-on effect ensuring that receivables owed are captured in the accounts to accurately reflect the transactions and state of affairs in AHPETC."





Josephine Teo takes issue with WP MP's comparison of lapses in govt
By Charissa Yong, The Straits Times, 14 Feb 2015

SENIOR Minister of State for Transport and Finance Josephine Teo yesterday challenged Mr Png Eng Huat (Hougang) to cite instances where the Auditor- General's Office (AGO) reached the same conclusions in its routine audits of government entities as in its recent audit of the Workers' Party-run town council.

 The exchange happened during the second day of debate on the AGO's findings of accounting and governance lapses by the Aljunied-Hougang-Punggol East Town Council (AHPETC).



Mr Png, a vice-chairman of the town council, had pointed out lapses at ministries and statutory boards the AGO had found in its annual audit of the organisations.

These include instances of overpayments, payments without evidence that goods and services were delivered and duplicate payments, which in one instance amounted to $18.6 million, he said.

"AHPETC is also found by the AGO to have erred in some of these areas, and I am certain AHPETC will not be the last as well, because good corporate governance is a work in progress.

"On any other given day, the report (of the AHPETC audit) may read like a typical AGO report on any entity under audit, but today, the spotlight is on AHPETC, and we will explain to the public," he said.

Mrs Teo pointed out that the AGO concluded in its AHPETC audit that "unless the weaknesses are addressed, there can be no assurance that AHPETC's financial statements are accurate and reliable and that public funds are properly spent, accounted for and managed".

She asked: "I would like to know whether Mr Png is aware of any other occasion that the AGO has drawn the same conclusion for a government ministry or statutory board?"

Mr Png replied that he had not meant to compare the conclusions in the AGO's AHPETC audit with the ones in its annual audits. What he meant was that "such lapses do exist", he said.

Mrs Teo shot back that he "had suggested that ministries and statutory boards have the same problems", even though the AGO had drawn a very specific conclusion about AHPETC.

Mr Png said the examples he cited had been picked up by the AGO. "Are those not real instances where lapses happened too? I am not saying that because (the) AHPETC (audit) was tabled in Parliament, but I am just citing that AGO work is thorough, fair, and I respect that."





WP MPs 'have not answered all the questions posed to them'
By Nur Asyiqin Mohamad Salleh, The Straits Times, 14 Feb 2015

THE Workers' Party (WP) has not been forthcoming in addressing the accounting lapses of its town council, People's Action Party ministers and MPs said yesterday.

Several times in the debate, they described the responses by WP MPs as inadequate and insincere, and criticised their attempts to distract instead of coming clean on how the lapses occurred.

The criticism came even as the WP said its MPs took "collective responsibility" for the lapses and would put things right.

National Development Minister Khaw Boon Wan said he was initially cheered when WP chief Low Thia Khiang declared the party would back the motion that Parliament noted "with concern" the Auditor-General's Office (AGO) report on the audit of the Aljunied-Hougang-Punggol East Town Council (AHPETC).

He said that changed when Mr Low launched into "a political speech, playing the victim of an unfair political world created by the Government".


Mr Hri Kumar Nair (Bishan-Toa Payoh GRC) said the opposition MPs tried to "brush off" its lapses as mistakes due to inexperience and human error.

They also cast the report as saying that no funds were missing and that no criminal or dishonest activity was uncovered, when it did not "by any stretch" say so.

"Rather, (the report) says that it does not know, because of the way the town council has mismanaged its operations," he said.

He added later: "They did come to this House with a different, more contrite tone... But that facade fell away when Mr Pritam Singh said that he will answer to residents who ask him questions during his house visit and not to this House."

Mr Singh (Aljunied GRC) had said on Thursday that the WP MPs would answer any questions that residents might have.

Yesterday, Mr Nair asked several times whether the WP would come clean and answer all questions asked of them in Parliament.

Mr Singh's response: "The WP members have come to Parliament and are taking collective responsibility... We are not here to make excuses."

To this Mr Nair said: "They have not answered all the questions that have been posed to them, and they are certainly not answering the questions they don't want to answer."





PAP 'cannot go easy on WP even if there is political price'
By Rachel Au-Yong, The Straits Times, 14 Feb 2015

PEOPLE'S Action Party (PAP) MPs said yesterday they cannot go easy on the Workers' Party (WP), even if it means paying a political price.

Instead, it was more important to ensure that residents are not short-changed.

This came after Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Mr Hri Kumar Nair (Bishan- Toa Payoh GRC) received feedback that the PAP's harsh criticism of the WP over the Auditor- General's Office (AGO) audit report on the Aljunied-Hougang- Punggol East Town Council (AHPETC) could backfire.

The report had found major lapses in governance.

Mr Nair, chairman of Bishan-Toa Payoh Town Council, said: "The people I discussed the matter with kept telling me, 'Don't attack the WP, it will only get more sympathy. Find a way to move on; you have to keep in mind the politics.'

"I could not get my head around that. Has it come to this? This is a matter involving public funds. How could anyone in good conscience ignore or downplay what the AGO and (PricewaterhouseCoopers) have found?"

Mr Liang said the PAP was more concerned that the WP was "bullying its residents with malpractices", even if such a concern "hurts us politically and (causes) the perception that the PAP bullied the WP".

He criticised the WP's failure to transfer funds to its sinking fund on time or in full. "If there are no regular and diligent contributions to the sinking fund, it will soon run out of money, and there will be no cyclical maintenance to talk about."

Likening the sinking fund to the national reserves, Mr Liang said timely contributions reflect "the type of government we want in Singapore, which is to do whatever is right and for the long-term good of Singapore and its people".

But the mismanagement and wrong use of the sinking fund shows "a short-sighted and populist government", he said.

On AHPETC's decision to employ a managing agent that charged significantly higher fees than others, Mr Liang said it was among the "worst practices that may not even find their place in a Third World Parliament" - a reference to the WP's goal of a "First World Parliament".

"Our politics must not be about accepting mediocre performance and substandard practices. Singaporeans deserve better."





Sharp questions, half-answers and what's truly at stake
Serious concerns raised about 'Gang of Four' AHPETC officers
By Zakir Hussain, Deputy Political Editor, The Straits Times, 14 Feb 2015

THE debate in the House over the Auditor-General's Office's (AGO) report on the troubled accounts of the Aljunied-Hougang-Punggol East Town Council (AHPETC) may seem municipal to some and, to others, a politically calculated move by the ruling People's Action Party.

But it took almost seven hours of intense exchanges over two days before Education Minister Heng Swee Keat yesterday set out the broad context of what was really at stake in the motion on the deficiencies in the Workers' Party (WP)-run town council's systems and accounts.

He cited the issue of integrity on the part of elected MPs - to underline how critical this was for Singapore.

"We have seen how in many countries, when elected officials engage in self-serving practices, when they put their interests ahead of the public interest, when they do not act with integrity and when they put the interests of their cronies first, the country fails. And it is the man in the street and the young, and the future generations, who suffer the most," he said. "As a little red dot, good governance is critical to Singapore's future."

For this, elected officials must act with integrity and responsibility.

The shambolic state of AHPETC's accounts, PAP backbenchers Liang Eng Hwa (Holland-Bukit Timah GRC) and Hri Kumar Nair (Bishan-Toa Payoh GRC) said, calls these very values into question on the part of the WP and its MPs.

One major area the AGO flagged in its audit was the conflict of interest in related party transactions.

The questions that PAP MPs had for the WP were simple: Why did they allow millions to be paid to related parties? Why they did not fully disclose and discuss this conflict of interest? Did the town council incur losses?

Mr Liang had serious concerns about the "Gang of Four" key AHPETC officers - who were owners and directors of FMSS and FMSI which the town council hired as managing agent and contractor respectively - and who approved payments to their own companies.

WP MPs did not engage these questions. They instead provided a slew of often technical responses to points the AGO had made in its audit. Mr Png Eng Huat (Hougang), an AHPETC vice-chairman, said payment cheques had to be co-signed by AHPETC chairman Sylvia Lim or one of the vice-chairmen, and oversight committees ensured that proper work was done before payments were made.

Mr Pritam Singh (Aljunied GRC), the other AHPETC vice-chairman, said no FMSS staffer was involved when tenders by the company were evaluated. The AGO also did not flag criminal wrongdoing on the part of any town council staffer. He added that AHPETC would use the findings to improve things.

Mr Nair took issue with such half-answers. There was still no explanation why FMSS was formed seven days after the 2011 General Election results and before then managing agent CPG discontinued its services.

He also refuted claims by Mr Singh and Ms Sylvia Lim (Aljunied GRC) a day earlier that the AGO report found no monies missing, and uncovered no criminal or dishonest activity.

This was blatantly misleading, as the AGO had said such a broad conclusion could not be derived from its audit.

Mr Heng sought to draw WP leaders out on key questions at the heart of the AHPETC audit: Why did elected MPs allow a structure involving FMSS to be set up in the first place?

"What is most disturbing in this entire sorry episode is the way WP has sought to downplay the crux of the matter, sought to deflect the issue by playing victim of a challenging operating environment that the opposition faced, and claiming inexperience."

There were feisty responses from Mr Low Thia Khiang (Aljunied GRC) and Ms Lim, which left the House no more enlightened.

Mr Low said the WP had explained how only FMSS responded to the tender, and the due diligence the MPs had taken.

As Prime Minister Lee Hsien Loong interjected from across the aisle, Mr Low, with raised voice, snapped: "Nobody wants to work for me. That is the problem, Prime Minister."

When it was clear that little more would emerge from grilling the WP, Mr Heng said the House had heard many technical explanations, but the issue was not a technical one.

"It is about integrity, trust, our conviction that as elected MPs, we are here to serve the people of Singapore, not our friends," he said.

The WP did not give a clear statement on the allegations cast upon its integrity in Parliament these two days, but people are likely to press its MPs for their position on the issue in person. Hopefully they can get clearer answers beyond a replay of the technicalities the House heard.





Episode shows need for stronger laws: Heng
Minister says debate in Parliament was necessary due to 'pattern of denial and deflection' by WP
By Tham Yuen-C, The Sunday Times, 15 Feb 2015

Lapses exposed by an audit of the Workers' Party (WP) town council show the need to strengthen the governance of town councils, said Education Minister Heng Swee Keat yesterday.

His comments came a day after Parliament unanimously endorsed the Auditor-General's Office (AGO) findings of serious lapses at the town council and called for a stiffening of the law regulating these councils.

"We need to ensure that the interests of residents are well served and that there are sufficient safeguards for the use of public funds," he said to reporters on the sidelines of a community event in Tampines held to encourage people to donate used books for a mobile library initiative.

He added that details about how the Town Councils Act will be amended would be discussed later.

The AGO had uncovered major lapses in governance and compliance with rules after a year-long audit of the Aljunied-Hougang-Punggol East Town Council's (AHPETC) accounts.


WP chief Low Thia Khiang said his party's Members of Parliament took collective responsibility for the lapses and have moved to fix the problems identified.

Over two days of lively parliamentary debate that ended last Friday, he and his fellow MPs were taken to task by ministers and MPs for misleading residents and mismanaging public funds.

Yesterday, Mr Heng said the debate was necessary as there has been a "pattern of denial and deflection" by the WP.

Many of the problems at the town council would not have come to light, he said, if not for the AGO audit, and the debate allowed MPs to point out the problems "factually".

He added that the issue was not one about partisan politics.

"It is a broader issue of how elected MPs must act with integrity and act to serve the interests of residents, so it is of greater interest than just a town council issue," Mr Heng said, reiterating what he had stated in Parliament.

The WP had betrayed the trust of residents by paying its managing agent company, FM Solutions & Services (FMSS), fees that were about twice as much as what other town councils pay, he said last Friday.

The company was set up by WP supporters, who also hold key positions in the town council. The AGO flagged conflicts of interest in $25.9 million worth of transactions between the two entities.

During the parliamentary session, Mr Low countered that the contract was awarded to FMSS in a public tender exercise, and the company was the only one that had put in a bid. His town council had also checked the rates proposed and found them comparable to what other town councils were paying.

Yesterday, Mr Heng rejected this explanation.

Referring to the links between the town council and FMSS, he added: "What we have is a structure that is quite convoluted. There were other options that could have been pursued."

For example, he said, the WP could have run the town council directly when it took over after the 2011 General Election, or extended the contract of the incumbent managing agent.

Mr Heng also called on the WP to take "concrete action" to put things in order. These include taking legal action against FMSS to recover public monies lost, and submitting an unqualified set of its financial reports for financial year 2013 by June 30 this year, and for financial year 2014 by Aug 31.

"What needs to be done going forward is for the WP to show that they are indeed sincere about making the changes," he said.





Shanmugam reiterates AHPETC actions 'clearly unlawful'
By Nur Afifah bte Ariffin, Channel NewsAsia, 15 Feb 2015

Law Minister K Shanmugam has reiterated that the actions of the Aljunied-Hougang-Punggol East Town Council (AHPETC) are "clearly unlawful".

He said there are still big questions left unanswered, even after the debates in Parliament following the Auditor-General's discovery of lapses in the town council's financial and accounting systems.

Speaking on the sidelines of a community event at his constituency on Sunday (Feb 15), Mr Shanmugam said the Town Council Act will have to be amended. He added that the government will have to see what the town council does before deciding what the other consequences should be.

Mr Shanmugam said: "First and most important, Parliament agreed to the motion, noting with concern the Auditor-General’s report on the Aljunied Town Council. All the MPs accepted it, including the Workers' Party MPs, the NMPs and NCMPs. So they accept, everyone accepts, that this is serious...

"What concerns me is that the (AHPETC) actions are clearly unlawful. But in Parliament, having accepted in theory the Auditor–General’s report, we were inundated with minutiae about how the safekeeping is going to be made better, how there’s going to be two locks and so on.

"The big questions remain unanswered. Why did you hide information from your own auditors, Foo Kon and Tan? What are you going to do to recover monies that have been lost? Those are questions, because these are people’s monies. There will have to be consequences; we have to see what they do to recover lost money."


Mr Shanmugam said that one clear consequence would be that the Town Council Act will have to be amended. He said: "While there is self-regulation, there has got to be, I think, more oversight. At the same time, there will have to be other consequences.

 "As Minister Khaw has said, we’ll have to see. Actions were unlawful, monies have been lost, what are they going to do? There have been breaches in fiduciary duties by the town councillors themselves. Now, if we apply these standards to any other company or any other town council. You know what Singaporeans will expect? They will expect things to be set right. We want to see what actions are going to be taken to set things right."

Mr Shanmugam also said that the AHPETC actions are against not only the Town Council Act, but other legislation as well. "There are many laws...and the actions are, and I choose my words carefully, I have said that they are unlawful. That’s based on my knowledge and legal advice that we have received."




WP must now walk the talk, take action

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

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