AHTC trial: Defence explains more than S$194,000 in payments labelled 'improper' in K
SINGAPORE: Nearly S$200,000 that auditors had marked as "improper" payments was used to pay staff salaries and provide essential services for Hougang Town Council (HTC), defence lawyers said on Tuesday (Oct 9), the third day of a landmark trial.
According to KPMG, four payments amounting to S$194,759 made in 2011 by Aljunied-Hougang Town Council (AHTC) to its then-managing agent FM Solutions and Services (FMSS) or its service provider FM solutions & Integrated Services (FMSI) were "unsupported by certifications of services received".
AdvertisementAbout S$106,000 of the sum was labelled as managing agent fees for HTC.
KPMG executive director Owen Hawkes explained that this payment was considered “improper” as it was for the first half of June. FMSS became the managing agent of the Hougang division only on June 15, and the managing agent of AHTC a month later, according to the defence.
Defence lawyer, Senior Counsel Chelva Retnam Rajah, questioned Mr Hawkes if he had asked AHTC why that invoice was paid.
[h=3]READ: AHTC's previous managing agent CPG also had conflict of interest, defence suggests[/h] AdvertisementAdvertisement“Mr Hawkes, if you had asked AHTC, they would’ve told you the reason ... FMSS had, in fact, paid the salaries of the HTC staff for the first half of June and therefore AHTC was reimbursing them," said Mr Rajah, who represents Workers’ Party (WP) Members of Parliament Sylvia Lim, Low Thia Khiang and Pritam Singh, as well as AHTC councillors Chua Zhi Hon and Kenneth Foo Seck Guan.
At this, lead lawyer for AHTC David Chan cut in, telling Justice Kannan Ramesh that he did not think "any of this is in the evidence or in the pleaded case of the first to fifth defendants".
The judge agreed and told Mr Rajah to add the relevant portion to his case for the defence, which Mr Rajah agreed to.
WHY WERE PAYMENTS FOR EMSU SERVICES "IMPROPER"?
Mr Rajah then turned to the other three invoices, which were for S$29,400 each, for Essential Maintenance Service Unit (EMSU) services for HTC.
He asked Mr Hawkes what his complaint was about these fees, since they were paid according to an agreed contract. Mr Hawkes replied that there was no certification whether or not the services were delivered.
To this, Mr Rajah said that complaints made by residents regarding EMSU services such as lift breakdowns, electricity supply disruptions and lighting problems were recorded in a log of complaints.
When these complaints were resolved, they were marked as closed or resolved, Mr Rajah said.
"Then that complaint is taken as having been certified that it has been adequately and satisfactorily addressed by FMSI. Would you accept that?" He asked.
Mr Hawkes responded that he did not accept that this as certification.
"It's a call log, and I don't know what your experience of call centres is, but my experience ... is that it's not 100 per cent reliable as to what is logged," he said.
[h=3]READ: Hard for opposition town councils to find managing agents, AHTC’s previous vendor an ‘unwilling horse’, says defence[/h][h=3]READ: Workers' Party took on a town council which was ‘stripped of its computer system'[/h]Mr Rajah said that AHTC would pay out invoices only if the word "paid" was stamped on the invoices.
"There was a system in which the invoices would be checked and certified with the word 'paid' before invoices were accepted. Do you accept that?" he asked.
Mr Hawkes said it was "fine" that the word "paid" was stamped on the invoices, but said the Town Councils Financial Rules require that work had to be "satisfactorily done".
"I don't think the word 'paid' meets that," he said.
APPOINTMENT OF ARCHITECTS
The issue of the town council having appointed a higher-priced architect instead of a cheaper alternative was also raised by the defence during the cross-examination of Mr Hawkes.
According to documents, AHTC had appointed the more expensive LST Architects instead of Design Metabolists for seven out of 10 construction projects. The plaintiffs have contended that AHTC could have paid about S$2.8 million more than it would have, had it appointed Design Metabolists for the seven projects.
Both companies had been appointed to AHTC’s panel of architects, following which either of the two could have been selected for the town council’s projects.
The defence had argued in court documents that LST Architects were appointed over Design Metabolists as they were considered to be the better consultant. AHTC’s experience with Design Metabolists, the defence said, was that they were “significantly less efficient” than LST, resulting in project delays that were “to the detriment of the residents”.
[h=3]READ: An 'egregious, cavalier misuse of public funds': Town council lawyers rip into Workers' Party leaders[/h][h=3]READ: Workers' Party MPs, AHTC town councillors acted in good faith, did not breach duties[/h]Mr Rajah also brought up one instance where the company had renegotiated a "much higher fee" based on the percentage of a particular project's total cost, even after it had been awarded the project on a fixed-fee basis.
This was in 2010 when the Aljunied Town Council had awarded the firm a Neighbourhood Renewal Programme project worth about S$7.8 million, on a fixed fee basis.
However, citing an email drafted by former AHTC deputy secretary How Weng Fan, Mr Rajah said that Design Metabolists had submitted claims which worked out to about double the fixed fee it had quoted and this was accepted by the previous town council.
Mr Hawkes admitted that he had not seen the email when KPMG made its report.
“From what we have seen from the previous instance, it may well be that Design Metabolists may not be prepared to carry out the works at this fixed fee, and may seek to renegotiate,” said Mr Rajah.
Lawyer for AHTC, Mr Chan, protested to Mr Rajah's line of questioning and the judge agreed, pointing out that “it does not follow” that if Design Metabolists had charged a higher rate in 2010, they would do so again.
Mr Rajah responded that the defence’s case remains the same: "It’s that (AHTC) felt that other people were more suitable for the job."
The trial continues, with Mr Rajah expected to complete his cross-examination of Mr Hawkes on Wednesday.
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SINGAPORE: Nearly S$200,000 that auditors had marked as "improper" payments was used to pay staff salaries and provide essential services for Hougang Town Council (HTC), defence lawyers said on Tuesday (Oct 9), the third day of a landmark trial.
According to KPMG, four payments amounting to S$194,759 made in 2011 by Aljunied-Hougang Town Council (AHTC) to its then-managing agent FM Solutions and Services (FMSS) or its service provider FM solutions & Integrated Services (FMSI) were "unsupported by certifications of services received".
AdvertisementAbout S$106,000 of the sum was labelled as managing agent fees for HTC.
KPMG executive director Owen Hawkes explained that this payment was considered “improper” as it was for the first half of June. FMSS became the managing agent of the Hougang division only on June 15, and the managing agent of AHTC a month later, according to the defence.
Defence lawyer, Senior Counsel Chelva Retnam Rajah, questioned Mr Hawkes if he had asked AHTC why that invoice was paid.
[h=3]READ: AHTC's previous managing agent CPG also had conflict of interest, defence suggests[/h] AdvertisementAdvertisement“Mr Hawkes, if you had asked AHTC, they would’ve told you the reason ... FMSS had, in fact, paid the salaries of the HTC staff for the first half of June and therefore AHTC was reimbursing them," said Mr Rajah, who represents Workers’ Party (WP) Members of Parliament Sylvia Lim, Low Thia Khiang and Pritam Singh, as well as AHTC councillors Chua Zhi Hon and Kenneth Foo Seck Guan.
At this, lead lawyer for AHTC David Chan cut in, telling Justice Kannan Ramesh that he did not think "any of this is in the evidence or in the pleaded case of the first to fifth defendants".
The judge agreed and told Mr Rajah to add the relevant portion to his case for the defence, which Mr Rajah agreed to.
WHY WERE PAYMENTS FOR EMSU SERVICES "IMPROPER"?
Mr Rajah then turned to the other three invoices, which were for S$29,400 each, for Essential Maintenance Service Unit (EMSU) services for HTC.
He asked Mr Hawkes what his complaint was about these fees, since they were paid according to an agreed contract. Mr Hawkes replied that there was no certification whether or not the services were delivered.
To this, Mr Rajah said that complaints made by residents regarding EMSU services such as lift breakdowns, electricity supply disruptions and lighting problems were recorded in a log of complaints.
When these complaints were resolved, they were marked as closed or resolved, Mr Rajah said.
"Then that complaint is taken as having been certified that it has been adequately and satisfactorily addressed by FMSI. Would you accept that?" He asked.
Mr Hawkes responded that he did not accept that this as certification.
"It's a call log, and I don't know what your experience of call centres is, but my experience ... is that it's not 100 per cent reliable as to what is logged," he said.
[h=3]READ: Hard for opposition town councils to find managing agents, AHTC’s previous vendor an ‘unwilling horse’, says defence[/h][h=3]READ: Workers' Party took on a town council which was ‘stripped of its computer system'[/h]Mr Rajah said that AHTC would pay out invoices only if the word "paid" was stamped on the invoices.
"There was a system in which the invoices would be checked and certified with the word 'paid' before invoices were accepted. Do you accept that?" he asked.
Mr Hawkes said it was "fine" that the word "paid" was stamped on the invoices, but said the Town Councils Financial Rules require that work had to be "satisfactorily done".
"I don't think the word 'paid' meets that," he said.
APPOINTMENT OF ARCHITECTS
The issue of the town council having appointed a higher-priced architect instead of a cheaper alternative was also raised by the defence during the cross-examination of Mr Hawkes.
According to documents, AHTC had appointed the more expensive LST Architects instead of Design Metabolists for seven out of 10 construction projects. The plaintiffs have contended that AHTC could have paid about S$2.8 million more than it would have, had it appointed Design Metabolists for the seven projects.
Both companies had been appointed to AHTC’s panel of architects, following which either of the two could have been selected for the town council’s projects.
The defence had argued in court documents that LST Architects were appointed over Design Metabolists as they were considered to be the better consultant. AHTC’s experience with Design Metabolists, the defence said, was that they were “significantly less efficient” than LST, resulting in project delays that were “to the detriment of the residents”.
[h=3]READ: An 'egregious, cavalier misuse of public funds': Town council lawyers rip into Workers' Party leaders[/h][h=3]READ: Workers' Party MPs, AHTC town councillors acted in good faith, did not breach duties[/h]Mr Rajah also brought up one instance where the company had renegotiated a "much higher fee" based on the percentage of a particular project's total cost, even after it had been awarded the project on a fixed-fee basis.
This was in 2010 when the Aljunied Town Council had awarded the firm a Neighbourhood Renewal Programme project worth about S$7.8 million, on a fixed fee basis.
However, citing an email drafted by former AHTC deputy secretary How Weng Fan, Mr Rajah said that Design Metabolists had submitted claims which worked out to about double the fixed fee it had quoted and this was accepted by the previous town council.
Mr Hawkes admitted that he had not seen the email when KPMG made its report.
“From what we have seen from the previous instance, it may well be that Design Metabolists may not be prepared to carry out the works at this fixed fee, and may seek to renegotiate,” said Mr Rajah.
Lawyer for AHTC, Mr Chan, protested to Mr Rajah's line of questioning and the judge agreed, pointing out that “it does not follow” that if Design Metabolists had charged a higher rate in 2010, they would do so again.
Mr Rajah responded that the defence’s case remains the same: "It’s that (AHTC) felt that other people were more suitable for the job."
The trial continues, with Mr Rajah expected to complete his cross-examination of Mr Hawkes on Wednesday.
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