SINGAPORE: People's Action Party (PAP) ministers listed a range of reasons why Mr Low Thia Khiang and Ms Sylvia Lim should recuse themselves from financial matters relating to Aljunied-Hougang Town Council (AHTC), debating a motion on the issue in Parliament on Tuesday (Nov 5).
Deputy Prime Minister Heng Swee Keat raised the motion, outlining four main issues in the Workers’ Party’s (WP) handling of the matter. Other ministers, including Edwin Tong and Desmond Lee, also weighed in on the issue.
AdvertisementAdvertisementIn his speech, Mr Heng said the WP appointed their “friends” to manage the Town Council at a higher cost than the previous management, concealed the real facts, manipulated the circumstances of the appointment and even misled their fellow Town Councillors.
They also told the public, their auditors and Parliament untruths about the matter, and refused to give auditors documents that might have shed light on their wrongdoing, added Mr Heng.
This followed the High Court’s ruling in October that Mr Low and Ms Lim had “acted dishonestly and in breach of their fiduciary duties” in the appointment of FM Solutions and Services (FMSS) as managing agent for AHTC.
APPOINTED THEIR FRIENDS
AdvertisementAdvertisementAccounting firm KPMG - appointed by AHTC as accountants in 2015 at the Court of Appeal’s direction - had found conflicts of interest in the town council’s appointment of FM Solutions and Services (FMSS) and FM Solutions and Integrated Services (FMSI), Mr Heng pointed out.
“The people that formed FMSS and FMSI were the Workers’ Party’s friends – trusted, loyal supporters. FMSS’ directors and shareholders were the secretary, general manager and deputy general manager of AHTC, respectively,” he said.
FMSS was appointed by the Town Council in 2011 to provide essential maintenance and lift rescue services.
Ms How Weng Fan and the late Mr Danny Loh ran FMSS, AHTC’s managing agent and emergency maintenance service provider. Mr Loh passed away in June 2015, and was secretary of AHTC from Aug 2011 to May 2015.
FMSI, engaged by the town council to provide essential maintenance and lift rescue services, was a sole proprietorship owned by Mr Loh.
Ms How, who was married to Mr Loh, is the director of FMSS and was also the general manager and secretary of WP-run Hougang Town Council before 2011. She later became the deputy secretary of AHTC.
Senior Minister of State for Law Edwin Tong noted that the WP MPs had also previously pointed to the termination of the town council management computer system by the vendor - software firm Action Information Management (AIM), described by Ms Lim as a “vehicle of the PAP” - as reason for the urgency for the appointment of FMSS.
However, he pointed out that Ms Lim had accepted in Court that AIM had been helpful to AHTC and in fact had assisted the town council beyond what it was required to.
Furthermore, as noted by Second Minister for National Development Desmond Lee, evidence from the Court proceedings showed the WP MPs had already taken steps to “considerably upscale” the then-Hougang Town Council’s software, well before they were aware of AIM’s intent to withdraw its own software.
“The truth of the matter was simply that they wanted to use their own software,” said Mr Lee.
CONCEALED FACTS AND MISLED TOWN COUNCILLORS
In his speech, Mr Heng noted that the WP misled their own Town Councillors by deliberately keeping the decision to appoint FMSS away from a Town Council meeting.
By delegating authority to Ms Lim to “keep the other Town Councillors in the dark”, they “concealed their true motives” from the rest of the Town Councillors, he said.
“Among the Workers’ Party Town Councillors, they had one experienced town councillor who had been Chairman of another Town Council for 20 years, and they had three lawyers,” said Mr Heng.
“They should have known that a tender could only be waived under very special circumstances – and they should also have known that these special circumstances did not exist when they waived tender in this case.”
Mr Tong said that while Ms Lim and Mr Low may have had concerns about the political allegiances of CPG and AIM, the other town councillors were themselves members of the WP.
“That they felt they had to mislead their own colleagues to get FMSS appointed without tender speaks volumes,” said Mr Tong.
TOLD UNTRUTHS
In his speech, Mr Heng said that the WP told the public, their auditors and Parliament untruths about the situation.
Ms Lim asked Ms How and the late Mr Loh to sanitise the report on FMSS’ appointment as Managing Agent so it could “pass the auditors’ eyes”, said Mr Heng.
“And she is a lawyer,” added Mr Heng.
“Ms How Weng Fan and Mr Danny Loh were the very officers and shareholders whose appointment was to be approved without tender, and here were Mr Low Thia Khiang and Ms Sylvia Lim asking them to draft and comment on a report concerning their own appointment,” said Mr Heng, noting that the Judge said these actions “cast serious doubt on their honesty and integrity”.
Mr Tong said that it was “astonishing” for an elected official to ask for a report to be sanitised to pass auditors.
“We all know what sanitise means, we all know what pass the auditors eyes means,” he added.
“If it was a truthful report and you knew it to be truthful there should be nothing needs to be done. But clearly this is not the case here.”
Adding that it was “wrong at so many levels”, that the sanitising was conducted by the person who was meant to be recommended by the report, Mr Tong said: “Even a child knows that you don't ask the fox to guard the chicken coop or a wolf to watch the sheep.
“But this little episode provides an insight into the way in which affairs are being conducted at AHTC. And Ms Lim continues in a position of having financial oversight over matters today. How can this status quo be allowed to continue?”
The WP also misled the public, said Mr Heng.
In the Town Council’s press release in August 2011, the party asserted that there was no time to call a tender. The press release also falsely asserted that AHTC did not incur additional Managing Agent fees from appointing FMSS, said Mr Heng.
He then noted that under cross-examination, Ms Lim admitted that this was not true, and that she was aware that it was not true.
Noting that FMSS had only one client, which was Aljunied-Hougang-Punggol East Town Council (AHPETC), Mr Lim noted that all of FMSS’ profit came from the Town Council.
Prior to the WP taking over, the Town Council “enjoyed a surplus”, he added.
Mr Lim said that within the first full year of WP’s management, AHPETC ran an operating deficit of $1.5m, which widened to a deficit of $2m in the second year.
“In a short span of 2 years, the Town Council was run to the ground,” added Mr Lim.
“In stark contrast, WP’s friends in FMSS made $1.5m in profits in the first full year, which shot up to some $3.2m in the second year.”
“How is it fair to the residents? How is this protecting the interests of residents and safeguarding public funds?”
Lastly, Mr Heng said that the party also misled Parliament on multiple occasions.
In 2015, Ms Lim had said in Parliament: “There was an urgent need to put in place a computer system due to the termination of the former system in use.”
Noting that the Judge found that it was “not sufficiently urgent” to justify waiver of tender, this meant that the WP was misleading Parliament when they claimed otherwise in Parliament in 2015.
Referring to the Court’s judgement, Mr Tong said the pair had offered a “litany of false excuses” to justify why FMSS was appointed without tender.
“None of these excuses, which kept shifting and changing shape, can stand up to scrutiny,” he said.
Mr Tong noted the WP had previously sought to justify the appointment of FMSS without tender as “an urgent and pressing matter”, because the previous agent CPG did not wish to continue in the role.
However, he pointed out that CPG was required by law to continue as the managing agent, and had to do so under the prevailing rates.
Ms Lim also said in Parliament in 2015 that no cheque to FMSS of whatever amount could be issued unless either the Town Council Chairman or one of the Vice Chairmen co-signed the cheque, noting that it was not possible for FMSS to pay itself unless it was authorised by the Town Council Chair or Vice Chair who have no interest in FMSS.
Mr Png Eng Huat also confirmed her statement.
Calling these statements “half-truths at best”, Mr Heng noted that there was no standing instruction that co-signatures were required on cheques for payments to FMSI, the EMSU provider.
“In fact, these claims are entirely untrue,” continued Mr Heng. He noted that Ms Lim admitted to the Court that she did not personally check that each payment was justified, and despite the reassurances they gave, there were payments to FMSS without the requisite co-signature of members of the Town Council.
Mr Heng stressed that the judgment was “crystal clear”, and added that Ms Lim and Mr Low also knowingly allowed Mr Pritam Singh to mislead Parliament.
Mr Singh said in 2015 that where FMSS is a tenderer in a tender called by the Town Council, FMSS is “kept at an arm’s length” and “a China wall is built” between FMSS and the Town Council.
“We now know this to be false. The Court found that How Weng Fan had been heavily involved since early May 2011, soon after the General Election, in setting up FMSS and in the plot to keep CPG in the dark,” said Mr Heng, noting that she was also involved in the preparation of the FMSS letter of intent and sanitising the report on FMSS’ appointment as Managing Agent.
“When the Workers’ Party leaders let their own MPs mislead Parliament on their behalf, what does this say about the Workers’ Party’s integrity and values?” asked Mr Heng.
DID NOT PROVIDE DOCUMENTS TO AUDITORS
Mr Heng highlighted that in an audit in 2014, the WP “hid details of the transaction with their friends” and “refused to give the documents and information to their own auditors”.
“The auditors were alarmed and again issued a disclaimer of opinion on the accounts. But the issues they highlighted were not rectified,” he added.
As a result, the Auditor-General carried out an audit in 2014 because of the “serious problems” identified by AHTC’s own auditors, which AHTC, under Ms Sylvia Lim, had “refused to deal with” said Mr Heng.
He added that the AGO was then obstructed by the Town Council.
“The AGO report stated that despite repeated requests for critical documents, the Town Council did not produce them,” he said.
“Still, the 2015 AGO report uncovered serious shortcomings, which cast doubt on whether the Town Council was properly managing public funds.”
The Court of Appeal also ordered the Town Council to appoint independent accountants, despite the Workers’ Party’s resistance, he noted.
“AHTC then responded to the CA’s order cynically, nominating accountants to do the forensic audit, but failing to provide enough information on their proposed accountants’ experience and expertise.
“When HDB asked for additional information, AHTC did not respond.”
The CA noted the Town Council’s lack of rigour and basic due diligence in how it nominated accountants, and on the CA’s direction, AHTC eventually appointed KPMG.
Pricewaterhouse Coopers (PwC), retained by Pasir Ris-Punggol Town Council (PRPTC) after Punggol East became part of PRPTC after the 2015 General Election, also submitted its own report.
Mr Heng said the report raised questions similar to KPMG, finding that AHTC had not been transparent, and had delayed granting PwC access to all necessary documents and information.
Mr Tong highlighted that in a report by KPMG dated Oct 2016, the auditors noted difficulties in getting information and documents out of AHTC.
Citing examples, Mr Tong said that when KPMG examined the electronic devices of town council staff and FMSS employees, they found that documents and archives had been deleted.
“Not just one or two, but several documents and several email archives of persons belong to AHTC and FMSS were removed,” he added.
He also noted that when KPMG began the audit, it wanted to have oral interviews so that they could ask the Town Council members questions.
“But Ms Lim will remember, she and Mr Low, in fact every single elected councillor of AHTC refused to take part in the interview, refused to cooperate with KPMG.”
Mr Lee said the “right and proper thing” for the implicated MPs to do is to recuse themselves from all the town council’s financial transactions, pending an appeal.
"If the same had happened in the corporate context, the management would recuse themselves from running the company,” he said.
Errant officers in other town councils have had to step down, he noted, pointing to the example of former Ang Mo Kio town council general manager Victor Wong Chee Meng, who pleaded guilty to corruption charges in March.
“IN THE INTEREST OF PRESERVING CLEAN POLITICS”
Mr Sitoh Yih Pin - who took over as MP for Potong Pasir in 2011 from former Singapore People’s Party secretary-general Chiam See Tong - acknowledged the difficulties in taking over a Town Council from another political party.
“It is the same in most corporate takeovers. But the stakes in town councils are much higher because we are dealing with the lives and well-being of thousands of families. We were clear in our minds that we had a heavy duty to discharge.
“There were no celebration or sweeping changes made in Potong Pasir post GE 2011. There was no time, teething issues abound and serving our residents and ensuring that their lives are not disrupted unnecessarily were at the top of our minds. And more importantly, we must do it right and ensure accountability in our duties in the Town Council.”
In his closing speech, Mr Heng urged MPs to take a stand on the motion.
“I hope that you will conclude that you should carry out your duty and do what the motion recommends. I urge members of this house to take a stand on this motion in the interest of preserving clean politics in Singapore,” he said.
Mr Tong said the “long sorry saga” saw WP “shifting from one untenable excuse to another”, to justify appointing FMSS without calling a tender.
“And this is set amidst a backdrop of constantly refusing disclosure to auditors, and fobbing off inquiry at every turn so that the real reason could remain suppressed until, as we see, their own IPs decided to bring this action, and it unravelled in Court.”
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