Thursday, 10 January 2013

PM orders review of town council software sale

This is in the interest of transparency and maintaining trust in system: PM
By Goh Chin Lian, The Straits Times, 9 Jan 2013

AFTER weeks of intense debate, the Prime Minister has ordered a full review of a controversial sale of software used by town councils to Aim, a People's Action Party-owned firm.

The review, to be conducted by the Ministry of National Development, is "in the interest of transparency and maintaining trust in the system", PM Lee Hsien Loong said in a statement last night.

The ministry has also been asked to re-examine the "fundamental nature" of town councils, to ensure high standards of corporate governance, he said.

The software sale by open tender by PAP town councils to Aim actually took place in 2010.

But it came to light only a month ago, when the Workers' Party (WP) blamed lapses in its performance running the Aljunied-Hougang Town Council (AHTC) in a town council report on the termination of its IT contract with Aim.

The claim by party chairman Sylvia Lim triggered a war of words between the WP, Aim and the PAP town councils as to who was at fault. PAP leaders argued that the salvos directed at Aim were intended as a diversion from the AHTC's poor showing, a charge which Ms Lim rejected.

The WP and critics, including those online, also questioned why a PAP-linked company - whose directors are former PAP MPs - had bought the software only to lease it back to the town councils.

They asked if public funds were at stake and residents' interests were compromised.

Explaining the sale, Dr Teo Ho Pin, coordinating chairman of the 14 PAP town councils, had said, among other things, that it made it easier for them to negotiate as a cluster their software needs. It also saved them some money.

In his statement, Mr Lee noted that Dr Teo had sought to explain the circumstances of the sale.

Mr Lee also pointed out that none of the external auditors who audited the Financial Year 2010 accounts of the town councils raised the sale as an issue.

Despite this, he said he had decided to call for a review.

"In the interest of transparency and maintaining trust in the system, I have asked the Ministry of National Development (MND) to review this transaction fully, and satisfy itself that public funds were safeguarded and residents' interests were not compromised."

The review is expected to take a month or two. The MND's town council review team is in charge, led by deputy secretary Tay Kim Poh. They will report to the ministry's Permanent Secretary, Mr Benny Lim.

Town councils were formed in 1989 to empower local elected representatives and residents to run their own estates.

While town councils are autonomous bodies managed by elected MPs, they are governed by the Town Councils Act, which the MND administers, the ministry's spokesman said.

Planning for the review began last week and field activities should start soon, she added.

Dr Teo and Aim did not respond to queries last night.

The WP's Ms Lim also declined to comment, but the party said on its Facebook page that she had filed an adjournment motion on the issue for next Monday's Parliament sitting. The motion: safeguarding the public interest in town council management.

Political observers said last night that the review should look into greater accountability of political parties that run them, and establish clearer guidelines on how they are transferred from one political party to another.

'Issues of public interest' in review of sale to Aim
Transparency and potential conflict of interest are key, say observers
By Robin Chan, The Straits Times, 9 Jan 2013

CORPORATE governance experts and political observers yesterday welcomed the Prime Minister's call for a full review of the sale of town council software to a PAP-owned company, Action Information Management (Aim).

They said there were issues of transparency and potential conflict of interest that are of public concern.

They also welcomed the review of town councils, and said it should include a look at ways to enhance the accountability of political parties that run them, establish clearer guidelines on transfers from one political party to another, and even their depoliticisation.

Their comments come after Prime Minister Lee Hsien Loong announced yesterday a full review of the software sale.

It came to light a month ago when the Workers' Party cited the termination of a contract by Aim as a factor in Aljunied- Hougang Town Council's lapses in the latest report card on town councils.

Since then, there has been growing public interest in the issue. Now, the Ministry of National Development (MND) is set to conduct a full review of that sale. It will also re-examine the "fundamental nature of town councils" to ensure good standards of corporate governance.

Associate Professor Mak Yuen Teen of NUS Business School, a corporate governance expert, said: "It is good that the transaction will be reviewed. I do not think laws have been broken, but there are certainly issues about the procurement process, conflict of interest and transparency."

Associate Professor Yu Shi Ming, head of the National University of Singapore's Department of Real Estate, added: "The residents need to be reassured that nothing untoward has actually happened, that Aim did not benefit from any of this town council work and to make sure that everything is above board."

He added that the review should resolve the tension between the public and political roles of the town councils.

Joo Chiat MP Charles Chong, a former town council chairman, said it was a good time to relook the purpose of town councils, first set up in 1989. He said: "The purpose was to differentiate between different political parties and MPs. If that is not relevant any more, we should review the need for TCs. If it is still relevant, we should set guidelines."

He added that there should be a set of dos and don'ts on how a town council is managed and transferred to another political party. "There should be some basic guidelines to make sure the residents don't suffer because of politics," he said.

Former Nominated MP Zulkifli Baharuddin said more fundamentally, the review should look at how town councils can be independently assessed by a third party rather than a government body. Political parties need to be able to take over and not rely on "legacies" from the previous management.

Prof Mak said one possibility is for town councils to be run professionally as not-for-profit organisations, rather than by ministers and MPs. "That way, MND could also properly oversee them, and there would not be the perceived conflict of a ministry having to oversee institutions run by MPs. The assessment of town council performance will then be perceived as more independent and objective," he said.

The genesis of town councils
By Andrea Ong, The Straits Times, 9 Jan 2013

THE notion of a town council was first floated in 1984, when former minister Lim Boon Heng proposed the idea during the hustings for the general election.

Mr Lim, the then MP for Kebun Baru, envisioned having a local council made up of MPs and community leaders who would have the autonomy to run the public housing estates in their town.

A committee was set up to look into the idea. It consisted of a team of Ang Mo Kio MPs, including Mr Lim, Mr Lee Hsien Loong, Mr S. Chandra Das, Mr Lau Ping Sum and Dr S. Vasoo. Mr Lim, Mr Das and Dr Vasoo were appointed the first town council chairmen in a pilot launched in 1986. They ran three councils in Ang Mo Kio.

In 1988, Parliament passed the Town Councils Bill. A booklet published by the Ministry of National Development (MND) that year set out the reasons for town councils.

One, they would give Singaporeans the chance to decide the kind of environment they prefer and participate in the day-to-day running of the estate. Two, they would be a "training ground" for future political leaders by having MPs make decisions that affect constituents' lives. Residents would also vote carefully, knowing they were selecting MPs to manage their housing estate.

"If your MP is not honest, or not competent, you will know it soon enough," said then Prime Minister Lee Kuan Yew in his 1988 National Day message. "And if your estate is poorly run, repairs slow, and lift maintenance poor, you will be inconvenienced and worse, the resale value of your flat will be affected... Your personal well-being will be at stake when you choose your MP."

From 1989 to 1991, 27 town councils were formed to take over the management of HDB estates.

The town councils have weathered several controversies since then. In the early days, some had questioned how MPs with no expertise in town management could run the estate more effectively than the HDB.

In 1996, the HDB stopped providing essential maintenance and computer services to all town councils, which then had to operate fully independently.

The PAP town councils pooled resources and hired a private firm to design and manage their computer systems. But the four opposition town councils protested, with some saying it was a political tactic to "fix" the opposition.

Another controversy arose in 2008, when Parliament was told that eight PAP town councils used $16 million of their sinking funds to buy toxic financial products linked to the failed Lehman Brothers bank. Later that year, MND said it would come up with a report to assess town councils' management of estates and funds.

In the first report, released in 2010, opposition town councils Hougang and Potong Pasir scored the worst. It sparked accusations of bias as well as a spat between Workers' Party (WP) MP Low Thia Khiang and then Senior Minister of State Grace Fu, over the leg-up he claimed PAP town councils enjoyed thanks to large injections of upgrading funds.

The fourth report card issued last month led to the current dispute between the WP-run Aljunied-Hougang Town Council and Action Information Management, an IT firm owned by the PAP.

War of words
A BRIEF timeline of the Action Information Management (Aim) saga:

DEC 14, 2012: Aljunied-Hougang Town Council (AHTC) chairman Sylvia Lim says Aim's move to terminate services in the handover from the People's Action Party (PAP) to the Worker's Party (WP) in 2011 affected its performance in a government review.

DEC 17: Aim says it would have extended the lease if the WP had asked, but Ms Lim says an extension "had to be fought for".

She asks why the PAP town councils (TCs) sold the system to Aim, and how a clause to stop services at one-month's notice if there is a material change to a town council membership is in the public interest.

DEC 24: PAP TCs' coordinating chairman Teo Ho Pin and Aim say the contract complied with the law. They reveal details of the 2010 open tender and also that PAP owns Aim.

Aim says the AHTC had wanted to develop its own system and thanked the firm for two extensions that it granted.

DEC 28: Dr Teo and Ms Lim dispute who had wanted to terminate the system first. Aim releases its letters with the AHTC, including one showing that the town council wanted to develop its own system.

Ms Lim says the AHTC had to develop its own system because a possible termination hung over it like the "Sword of Damocles". She questions the sale of systems developed by public funds, to a political party.

JAN 3, 2013: Dr Teo gives more details of why and how the system was sold to the sole bidder. Dr Teo says the sale saved the town councils about $8,000 and was done because it was cumbersome for 14 town councils to own the intellectual property.

He defends the termination clause, saying the contractor priced its tender based on existing TC boundaries.

JAN 5: The AHTC and Aim lock horns again over who terminated the software lease first. The AHTC releases a termination notice dated June 22, 2011, from Aim to back up its case.

Aim responds by pointing to the letter from the AHTC it released earlier, dated June 10, 2011, stating that the town council was developing its own system.

JAN 8: Ms Lim says the AHTC would have been happy to continue using Aim's software, but Aim says the AHTC never said so.

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