Saturday 18 May 2013

Face-off over WP town council

'Still no answers on dealings with agent'
Teo Ho Pin slams WP's silence on queries over $26m contracts, rates
The Straits Times, 17 May 2013

THE war of words surrounding the Workers' Party's dealings with its town council managing agent was turned up a notch yesterday with the coordinating chairman of People's Action Party town councils, Dr Teo Ho Pin, saying the matter raises "serious issues of financial probity and transparency".

At the heart of Dr Teo's concerns were the circumstances surrounding contracts worth some $26 million which the WP-run Aljunied-Hougang Town Council (AHTC) had awarded to the managing agent FM Solutions and Services (FMSS), a company owned by WP supporters.

In a strongly worded Facebook post, Dr Teo posed several questions about the deals, including how the higher managing agent rates were in the public interest and whether the owners of FMSS were getting double salaries.

He said: "Ms Sylvia Lim (WP and AHTC chairman) needs to explain clearly why a WP-run town council gave more than $26 million of public funds in contracts to close associates.

"And why it paid management fees significantly higher than normal, and 20 per cent higher than its previous managing agent?"

In its response, WP said Dr Teo and National Development Minister Khaw Boon Wan were trying to distract the public from the concerns WP had raised over the sale of PAP town council software to Action Information Management (AIM), a company owned by PAP.

It then challenged Mr Khaw, Dr Teo or anyone at the Ministry of National Development (MND) to make a report to the Corrupt Practices Investigation Bureau or other relevant agencies if they "believe there was any wrongdoing in WP's management of the town council".

"We assure these agencies our full cooperation," WP said.

The exchange marks the fourth day of an argument that began in Parliament on Monday when Mr Khaw gave a ministerial statement on town councils.Yesterday, Dr Teo noted that Mr Khaw had revealed "troubling facts" about FMSS and asked Ms Lim how she would "characterise the FMSS transactions and if public interest had been protected".

"Ms Lim has not answered these queries," said Dr Teo.

He then laid out facts about FMSS that he said Ms Lim and the WP MPs have not disputed. The company, formed four days after the WP won Aljunied GRC in the 2011 General Election, is owned by a couple "who were clearly close and trusted supporters of the WP", said Dr Teo.

Mr Danny Loh and his wife, Ms How Weng Fan, had been assentor and proposer to the WP candidates who contested Ang Mo Kio GRC in the 2006 General Election, he said.

Ms How was also a former employee of the WP's Hougang Town Council, which was merged with Aljunied GRC after the WP's victory there in 2011. Mr Loh is now the secretary of AHTC while Ms How is the general manager/deputy secretary.

The company was awarded three separate contracts: The first, in 2011, was worth $5.2 million and was to manage the town for a year. This was followed by two three-year deals worth $16.8 million and $3.9 million.

Dr Teo also took issue with FMSS' managing agent rates that he said were higher than those in comparable PAP wards. The numbers had been the key sticking point between WP and the MND over the past three days.

He then raised what he said were "three key questions of public interest": First, if AHTC had secured the best possible deal when it awarded the first contract to FMSS in 2011 without a tender.

Second, if AHTC had exercised due diligence in awarding two contracts worth $21 million to FMSS a year later.

And third, if AHTC had protected the interests of Aljunied and Hougang residents.

Dr Teo also asked if Mr Loh and Ms How draw salaries as employees of AHTC, adding: "As Mr Loh and Ms How do business with the TC (town council) through FMSS which they own and profit - do they get paid twice?"

He questioned the need to form FMSS - a for-profit firm - just days after the general election.

While Ms Lim had cited urgency as the chief consideration, he suggested that it would have been easier for AHTC to employ Ms How directly, as was done in WP's former Hougang Town Council.

Dr Teo said: "These questions raise serious issues of financial probity and transparency. The WP MPs in AHTC owe it to the residents of Aljunied and Hougang, as well as Singaporeans in general, to give full answers to them."

The WP responded by saying that many of Dr Teo's allegations had already been addressed in Parliament.

It added that the reason it chose to hire a managing agent rather than hire staff directly should be clear as "almost all PAP town councils have chosen to appoint managing agents as well".

Dr Teo later issued a statement saying that his questions remain unanswered: "Why is Ms Lim reluctant to answer questions? What is she afraid of?"


I asked serious questions about the financial probity of the Aljunied-Hougang Town Council, which Ms Sylvia Lim chairs. Why did WP award multi-million-dollar contracts to its close associates and supporters? No answer. Are the secretary and deputy secretary/general manager, cum owners of FMSS, paid twice? No answer.

Ms Lim has not answered a single question I asked. When questions were raised about AIM, I gave a full public explanation and answered all the questions by the MND review team. Parliament held a full debate on the matter and the Minister for National Development answered all the MPs' questions, including from Workers' Party MPs.

Why is Ms Lim reluctant to answer questions? What is she afraid of?

- Dr Teo Ho Pin, on not getting answers from Ms Sylvia Lim

Teo Ho Pin and Sylvia Lim face off on agent rates
The Straits Times, 17 May 2013

DR TEO Ho Pin, coordinating chairman of the People's Action Party (PAP) town councils, yesterday entered the fray on the dispute over the rates paid to the managing agent of the Workers' Party-run Aljunied-Hougang Town Council (AHTC).

He criticised the Workers' Party (WP) for leaving out commercial units in its initial calculations.

He also charged that the party's revised sums meant either that there is $1 million not accounted for, or the managing agent (MA) rates for AHTC will rise sharply each year.

The Ministry of National Development (MND) had similarly suggested on Wednesday that there had been a discrepancy of $1 million between the number AHTC reported to it and the figures used by WP in calculating managing agent rates.

Last night, WP refuted the "erroneous assertion" that $1 million was missing, saying the difference was because the contract involved staggered price increases.

It was a point that Dr Teo, in his Facebook post, said would spell "bad news for residents".

"It means simply that their current MA rate, which is already high, will rise even higher next year," he said. By his calculations, from $7.58 in FY2012, it would hit $8 this year and $8.50 next year.

The argument, which began in Parliament on Monday, centres on disagreements over how to calculate the rates AHTC is paying its managing agent FM Solutions and Services (FMSS).

National Development Minister Khaw Boon Wan had said that in FY2011, FMSS' rates were 20 per cent higher than those of CPG Facilities Management, the managing agent of the PAP-run Aljunied Town Council, in FY2010.

He questioned if this was in the public interest given that FMSS was owned by WP supporters.

He added that in FY2012, FMSS' rate was over 50 per cent higher than the rate charged by CPG for Tampines Town Council.

This prompted a to-and-fro between WP and MND in the following days, with both sides disagreeing on the actual numbers.

Yesterday, Dr Teo took issue with WP and AHTC chairman Sylvia Lim's responses since Monday.

In Parliament, Ms Lim said FMSS' higher price in FY2011 compared to CPG in FY2010 could be due to inflation, but Dr Teo said yesterday: "Really? Can inflation explain the huge difference in rates with Tampines Town Council?"

On Tuesday, Ms Lim issued a statement citing a rate for FMSS in FY2012 that was $1 less than the one given by MND. She also asked how CPG could charge a lower rate in Tampines in FY2012 than in Aljunied in FY2010, and if the Tampines example was an "outlier".

Dr Teo said that by citing only residential units, Ms Lim's figures were "erroneous and misleading".

Then on Wednesday, Ms Lim presented more figures to show that even when using MND's method, FMSS' rates were still lower than those given by the ministry.

MND responded by saying that AHTC declared to the Housing Board that FMSS' three-year contract was worth about $16.8 million. Divided by three years and the 57,899 units managed by AHTC, this gave a monthly rate of $8.04 per unit.

However, Ms Lim's rate - $7.58 per unit - would result in about $15.8 million if worked backwards. Ms Lim's explanation was that the contract involves staggered price increases.

In a statement last night, Ms Lim stood by the figures she had given. She confirmed that the total price of the FMSS contract she declared to HDB was correct at $16.75 million. But MND had "unjustifiably suggested that $1 million was missing".

She said that as the contract provided for staggered pricing, the total amount could not be derived by multiplying FY2012's rate by three. She did not, however, give the rates for this year and next.

"There is no contradiction in MA rates nor missing money as MND suggests," she said.

She noted in another statement yesterday that her question on whether the Tampines rate is an outlier has not been answered.

Dr Teo, in his response to WP last night, repeated his calculations showing that FMSS' managing agent rates would rise, adding: "In fact by 2014, their managing agent rate will be about $8.50 or 70 per cent higher than Tampines TC's rate.

MND, WP continue debate on managing agent rates
TODAY, 16 May 2013

The dispute between the Ministry of National Development (MND) and the Workers’ Party (WP) over the calculation of Managing Agent (MA) rates at the Aljunied-Hougang Town Council (AHTC) continued yesterday, as the ministry took issue with the opposition party’s accounting.

The MND’s stance was in response to the WP, which provided new figures — different from those provided earlier — while saying that it “continue(s) to be puzzled” by the ministry’s assertions.

The ministry pointed out that, using the new figures provided by the WP, there would be a shortfall of “nearly S$1 million” — compared to the value of the contract awarded to its MA.

On Tuesday, the ministry had said the WP’s method of calculating the MA rate per unit gave an “incomplete picture”, after the WP explained how its MA rates were equivalent to those of the previous managing agent under the People’s Action Party, and not 20 per cent more as asserted by National Development Minister Khaw Boon Wan in Parliament.

The WP said yesterday that even by adopting the ministry’s methodology of using both residential and commercial units, the difference in rates should be 4.55 per cent, and not 20 per cent. By using the MND’s method, the MA rate charged by the town council would be S$7.58 for last year, slightly higher than the S$7.25 per unit the former agent would have charged had it continued to manage the town council in the same year.

An MND spokesperson noted in response that Ms Lim “had asked for MND’s method of computation” of the MA rate per unit for AHTC. “MND, therefore, shared this (on Tuesday). The method is consistently applied to all town councils, based on data submitted by the town councils to HDB,” she said. The spokesperson added: “Based on such declared data, the AHTC MA contract is S$16,752,314 for the three-year contract, or S$465,342 per month. This amount divided by the number of residential and commercial property units (57,899) managed by AHTC works out to S$8.04 per unit per month.”

“This amount (S$8.04) is higher than the rate for Aljunied Town Council (S$6.51) in the past and even higher when compared to the FY2012 MA rate for Tampines Town Council (S$4.99) which is of a similar size. All the rates were computed based on the same method, based on the data declared.”

The spokesperson highlighted that the WP had said on Tuesday that its FY 2012 MA per unit rate was S$7.01. But the figure was amended to S$7.58 yesterday.

WP and ministry lock horns over managing agent rates
By Andrea Ong, The Straits Times, 15 May 2013

THE Workers' Party (WP) yesterday locked horns with the Ministry of National Development (MND) over the rates it paid its managing agent in Aljunied-Hougang Town Council (AHTC). WP disputed the figures cited by National Development Minister Khaw Boon Wan on Monday, citing charges that were $1 less.

The difference stems from WP leaving out commercial units in its sums. MND said last night that the WP numbers give an "incomplete picture" as town councils collect service and conservancy charges from both residential and commercial properties.

For FY2012, WP and AHTC chairman Sylvia Lim said the the managing agent, FM Solutions and Services (FMSS), charged $7.01 per residential unit a month, as opposed to $8.04 per unit cited by Mr Khaw on Monday.

By WP's calculation, this was just about 4 per cent higher than the amount the former managing agent of the PAP-run Aljunied Town Council would have charged had they continued to provide their services. FMSS took over from CPG Facilities Management as managing agent in 2011 after the WP was elected in Aljunied GRC.

On Monday, Mr Khaw said FMSS charged 20 per cent more in managing agent rates for FY2011 compared to what CPG charged the year before. He asked if this was in the public interest, noting that FMSS was owned by WP supporters. Ms Lim also justified the higher rates for FMSS as the contract packed in more. She said they covered services and costs not provided by the previous administration. These include the cost of more lifts due to lift upgrading, more town council offices, and more technical staff. The rates also built in "reasonable increases" for inflation and staff wages.

Ms Lim also explained yesterday that FMSS' rate for FY2011 had two components as the town council had expanded to cover both Aljunied GRC and Hougang after the general election, running six wards instead of five under the PAP.

Ms Lim yesterday also took issue with Mr Khaw's comparison between AHTC and Tampines Town Council. Mr Khaw had said the managing agent fees in Tampines were $4.99 per unit in FY2012 or 50 per cent less than for AHTC.

Ms Lim said the $4.99 charged by CPG in Tampines was lower than the $6.51 the same company charged PAP's Aljunied Town Council in FY2010. Noting that Pasir Ris-Punggol Town Council had been charged $5.75 per residential unit in 2007, she suggested that Tampines was an "outlier".

Residents care most about town councils' estate maintenance
Most of those polled not concerned about politics of running a council
By Tessa Wong, Goh Chin Lian, Sabrina Tiong And Debbie Lee, The Straits Times, 15 May 2013

WHILE politicians debating in Parliament on Monday focused mainly on the link between town council management and electoral fortunes, ordinary Singaporeans said they knew and cared little about the politics of town councils.

What was important to them were swept corridors, working lifts and clean void decks.

The 50 Housing Board residents polled yesterday said unanimously that estate maintenance was their top concern when it comes to town councils.

Most had little knowledge of how exactly their town councils were run, how their money was managed, and which companies were being awarded town council contracts. Yet, only six residents said they wanted more transparency about how councils are run, arguing that it is important to know how public money is spent.

The others, like Aljunied resident Angelia Liu, 57, an executive, zeroed in on the outcomes.

"As long as the council does its job, I don't care whether it's doing business with a company linked to a political party. We expect the town council to upkeep the estate and maintain cleanliness," she said.

Few, whether in People's Action Party (PAP) or opposition wards, had complaints about the performance of their own town councils. Those in Aljunied GRC and Punggol East, which were recently taken over by the Workers' Party, said they did not notice any difference in how their estates were run.

There were also no complaints about service and conservancy charges as hikes have tended to be small. Mr Vincent Ang, 67, a senior logistics executive living in a three-room flat in Queenstown, said he does not bother to query his council on how it spends fees as he is satisfied with its service. "I find the amount I pay is quite worth the services it provides."

The results serve to reinforce the importance of MPs ensuring the estates under their care are managed carefully, even as they contend with the political pressures of running a town council.

Those familiar with the running of town councils yesterday spoke about the impact of political aspects on maintenance.

Corporate governance expert Mak Yuen Teen said the present town council model means "political considerations interfere with proper management of the town councils, leading to rules not being enforced or not collecting service and conservancy charges to score political points, and this is not sustainable".

Former Nominated MP Zulkifli Baharuddin, who used to be general manager of Tanjong Pagar Town Council, said the competitive political landscape has increased pressure. "When the PAP is dominant, you can make a long-term decision and raise charges. People live with it. Now with a stronger opposition, people will want short-term (benefits)."

This could lead some politicians to be less concerned with ensuring the town council's longterm financial sustainability, a policy that causes problems when major cyclical works are due.

Residents in Potong Pasir, for instance, said they have noticed a change in the town under MP Sitoh Yih Pin. Customer service officer Sam Pang, 29, who has lived there for 16 years, said there has been a flurry of refurbishments: "It used to be slightly dull, and some of the street lights were out of order. After the elections, (the estate) became brighter."

Mr Sitoh, who won the long-time opposition seat in 2011, said he had to raise "hundreds of thousands of dollars" from personal contacts to fund small estate improvement projects such as revamping of community gardens and covering open drains.

"We have had to be mindful of the town council's funding constraints," he said.

The big 'G' question in town council politics
By Han Fook Kwang, The Sunday Times, 19 May 2013

Twenty-five years after the law to set up town councils was introduced in Parliament in 1988, Singaporeans finally heard a real debate on the pertinent issues.

Are town councils inherently political in nature and therefore expected to act in a partisan manner?

Is there a conflict of interest when the work is done and money paid to companies owned or affiliated to political parties?

When the leadership of a town council passes from one party to another, how smooth a handover can one expect given its partisan nature?

It took a clumsily handled changeover of the Aljunied Town Council from the ruling party to the opposition Workers' Party (WP) after the 2011 General Election to bring these matters to a head in last Monday's debate.

Even if some of these questions were not answered to everyone's satisfaction, it was a good, robust debate which helped Singaporeans better understand the workings of town councils and the key issues in this saga.

For the ruling party, it was always going to be an uphill task to battle the widespread perception that something was not quite right when it was first revealed that People's Action Party (PAP) town councils had sold their IT system to a party-owned company, Action Information Management (AIM).

Who wouldn't be suspicious after it was revealed that AIM wanted to terminate its contract with the Aljunied-Hougang Town Council (AHTC)?

In fact, when the story broke last December, most people I spoke to had made up their minds and concluded it was done to make life difficult for the opposition, even before hearing the Government's side of the story.

This wasn't surprising given the PAP's long history of playing hardball politics.

Given this cynicism, it might have been better for the Government to respond to the allegations immediately instead of deferring the matter to a review team made up of civil servants from the National Development Ministry (MND).

So which party won the debate?

One online blogger scored it pointedly:

PAP: -1 WP: 0

There were no winners because both sides suffered some damage in the public eye as a result of all the politicking.

Those who believe the PAP was out to fix the opposition are unlikely to change their minds.

And there would also be those who believe the WP was playing the same game to score political points.

Many still cannot accept there was no conflict of interest when AIM bought the IT system from the PAP town councils, or, as has been more recently disclosed, when AHTC awarded its contract to a company owned by WP supporters.

One lesson from this saga is on how strongly people feel about fairness in the political landscape.

The PAP used to be unapologetic about its tough approach to the opposition, declaring that it wasn't its job to make things easier for its political opponents.

Singaporeans accept this, but they also expect the Government to play fair and be seen to be doing so.

In this new mood, there is probably little political capital to be gained by the ruling party from doing otherwise even if it believes what it does is legal and legitimate.

Hence while the AIM transaction might be within the law, as the MND review points out, the public uses a different ethical yardstick to decide whether it was the right thing to do.

As a Straits Times poll published last Wednesday reported, most residents said they were not interested in the politics of estate management; they just wanted their neighbourhood cleaned.

In fact, most said they preferred to have their estates maintained by the Housing Board, reverting to the situation before town councils were set up.

The Straits Times report also quoted those in opposition wards, in Aljunied and Punggol East, saying they didn't notice any difference in the upkeep of their estates, compared to when they were PAP-controlled.

Does this mean town councils have failed to achieve the objective of helping voters decide whether an MP is up to scratch in his estate management work?

If it has, it's not because the original idea was wrong.

The problem lies in the limited work that town councils do that makes a real difference from one estate to another.

The work they do is obviously important - keeping the estates clean, maintaining lifts and common property such as walkways, void decks and open spaces.

But compared to the really big stuff that affects residents - the development and upkeep of all the important facilities in a town such as shops, markets, hawker centres, transport and sports facilities - they pale in comparison. These essential services are still centrally decided by government agencies.

So the local government that MPs head at present is one with a relatively small "g".

That's why those residents interviewed said they couldn't tell the difference.

To really strengthen the link between the work of the MP at the ward level and his election into Parliament, you would have to pile a great deal more responsibilities on him at the local level.

But this wouldn't go down well with residents, going by what they told this newspaper.

The reality is that Singapore is too small a place, with a Government that's too dominant (that's the one with the big "G") to have an effective system of local governments.

That's why electoral outcomes will always be decided by national issues rather than local ones.

It also means a greater chance of elections being affected by large swings in the national mood for or against any one party.

There isn't the same political bulwark that exists in some countries, including in Malaysia where the rural vote provides some measure of stability to the status quo.

For the PAP, town councils no longer confer as much political advantage to the incumbent as might have been hoped for when they were first conceived.

Dare it make the changes that would alter this equation in its strategic review of town councils?

That's a big "G" question.

Time for managing agent to come clean

WHEN Workers' Party (WP) chairman Sylvia Lim brought up the Action Information Management issue last year, she surely expected the People's Action Party and the Government to come clean on the matter.

And they did come clean, first with a comprehensive report by the National Development Ministry and then the debate in Parliament on Monday ("Khaw: Town councils political by nature"; Tuesday).

In fact, it was revealed that the WP-appointed managing agent, in the form of husband-and-wife company FM Solutions and Services, was set up just four days after the WP won Aljunied GRC in the 2011 General Election.

Just who are this couple? Shouldn't they speak up for themselves in the face of so much public discussion?

Perhaps it is time for Ms Lim to call a press conference and introduce the couple to the public, and let them answer all the burning questions that have been raised in the media and, most importantly, come clean, like what the Government did in Parliament earlier this week.

Accountability and transparency have to work both ways - not just for the government of the day but also for the opposition parties.

S. Ramamirtham
ST Forum, 18 May 2013

Where's the accountability?

ON MONDAY, National Development Minister Khaw Boon Wan revealed in Parliament details about the management contract awarded by the Workers' Party-run Aljunied-Hougang Town Council to FM Solutions and Services (FMSS) without a tender being called ("Khaw: Town councils political by nature"; Tuesday).

It was also mentioned that FMSS is principally owned by a husband-and-wife team with a long association with the WP, and who acted as the assentor and proposer to the party's Ang Mo Kio GRC team in the 2006 General Election.

How did we end up in this situation?

The website of the Auditor-General's Office (AGO) states that its mission is to "audit and report to the President and Parliament... on the proper accounting of public moneys and use of public resources so as to enhance public accountability".

A town council is a public set-up and uses public funds. So why was the AGO not involved in the auditing of town councils?

Even if it is not responsible for doing so, there are still some safeguards in the Town Councils Act.

For example, the Act states that "a member of a town council who is in any way, directly or indirectly, interested in a transaction or project of the town council shall disclose the nature of his interest at a meeting of the town council".

Was the disclosure of the ownership of Action Information Management and FMSS made during the tender stage? What steps were taken to protect public interest?

And, most importantly, were these noted down in the minutes of town council meetings? Can these minutes be made available to the residents or to the National Development Ministry at least?

The Act further states that "the minister may make rules to be called Financial Rules... for carrying out the provisions of this Act" and "such rules may provide for the collection, receipt, custody, issue, expenditure, due accounting for, care and management of all moneys of a town council and the guidance of all persons concerned therein".

Did the minister or ministry set any rules for the proper management of town council funds?

How were tenders conducted, and what happens if there is a conflict of interest? Was another level of approval needed, say, from the National Development Ministry if there was a conflict of interest?

Party members, as well as their friends and family members, should be barred from town council tenders to avoid any real or perceived conflicts of interest.

Town councils should also share with residents details of the tenders awarded.

Kalaiselvan Rajangam
ST Forum, 18 May 2013

Town councils: Time to clear the air
Editorial, The Straits Times, 20 May 2013

THE Government made its thinking on town councils plain last week when it argued that they are political institutions, and Members of Parliament have been given latitude in running them. Ironically, it was an accusation by the Workers' Party, that the People's Action Party had compromised the interests of residents in its IT deal with a PAP-owned company, which prompted National Development Minister Khaw Boon Wan to lay the political cards on the table. In a parliamentary disclosure that took the wind out of the moral sails on which the opposition party had been coasting, he pointed out that the WP, too, had turned to party affiliates in its town council management. The WP's defence - that the affiliates were supporters and not party members - was hardly convincing. The larger point the minister made was that town councils are political because elected MPs are accountable for the way they are run. This was their founding purpose, namely, to tie electoral outcomes to how well elected representatives maintain the living environment.

Now that the principle has been restated, it is time to address public disquiet over the revelations of contracts and jobs being given to supporters, which have caught the public by surprise. While town councils are political bodies, this in no way suggests that MPs should have a completely free hand in how they should be run with no regard for the rules of propriety which should govern all public institutions. While the practices which have come to light might not have been illegal, they nevertheless offend public sensibilities of what is right.

Anecdotal evidence and a poll of 50 Housing Board residents carried out by this paper show that ordinary Singaporeans are concerned less with the politics of town councils than with how well their estates are maintained. It would seem, therefore, that while the political rationale of town councils is not unimportant, ways will need to be found to institutionalise the functioning of town councils so as to ensure reliable services continue even when councils change hands politically.

There is a need for a code of conduct to govern such handovers. Mayor Teo Ho Pin presented a forceful case for a facilitative framework that would be important also when the constituency boundary changes. Making the Ministry of National Development the arbitrator in disputes would add a protective layer of public-service impartiality to the arrangement. The code should cover the safeguarding of assets, the disclosure of interests, the tender process, as well as restrictions on party officials being given contracts. Clarity on these would help restore confidence in town councils.


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