Friday 13 February 2015

Chen Show Mao learns he's in a fiduciary relationship with AHPETC

AHPETC finances are a 'sorry state of affairs': Shanmugam
"In no other town council except AHPETC, are the secretary, the general manager, the deputy general manager of the town council not just employees of the managing agent, but also complete owners of the managing agent," said Law Minister K Shanmugam.
By Alice Chia, Channel NewsAsia, 12 Feb 2015

Law Minister K Shanmugam described Aljunied-Hougang-Punggol East Town Council’s (AHPETC) finances as a "sorry state of affairs". He called for each of the town councillors to come clean before Parliament and the people of Singapore.

Mr Shanmugam posed questions to Workers' Party MP Chen Show Mao. First, he asked whether Mr Chen knew that Mr Danny Loh, Ms How Weng Fan and Mr Yeo Soon Fei - who are from the town council - owned its related parties FMSS and FMSI.

FMSS was set up by Mr Loh and Ms How, who are husband and wife. Mr Loh also owned FMSI - a sole proprietorship.

Mr Shanmugam said that, since 2011, three more contracts were given to FMSS, for a total contracts value of about S$27 million.

He noted that Mr Loh and his wife later became secretary and general manager of the town council respectively. Mr Yeo, an FMSS shareholder, also became AHPETC's deputy general manager.

"Mr How and Ms Yeo could have been employed by AHPETC. There was no need to set up a new company to provide services to the town council. So, why set up FMSS? It was a convenient vehicle to which millions of dollars went from the town council. And another obvious question: money that went to FMSS - where did it actually go? What happened to it?" asked Mr Shanmugam.

He also asked why there was no discussion at the town council of their ownership, and why there was no record in the minutes of any such discussion.

Another question he posed was whether Mr Chen knew that the trio were allowed to supervise and pay themselves, and that the amounts involved ran into millions of dollars.

"This process is unacceptable and it is also unlawful. In all these 25 years, in no other town council except AHPETC, are the secretary, the general manager, the deputy general manager of the town council not just employees of the managing agent, but also complete owners of the managing agent," said Mr Shanmugam. 


He also asked if Mr Chen knew that FMSS was paid managing agent fees which were much higher than everyone else's.

"The rhetoric from the Workers' Party (WP) is always about helping the poor man. The reality is that the Workers' Party took money from the man in the street to give to their friends in FMSS," said Mr Shanmugam.

Mr Shanmugam said if all the facts had been made known, Mr Chen could not have agreed to the structure.

"As a lawyer, you will know that every town councillor owes fiduciary duties, and you know what fiduciary duties mean,” he said. “It will be a gross breach of those fiduciary duties to have allowed Mr Loh, Ms How and Mr Yeo to act as they did and rubber stamp what they did. You will be aware that such conduct is unlawful.

"If a town councillor acts in breach of his fiduciary duties, then legal action can be brought. The town councillor would have acted unlawfully. Mr Chen, the question is, now that all these details are out – what are you going to do? How are you going to explain to your residents?"

Mr Shanmugam then turned to Mr Pritam Singh. He recalled how Mr Pritam said in 2011 that the thread of transparency and accountability runs through the Workers' Party (WP) manifesto. But the he said Mr Pritam had been anything but transparent and accountable.

Turning to WP chairperson and lawyer Ms Sylvia Lim, he pointed out that she must have known about the ownership of FMSS and FMSI, but she still approved the system that was set up and rubber stamped their actions by countersigning the cheques. He added that Ms Lim did not seem to have ensured that all relevant facts were made known to all the town councillors.

"No discussion on how the serious financial conflicts were going to be handled. No discussions on how residents’ monies will be protected,” said Mr Shanmugam. “You must have known that such conduct would be in serious breach of your legal, fiduciary duties, and that it will be unlawful to do so. Yet you allowed this. The town council also failed to give documents and information to the auditors. The inevitable question is: Why did you do all of this?"

He recalled how Ms Lim said in Parliament on May 2013 that she was committed to being accountable for how the town council was managed. He added that it was the month that she stopped submitting the arrears data.

For Mr Low Thia Khiang, Mr Shanmugam said that Mr Loh and Ms How got the contracts because they were his friends. He asked if Mr Low would take responsibility as secretary-general of WP.

He asked: ”Any honest town councillor will admit that all this is unacceptable, and will want to set right what has gone wrong, which means coming clean on the facts, relooking at all the contracts and payments, and recovering all the excesses, the overpayments, and the payments made in breach of fiduciary duties. Which means taking legal action where necessary. Will the town councillors do that?"

Mr Shanmugam said the Auditor General’s report "makes for sad reading". He said the town council did not manage the sinking fund and had unreliable data. It was also not able to monitor what residents paid in S&CC fees.


"If you were a listed company, by now your shareholders would have sued you,” he said. “Because you collect public funds every month, and you have a duty to account to your residents. Basically your town council is in shambles. It is quite amazing to hear you stand up and say everything is okay.”

Mr Shanmugam noted that when queried on its accounting processes by PricewaterhouseCoopers as part of the AGO's audit, the town council chose to evade the questions.

"Why doesn't the town council give proper answers instead of playing hide and seek?" he asked. "What are you hiding? This is not negligence. It is active decision to suppress. It raises the issue of integrity."

He pointed out that the fact the town council was not able to submit its accounts this year shows that something is wrong.

"It is not just a matter of there having been a few lapses on some issues. So many things are so disastrously wrong,” he said.

“There has been a complete dereliction of duties and this is in addition to the gross breach of fiduciary duties, in relation to FMSS and FMSI. You made a conscious decision to appoint your close supporters - Mr Loh, Ms How and Mr Yeo - to run the town council. You allowed a setup which allowed monies to be paid to them, unlawfully. What does this say of your integrity? In conclusion, I say this to the AHPETC town councillors: Each of you appear to have seriously breached your fiduciary duties."

He urged WP to come clean and explain themselves to the public – noting that their residents deserve some honest answers.


In response, Mr Pritam said his duty was to his residents, and that he would answer all their questions.

“I do house visits twice a week. Other WP MPs - some do it three times a week. We knock on the door ourselves, no RC member with us. I fully believe when I do my house visits this Saturday, some of these questions will come up. Likewise they will also come up for my fellow WP MPs. We will answer all of them. Why? Because our duty is to the residents - we will answer to them,” he said.

“Minister, if you were a resident, I’ll answer your question.”

But Mr Shanmugam said this response raised issues about Mr Pritam's views on transparency.

“I see a very interesting definition of transparency - ‘We’ll answer residents, we won’t answer in Parliament.’” he said. “I’m not sure what you’re saying, because I’ve asked all these questions and you stand up there and you say, ‘If you are my resident I will answer you,’ I assume you mean that since I’m not your resident you will not answer me in Parliament here. But let’s not debate it. If you have answers to the questions I’ve asked, please give it to us tomorrow.”

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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