Thursday 19 February 2015

Workers' Party must now walk the talk, take action on lapses in Aljunied-Hougang-Punggol East Town Council

By Khaw Boon Wan, Published The Straits Times, 17 Feb 2015

LAST week, I tabled in Parliament the Auditor-General's audit report on Aljunied-Hougang-Punggol East Town Council (AHPETC) and MPs had a full debate on the matter.

The audit findings on the many lapses of AHPETC's managing agent, FM Solutions and Services (FMSS), and the way the town councillors discharged their duties are serious indictments of the town council.

The Workers' Party (WP) MPs' lack of transparency and accountability in their handling of this mess made for sad reading, raising serious questions about their integrity.

Some say that the WP MPs had to do so, given the abundant evidence gathered by the auditors. How could they vote against transparency and accountability after brandishing these values so stoutly themselves?

But the real test of whether their votes were sincere and whether they truly meant it when they accepted "collective responsibility" is: Will they walk the talk? Will they take concrete actions?

We need to ask these questions because their responses in Parliament did not give confidence to residents. For instance, to show how they keep a close eye on the accounts, WP chairman Sylvia Lim told Parliament that AHPETC's finance and investment committee meets every month. But the Auditor-General Office (AGO) report noted that as of Dec 12 last year, the last finance and investment committee meeting was held last April, which means the committee had not met for at least eight months.

During the debate, while stating that they accepted and respected the findings and conclusions of the AGO report, the WP MPs offered numerous excuses to suggest that the AGO's findings were not as serious as they seemed.

Most importantly, they said that the AGO report concluded that no money had been found to be missing, that there had been no criminal or dishonest activity uncovered and that at all times the sinking fund monies were still in the town council's bank accounts.

These are assertions that the AGO has strongly refuted. Indeed, the AGO report had concluded: "Until the weaknesses are addressed, there can be no assurance that AHPETC's accounts are accurate and reliable, or that public funds are properly spent, accounted for and managed."

There can be no doubt that the system that has been allowed to exist in AHPETC cannot continue.

In their speeches in Parliament, the WP MPs promised to improve. Many would recall that they have made similar promises many times before in the past four years to correct the serious shortcomings in their running of AHPETC. However, the situation just continued to get worse, not better, as their finances declined from surplus to deficit.

WP chief Low Thia Khiang declared in Parliament: "We are for transparency and accountability; we are not shy to support the motion that is critical of us."

But these are just words. The WP must demonstrate its sincerity by taking concrete action. It owes that to its residents. How housing estates are managed impacts public health, public safety and the quality of life for millions of Singaporeans, not to mention property values.

AHPETC needs to show its residents it will make things right.

MP Hri Kumar Nair and I have suggested concrete actions which Mr Low and his colleagues might take if they are truly sincere:
- First, the elected town councillors themselves must commission a forensic audit to get to the bottom of things: How much money has actually been lost? Who was responsible? Where has the money gone? And, in the interest of transparency, send the findings to Parliament.
Such forensic audits are done, for example, in companies where there has been a serious failure to account for money, and/or where money has been lost. The serious concerns with the town council's controls and accounts as disclosed by its own auditors and the AGO make such a step necessary and urgent.
- Second, take action against FMSS to recover what was overcharged. Find out through the forensic audit what other money has been lost and take immediate steps to recover the money.
FMSS was set up immediately after the 2011 General Election for the express purpose of taking over the management of AHPETC. AHPETC paid FMSS a higher managing agent rate than all other town councils paid to their respective managing agents.

Find out how much FMSS has made from this arrangement and where the money has gone. Since FMSS is an exempt private company, AHPETC should apply to the courts to require FMSS to reveal its accounts as the town council is likely to have incurred a loss of public funds to the company. We must not allow FMSS to get away scot-free with its takings.
- Third, rectify the serious conflict of interest with the managing agent, FMSS. Despite the AGO's explicit finding that it had failed to manage properly its related party transactions, the WP had tried to argue that there was nothing wrong with its current arrangement. But it is abundantly clear that this arrangement is not acceptable and cannot continue.
- Fourth, submit clean and properly audited accounts of AHPETC to Parliament just as all other town councils do, as required by law. One set is already overdue. The other set will be due in August this year.
It will not take long to get started on these actions. The first step is to appoint a forensic auditor so that they can get to the bottom of things, and start to clean up the mess. If the WP MPs are sincere, they can start immediately. It will not take more than a few weeks - at most a month - to appoint a forensic auditor, and to initiate a demand to recover the money overcharged.

If they fail to take these two essential first steps, it means AHPETC will continue to place public funds and residents' service and conservancy charges (S&CC) monies at risk.

The viability of the town council and its ability to pay and maintain essential services, as well as the upkeep of essential infrastructure such as lifts, will be in question.

Already, the town council's finances have deteriorated from a surplus position of $3.3 million to a deficit of more than $700,000 in the two short years after the WP and FMSS took over. The true situation since 2012 remains unknown as submissions of audited accounts since 2013 are outstanding.

Some residents are already asking how they can take action to compel AHPETC to make good the losses that the residents have suffered. Some in Aljunied have also asked why their S&CC had been used to cover the deficits in Hougang without consultation.

The Ministry of National Development, too, cannot stand idly by if public funds and residents' money continue to be at risk.

The writer is Minister for National Development.

WP 'focusing on accounts for audit'
By Tham Yuen-C, The Straits Times, 17 Feb 2015

THE immediate priority of the Workers' Party (WP) town council is to get its accounts audited and submitted to the Ministry of National Development (MND) by the June 30 deadline, its chairman Sylvia Lim said yesterday.

"We will do our best to meet that deadline... we are looking to see how fast we can get this done," she said.

Ms Lim, who is also chairman of the Aljunied-Hougang-Punggol East Town Council (AHPETC), was responding to reporters' questions about her party's next step following calls by several ministers for it to take "concrete action" to make right the lapses discovered at its town council.

The Auditor-General's Office (AGO) had, after a year-long audit, uncovered management and accounting lapses at the town council. The most glaring was its failure to properly manage conflicts of interest in dealings with its managing agent, FM Solutions & Services (FMSS).

The company's owners are WP supporters who also hold senior positions in the town council. There were multiple instances in which they had done work, certified it and approved payments to themselves, the AGO said in its report.

Several ministers said in Parliament last week that FMSS overcharged the town council by $1.6 million a year, over four years, for its managing agent fees.

They called on the WP to recover the millions of dollars in public funds it overpaid to FMSS, and to order a forensic audit of AHPETC's accounts.

In an article for The Straits Times today, Minister for National Development Khaw Boon Wan repeated these calls.

Asked yesterday at her meet-the-people session if her town council would do so, Ms Lim declined to comment.

She also did not want to say if FMSS had spoken to the town council over the matter.

She said: "We are focusing on our accounts right now."

AHPETC was given a June 30 deadline to submit its 2013 accounts, which are late. It was also asked to submit its 2014 accounts by Aug 31.

On whether the WP would run the town council on its own as no one had put in a bid in its tender call for managing agent, Ms Lim said: "We are still keeping our options open."

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