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Tag: FMSS

  • WP Chief Low Thia Khiang: KPMG Report On Past Payments & Transactions ‘Inconclusive’

    WP Chief Low Thia Khiang: KPMG Report On Past Payments & Transactions ‘Inconclusive’

    The audit report on the Aljunied-Hougang Town Council’s (AHTC) past payments and transactions remains “inconclusive” despite the manpower and resources spent, said Workers’ Party (WP) chief Low Thia Khiang on Wednesday (Nov 2).

    Mr Low was making his first comments on audit firm KPMG’s finding that flawed governance in the WP-run AHTC had exposed millions in public funds to improper use, to the extent there could be criminal conduct if lapses were deliberate.

    “The report seems to have a lot of answering (to do) despite the fact that they had deployed a lot of manpower, public monies (were) used, and eight months spent,” said Mr Low, who was speaking to reporters before the start of his fortnightly Meet-the-People Session at the void deck of Block 522 Hougang Avenue 6. “The town council also spent a lot of manpower responding to their queries. The MPs were also being interviewed to satisfy their questions, but unfortunately the report seems to be inconclusive in that sense. So that’s it.”

    KPMG’s 68-page report, which was made public by AHTC on its website on Tuesday, flagged “serious conflicts of interest” and a “failed control environment” which exposed millions of dollars in public funds to improper use, including in payments to its former managing agent FM Solutions & Services and service provider FM Solutions and Integrated Services.

    The owners of these two companies concurrently held key management and financial control positions in the town council and approved 132 payment vouchers amounting to more than S$23 million from the town council to the company.

    KPMG also said improper payments to FMSS and FMSI alone amounted to over S$1.5 million, of which at least S$600,000 ought to be recovered by the town council.

    The improper payments to FMSS and FMSI included overpayments for project management fees, overpayments to FMSS for purported overtime and CPF contributions payments to FMSS without certification that work had been performed, as well as payments made without the requisite co-signature of members of the town council.

    AHTC also overpaid when it appointed FMSS as its managing agent by more than S$1.2 million.

    Responding to these issues, Mr Low reiterated the points in a statement issued by his party on Tuesday, saying KPMG had found “no fictitious, fraudulent, nor duplicate payments”.

    “So that is what is important for the public to know,” he added.

    Mr Low also said the report “has not said anything” about conflicts of interest among the WP Members of Parliament, the town councillors, FMSS, and other contractors it appointed.

    “To me, the report is simply more detailed than AGO’s report, in terms of the framework, and the kind of lapses they found are basically as the AGO’s but in more detail, yes, because they had spent a lot of time going through the records. It is a forensic audit,” he added.

    Mr Low was referring to a special audit by the Auditor-General’s Office that found major lapses in compliance and governance in AHTC. The finding led to a High Court ordering AHTC to appoint auditors to fix these lapses.

    After fielding questions for five minutes, Mr Low ended the doorstop interview, saying the town council was still studying KPMG’s report and would issue media releases on the matter, if necessary.

    Meanwhile, Nanyang Technological University accounting professor El’fred Boo said the proposed amendments to the Town Councils Act would help strengthen governance in a few ways, such as how to avoid conflict of interest situations. But he felt that there could be other changes, such as a requirement to set clear objectives and performance milestones to make it easier to assess them and hold them accountable.

    More regular compliance audits could also be made a requirement to boost the Ministry of National Development’s ability to monitor the situation at individual town councils, said Associate Professor Boo. At the same time, there should be a channel for people to report matters of concern to the town council chairman and/or MND, he added.

     

    Source: www.todayonline.com

  • KPMG: ‘Pervasive Control Failures’ In AHTC

    KPMG: ‘Pervasive Control Failures’ In AHTC

    Independent auditors have found that flawed governance in the Workers’ Party-run Aljunied Hougang Town Council (AHTC) led to improper payments running into the millions to various parties, including to its former managing agent FM Solutions & Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI).

    In a report made public on the town council’s website on Tuesday (Nov 1), KPMG said improper payments to FMSS and FMSI alone amounted to over S$1.5 million.

    AHTC also overpaid when it appointed FMSS as its managing agent by more than S$1.2 million, said KPMG, which was appointed by AHTC on court orders to help fix compliance and governance lapses uncovered in a special audit by the Auditor-General’s Office.

    Flagging “serious conflicts of interest” and a “failed control environment” at the town council, the auditing firm also warned that if the issues involving FMSS and FMSI were deliberate, “they could amount to criminal conduct, the implications of which the Town Council should consider”.

    KPMG’s latest report centred on improper payments made by the council to various parties, in particular to FMSS and FMSI, which were appointed between 2011 and last year.

    Their appointments “exposed the Town Council to serious conflicts of interest as the direct owners of FMSS and FMSI (with a profit motive) concurrently held key management and financial control positions in the Town Council (charged with a service motive)”, said KPMG.

    For example, Mr Danny Loh – who died last year – was secretary in the town council as well as shareholder of FMSS, and sole proprietor of FMSI.

    “The situation of FMSS is unlike that of the Town Council’s previous managing agents. In the former case, those approving payments for the Town Councils were not beneficiaries engaging in a profit-motive transaction with the Town Council,” said KPMG.

    In the case of FMSS, the “conflicted persons” were in effect “approving payments to themselves”.

    Meanwhile, the Town Councillors relinquished an “unacceptably high degree of financial responsibility” to the conflicted persons.

    “In this regard, payments with an aggregate financial value of at least SG$23 million involved approvals by the conflicted persons of payments in effect to themselves through payment vouchers, which is an important gateway in the Town Council’s payment approval process,” KPMG said.

    In this “failed control environment”, the improper payments to FMSS and FMSI included amongst others, overpayments to FMSS for project management fees, overpayments to FMSS for purported overtime and CPF contributions payments to FMSS without certification that work had been performed, as well as payments to FMSS that were made without the requisite co-signature of members of the town council.

    These amounted to about S$1.5 million, of which at least S$600,000 ought to be recovered by the town council, said KPMG.

    The firm also said the tendering out of the contracts to FMSS and FMSI was “deficient in numerous respects”.

    For one, for the first managing agent contract, FMSS was more expensive than the comparable contract with the former Aljunied Town Council managing agent.

    When the contract was renewed — the second managing agent contract — the rates increased significantly. The increase in the managing agent’s costs in the first year under FMSS amounted to approximately S$500,000, while under the second managing agent contract the rates were, conservatively, S$700,000 million more that what might have cost to retain CPG as the managing agent.

    Overall, KPMG reported “pervasive” control failures cutting across key areas of AHTC’s governance, financial control, financial reporting, procurement and records management over the audit period. Such flawed governance has potential to “conceal and hinder the detection and identification of all instances of proper payment”, said the accountants.

    As a result, KPMG said it was unable to conclude whether the improper payments and the amounts that ought to be recovered identified in the report are exhaustive.

    Noting that it is beyond the auditors’ mandate to conclude whether an offence has been committed, KPMG said: “While our work was not focused on identifying potential criminal acts arising from the issues we observed, we are advised that, had the shortcomings (identified in) this report been committed deliberately, they could amount to criminal conduct, the implications of which the town council should consider.”

    AHTC said it is studying the report and will respond in due course.

     

    Source: www.todayonline.com

  • Former AHPETC Managing Agent, FMSS, Issues Legal Letter To AHPETC, Claims It Is Owed $3.5 Million

    Former AHPETC Managing Agent, FMSS, Issues Legal Letter To AHPETC, Claims It Is Owed $3.5 Million

    The former managing agent of Aljunied-Hougang-Punggol East Town Council (AHPETC) has sent a letter of demand saying the town council owes it more than $3.5 million.

    The New Paper has learnt that the managing agent (MA), FM Solutions & Services (FMSS), sent the letter, dated July 20, through its lawyers, Netto and Magin.

    This comes at a time when the Ministry of National Development is asking AHPETC whether it overpaid FMSS and, if so, how it plans to claim back public monies that allowed FMSS to make huge profits.

    FMSS, which was incorporated soon after the Workers’ Party (WP) won Aljunied GRC in the 2011 General Election, was managing agent for AHPETC from July 15, 2011, to July 14 this year.

    It claimed the amount was for money owed for services between April and July 14, when its contract with AHPETC expired.

     

    Source: www.tnp.sg

  • AHPETC Paid Highest Rates To Managing Agent In Three Out Of Past Four Years

    AHPETC Paid Highest Rates To Managing Agent In Three Out Of Past Four Years

    Among all the town councils, the Aljunied-Hougang-Punggol East Town Council (AHPETC) paid the highest rates to its managing agent (MA) — for both residential and commercial units — for three out of the past four years, figures from the Ministry of National Development (MND) showed.

    Ms Sylvia Lim, Workers’ Party (WP) chairman and Aljunied GRC Member of Parliament, had filed questions for written answers, asking the MND for the MA rates of each of the town council for residential and commercial units in 2011, 2012 and 2013. She also asked for the names of the firms that were appointed as the MA of each town council for those years.

    In response, the MND released figures for the rates between 2011 and last year. For residential units, AHPETC paid the highest rates to its MA, FM Solutions and Services (FMSS), for the four years, except in 2013 when its rates was behind what Potong Pasir Town Council paid its MA, EM Services.

    For commercial units, AHPETC’s MA rates were the highest in 2011, 2013 and last year, but its rates were topped by those paid by the East Coast and Pasir Ris-Punggol town councils in 2012.

    The ministry also highlighted that all MA contracts charge a “clean MA rate” for each property type, with the exception of the FMSS’ 2011 MA contract with the town council. Unlike other MA contracts, FMSS’ MA fee comprises three separate cost components: The MA rate, a fee to cover the costs of existing staff of the former Hougang Town Council, and a fee to cover the costs of new staff.

    During last month’s parliamentary debate on the Auditor-General’s audit report on AHPETC, which found several accounting and corporate governance lapses, Law and Foreign Affairs Minister K Shanmugam cited the MA rates of each town council last year to show that the fees paid by AHPETC to FMSS were significantly higher. Among other things, Mr Shanmugan charged that the town council made inflated payments to FMSS — whose directors were also key office holders in the town council — without transparency and accountability.

    Ms Lim questioned the figures cited by Mr Shanmugam, asserting that MA rates for commercial and residential units are usually different. In response, Mr Shanmugam said the figures were accurate.

    The ministry has since clarified that the MAs of all town councils, with the exception of FMSS, have done away with the practice of charging differentiated rates for residential and commercial units. The ministry also said Pasir Ris-Punggol Town Council had called for a fresh tender last year, which adjusted its rates for commercial units from S$11.50 to S$5.50.

    Ms Lim also tabled a question asking the ministry what were the rates charged by the MA for the former Aljunied Town Council — which was then run by People’s Action Party — for 2010, 2011 and 2012. The ministry noted that the contract which the former Aljunied Town Council signed with its MA, CPG Facilities Management, is in fact in AHPETC’s possession. CPG’s rate per commercial unit was S$12.80 in those three years. Its rate per residential unit during the period was between S$6.03 and S$6.73.

    Taking into account various components in FMSS’ MA fee, the town council’s payments to FMSS in 2011 were effectively 20 per cent higher than the amount paid to CPG Facilities Management in 2010. By last year, AHPETC was paying about S$1.6 million more to its MA than other town councils, the ministry reiterated.

    Bishan-Toa Payoh GRC MP Hri Kumar Nair questioned the additional fees that the town council paid to FMSS in 2011. “Since the work of running the enlarged Aljunied-Hougang Town Council fell on former Hougang staff — some of whom became owners of FMSS — as well as the new staff whose salaries were provided for, why were additional MA fees payable for that year to FMSS?”

     

    Source: www.todayonline.com

  • Pritam Singh: Managing Agent’s Staff Not Privy To Tender Process

    Pritam Singh: Managing Agent’s Staff Not Privy To Tender Process

    The couple who own FMSS Solutions and Services (FMSS), the company appointed as Aljunied-Hougang-Punggol East Town Council’s (AHPETC) managing agent, may hold top appointments in the town council, but they are not involved in its tender decision-making processes, Aljunied GRC Member of Parliament (MP) Pritam Singh said today (Feb 13), as he addressed the conflict of interest raised in the Auditor-General Office’s (AGO) audit of the beleaguered Workers’ Party-run town council.

    The AGO’s audit report had highlighted AHPETC’s failure to properly disclose and assess safeguards to address the potential conflicts before it entered into agreements with FMSS.

    Mr Singh, who is also the vice-chair of AHPETC, said: (The) “decision-making to award the tender in such a case would … be the sole remit of the Tender and Contracts Committee.”

    None of the staff at FMSS is privy to the evaluation or the decision-making process, he said. The secretary of the town council, Mr Danny Loh, and the general manager, Ms How Weng Fan, were not involved in this process, which Mr Singh stressed was conducted in “strict adherence” to the Town Council Financial Rules.

    Today, Mr Singh and his WP colleagues, Hougang MP Png Eng Huat and Punggol East MP Lee Li Lian, took turns to address some of the lapses flagged by the AGO and tried to assure the House that AHPETC was already setting things right.

    For instance, the town council had, in May 2013, paid back in full about S$18.6 million owed to the Housing and Development Board (HDB) for lift upgrading work, Mr Singh said.

    He added that those expenses were not recorded in the town council’s books in the earlier years because it had a dispute with the HDB over the amount that should be recognised.

    The AHPETC also “duly reversed” several incorrectly stated figures in its books, said Mr Singh, including a S$110,375 figure it believed it should have received from the Inland Revenue Authority of Singapore — an error that was corrected last May.

    After the 2011 General Election, staff of the previous managing agent in Aljunied GRC, then a PAP ward, resigned.

    As they were familiar with the handling of financial documents, their resignation meant the town council lost “a lot of institutional knowledge”, Mr Singh explained.

    He acknowledged that the handover of records from the previous town council management could have been better managed, but added that proper handover procedures were now in place.

    To strengthen internal controls, closed-circuit television cameras have also been set up to monitor the town council’s reception area to detect unauthorised access to its mail, said Ms Lee.

    All cheques received are scanned and saved on a central server and those not banked in by the end of each day are placed in a safe, she added.

    Mr Png said AHPETC has made “incremental improvements” to its computer system over the years. Contrary to the AGO’s findings, he asserted, AHPETC has a “live and up-to-date” system to track every financial transaction in a resident’s account, including arrears in service and conservancy charges.

    Dismissing the insinuation in media reports that AHPETC’s secretary and the general manager, both owners of its managing agent, were pocketing monies paid to the town council,

    Mr Singh reiterated that the recurring payments were necessary “to keep (the) town running, (or) else rubbish will pile up three-storeys high and lives will be endangered if residents are trapped in the lifts with no rescue effort carried out in the shortest possible time”.

     

    Source: www.todayonline.com