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  • Court Of Appeal Reserves Judgment On MND’s Appeal On AHPETC Ruling

    Court Of Appeal Reserves Judgment On MND’s Appeal On AHPETC Ruling

    The Court of Appeal has reserved judgment for the Ministry of National Development’s (MND) appeal against a High Court decision not to appoint independent accountants to the town council run by the Workers’ Party (WP).

    The MND’s lawyer argued that the court’s ambit should extend to its request for it to appoint independent accountants to the Aljunied-Hougang-Punggol East Town Council (AHPETC), but AHPETC’s lawyer disagreed.

    The crux of the hearing on Monday was to determine whether to uphold High Court Justice Quentin Loh’s finding in May, that there was no legal basis for the MND to ask the court to appoint the independent accountants.

    In his decision, Justice Loh had criticised AHPETC over its lapses, but said that the law only has provisions for the HDB or residents – and not the ministry – to take legal action against a town council that fails to perform its duties.

    He also said that the National Development Minister has powers to appoint the accountants as a condition for disbursing grants to town councils, and does not have to go through the court.

    In appealing the ruling, the MND cited the High Court’s grim view of AHPETC’s actions: “The Judge found that AHPETC had breached and continues to be in breach of its duties and obligations in law, and that there are critical questions about the state of its finances. The Government cannot disburse public funds to AHPETC in the current circumstances, given the very serious findings by the AGO and the High Court.”

    Justice Loh had harsh words for AHPETC, describing it as a “travesty” that it ignored its duties and obligations.

    He was critical of the state of the town council’s accounts, and questioned the validity and propriety of payments previously made to related parties – a reference to AHPETC’s managing agent firms that are owned by the town council’s key officials.

    The MND had said that given the High Court’s findings, it could not immediately disburse about $14 million in grants, over two financial years, to AHPETC without independent accountants safeguarding the monies.

    The MND withheld the sum from AHPETC owing to financial lapses uncovered by the Auditor-General’s Office during a special audit.

    In March, the MND applied to the High Court to appoint independent accountants to AHPETC to oversee the grants, co-sign payments above $20,000, examine past payments, and recover any losses.

    MND’s June 22 application to add the HDB as a co-plaintiff was in anticipation of two possible developments: the Court of Appeal agreeing that HDB, and not MND, is entitled to seek the court order; and the Court of Appeal finding that the sole reason for not appointing accountants is that the MND is not the right party to initiate such action.

     

    Source: www.straitstimes.com

  • AHPETC: MND’s Concerns Highlight Old Issues

    AHPETC: MND’s Concerns Highlight Old Issues

    The Aljunied-Hougang-Punggol East Town Council (AHPETC) says the areas of concern cited by the Ministry of National Development (MND) on its recently submitted accounts were “old issues” that have been explained previously, and that progress is being made to clear up other problems.

    Although the Workers’ Party-run (WP) town council met a newly imposed June 30 deadline to submit its accounts for the financial year (FY) 2013/2014, the MND noted on Wednesday that the accounts were already late by 10 months.

    But AHPETC responded on Thursday night saying “this is an old issue previously explained inside and outside of Parliament …”

    AHPETC chairman Sylvia Lim had said in the foreword of the town council’s annual report that its resources were taken up by an audit by the Auditor-General’s Office (AGO) from March 2014 to January 2015. As such, it was only able to secure a commercial auditor to prepare the accounts after many months.

    The MND said that AHPETC’s own auditors, Audit Alliance, were unable to verify the accounts for the third year running.

    The auditors flagged eight areas of concern, including the presence of related party transactions. This was a reference to two companies engaged by AHPETC, including managing agent FM Solutions and Services, being owned by some key officials of the town council..

    Here, AHPETC’s response was that related party transactions was “an old issue on which AHPETC has made progress”.

    It added that “any concerns will be completely removed after July 15, 2015, when the current managing agent contract expires and AHPETC is directly managed.”

    The town council also said “significant progress has been made on clearing past disclaimers”. This was a reference to the 13 disclaimers – of which three remain unresolved – raised by previous auditors Foo Kon Tan Grant Thornton in its FY 2012/2013 report.

    But AHPETC acknowledged that future audit reports were likely to still “contain qualifications relating to specific items especially handover opening balances, which remain unresolved even with the assistance of AGO, despite 10 months of extensive work”.

    MND on Wednesday also highlighted the state of the town council’s operating surplus and deficit.

    AHPETC had gone from an operating surplus of $1.1 million in FY 2011/2012 to a deficit of $1.53 million in FY 2012/2013.

    By FY 2013/2014, the deficit hit $2.01 million.

    But the town council said in its statement on Thursday that its operating deficit had increased substantially in FY 2013/2014, as operating expenses had risen.

    Meanwhile, the additional revenue it received from the collection of service and conservancy charges (S&CC) in Punggol East – which the WP won in a 2013 by-election – were more than offset by increases in conservancy, cleaning, lift maintenance, and utilities, amongs others things.

    AHPETC also took issue with the MND’s statement the town council had understated its annual operating deficit in FY 2012/2013 by half.

    “The annual operating deficit for FY 12/13 was restated in response to the findings of the AGO audit. The adjustments included corrections as well as provisions made for impairment,” it said.

    It added: “We believe that the trend in changes in AHPETC’s financial position and results of operations will become clearer following the audit (for) FY 2014/2015.”

    These accounts are due for submission to the MND by Aug 31.

    AHPETC also highlighted two points in its auditor’s report that it wanted to “draw public attention” to.

    First, that its auditors said the town council complied with the Town Councils Act in “the receipts, expenditure, investment of moneys and the acquisition and disposal of assets”.

    And second, that the auditors attested that “proper accounting and other records have been kept, including records of all assets of the Town Council whether purchased, donated or otherwise”.

    This was in response to the MND having said that AHPETC failed to comply with the Town Council Act and Town Council Financial Rules as there were lapses in tender specifications prepared by its managing agent; that sinking fund transfers were late; and that town improvement expenses were wrongly paid out of the sinking fund – points that were also made by AHPETC’s own auditors.

     

    Source: www.straitstimes.com

  • New Tender Called For Sengkang Columbarium Site

    New Tender Called For Sengkang Columbarium Site

    A new tender has been called at the Sengkang site originally awarded to a commerical firm to build a Chinese temple housing a columbarium.

    An outcry from residents in the area had led the authorities to terminate the project.

    On Tuesday, the Housing and Development Board (HDB) put up a tender notice for the site at Fernvale Link for the development of a Chinese temple.

    The site, which has an area of 2,000 sq m, will be leased for a term of 30 years.

    The Ministry of National Development (MND) had said in May that the land would be released for re-tender when it signed a mutual termination agreement with Eternal Pure Land, the company which had secured the original bid.

    Tender documents uploaded on the HDB website showed that provisions had been put in place to allow only religious groups to bid for the land.

    “To qualify for participation in this Tender, the Tenderer must be established or constituted for the advancement of religion,” said the documents.

    For-profit companies have been excluded from the tender. Only registered societies, charities and non-profit companies can qualify.

    The tender closes on Aug 4.

    The previous tender had been awarded to Eternal Pure Land, a commercial company that planned to build a temple and commercial columbarium on the land.

    After residents in Build-To-Order flats around the development complained about the land going to a commercial entity, MND terminated the previous tender agreement, and refunded the company the $5.2 million it had paid for the land.

    The ministry also released a small plot of land along Tampines Road, zoned for cemetery use, to the company for a “pilot project” for columbarium services.

     

    Source: www.straitstimes.com

  • Sylvia Lim’s Open Letter To The Residents

    Sylvia Lim’s Open Letter To The Residents

    Dear Residents,

    There has been Parliamentary debate and many adverse media reports on the issue of Managing Agent contract of the Aljunied-Hougang-Punggol East Town Council (AHPETC). I am writing to you to clarify any misconceptions that may have arisen. I also wish to update you on a few matters concerning the management of AHPETC.

    Public Tenders for AHPETC Contracts

    Has AHPETC given contracts to “friends”?

    It has not.

    The fact is that in 2012, public tenders were called and advertised in the Straits Times newspaper for the contracts for Managing Agent (MA) and Essential Maintenance and Services Unit (EMSU) services. In 2014 and 2015, public tenders were also called for the MA and EMSU contracts respectively. Anyone can submit a bid for a public tender. AHPETC does not and cannot reserve contracts for friends in a public tender.

    A tender was not called for MA services only for the one year period from July 2011 to July 2012 when urgent taking over work was needed. The elected Members of Parliaments (MPs) decided to award the newly formed FM Solutions & Services Pte Ltd (FMSS), consisting primarily of managers and staff from the former Hougang Town Council, a one-year provisional contract to take over the initial management of the Town Council, without calling a public tender. This was in order to ensure a smooth takeover of town management in view of the short time on hand to do so and to avoid any disruption in services to the residents.

    Not calling a public tender for an MA contract is allowed under Para 76 of the Town Councils Financial Rules. However, the Town Councillors did not award a standard three-year MA contract to FMSS at this point, as the Town Council intended to call for a public tender for MA services as soon as possible after takeover of town management has been completed and operations have been stabilised.

    Managing Agent Rates & “Overpayment”

    You may have seen and read reports that AHPETC “overpaid” FMSS by an estimated $1.6 million a year and therefore supposedly estimated as $6.4 million over four years.

    To support this allegation a table showing 2014 Managing Agent (MA) rates of Town Councils was distributed during the parliamentary debate on 12 Feb 2015 and the Law Minister said that “FMSS charges the Town Council $14.92 for each commercial unit compared with between $4.80 and $6.65 for all other Town Councils.”, and that “FMSS charged the Town Council $7.43 for every residential unit. Others charge between $4.80 and $6.65”. He used these as the basis to derive at the above estimated overpayments, comparing FMSS’ rates with a “weighted average” of MA rates in other TCs in 2014.

    We were puzzled by the MA rates used by the Minister and hence I filed questions in Parliament to ask the Minister for National Development for more information. On 5 March 2015, the Minister provided Parliament with the tables which I will reproduce here to clarify the matter.

    Table 1 – MA Rates Per Residential Unit by Town Council (2011-2014)

    Town Council 2011 2012 2013 2014
    AHPE $7.87** $7.87** $7.01 $7.43
    Ang Mo Kio $5.08 $5.08 $5.08 $5.33
    Choa Chu Kang $5.13 $5.13 $5.06* $5.06
    East Coast $6.10 $6.20 $6.30 $5.10
    Holland-Bukit Panjang $5.95 $6.10 $6.20 $6.30
    Jurong $5.35 $5.45 $5.55 $5.55
    Marine Parade $5.13 $5.13 $5.13 $5.13
    Moulmein-Kallang $6.63 $6.63 $6.63 $5.80
    Nee Soon $6.05 $6.20 $6.30 $6.40
    Pasir Ris-Punggol $6.11 $6.20 $6.25 $5.50
    Potong Pasir $6.63 $7.80 $7.80 $5.80
    Sembawang $6.05 $6.20 $6.30 $6.40
    Tampines $5.00 $5.00 $4.79* $4.79
    Tanjong Pagar $6.22 $6.25 $6.45 $6.65
    West Coast $6.01 $6.01 $6.10 $6.21

    Note:
    * Indicates there was a change in MA during the period of the predominant rate.
    ** Derived by MND using total MA fees paid, which includes for managing parking lots, and making no distinction between residential and commercial rates.

    We make the following observation from Table 1 on MA rates for residential units:

    1) MA rates of PAP Town Councils in 2014 were lower compared to preceding years for six TCs. In 2011, there were eight PAP TCs with MA rates per residential unit over $6, and nine in 2012 and 2013. In 2014, the number dropped to five and the “weighted average” MA rate in PAP TCs was the lowest.

    2) Compared to 2013, MA rates per residential unit dropped drastically in 2014 for four PAP TCs even though the MA did not change: East Coast from $6.30 to $5.10, Moulmein-Kallang from $6.63 to $5.80, Pasir Ris-Punggol from $6.25 to $5.50, and Potong Pasir from a high of $7.80 to $5.80.

    Next, we look at the data on MA rates for commercial units:

    Table 2 – MA Rates Per Commercial Unit by Town Council (2011-2014)

    Town Council 2011 2012 2013 2014
    AHPE $7.87** $7.87** $14.08 $14.92
    Ang Mo Kio $5.08 $5.08 $5.08 $5.33
    Choa Chu Kang $5.13 $5.13 $5.06* $5.06
    East Coast $11.50 $11.50 $11.50 $5.10
    Hollang-Bukit Panjang $5.95 $6.10 $6.20 $6.30
    Jurong $5.35 $5.45 $5.55 $5.55
    Marine Parade $5.13 $5.13 $5.13 $5.13
    Moulmein-Kallang $6.63 $6.63 $6.63 $5.80
    Nee Soon $6.05 $6.20 $6.30 $6.40
    Pasir Ris-Punggol $11.50 $11.50 $11.50 $5.50
    Potong Pasir $6.63 $7.80 $7.80 $5.80
    Sembawang $6.05 $6.20 $6.30 $6.40
    Tampines $5.00 $5.00 $4.79* $4.79
    Tanjong Pagar $6.22 $6.25 $6.45 $6.65
    West Coast $6.01 $6.01 $6.10 $6.21

    Notes: * and ** as noted for Table 1 above.

    We noted from Table 2 that prior to 2014, some MAs of PAP TCs practiced charging a higher rate for managing commercial property compared to residential property. For example, the MA rate for commercial units at East Coast and Pasir Ris Punggol TCs were $11.50 when their residential rates were in the range of $6. The former MA managing of Aljunied TC, CPG Facilities Management (“CPG”), also had the same practice and hence the former Aljunied TC had a differential MA rate for residential and commercial units (see Table 3).

    In 2014, as seen from the tables, all MAs managing PAP TCs adopted the practice of charging a flat rate for MA fee for both commercial and residential units. Hence, by taking the 2014 rates only, the commercial rate of $14.92 for AHPETC stood out compared with the flat rates of PAP TCs.

    In any case, if we use the same logic of the ministers to derive at “overpayment” estimates, PAP TCs such as Tanjong Pagar (77,300 units), Nee Soon (65,000 units) and Sembawang (67,000 units) are also overpaying their MAs by around $860,000, $530,000 and $550,000 a year respectively. I am not alleging Tanjong Pagar, Nee Soon and Sembawang TCs are overpaying their MAs. My point is that comparing the MA rates of a TC to the “weighted average” of MA rates for all TCs is not a good way to judge the fairness of the rates charged by the MA. As you can see in Table 1 & 2 above, there is a lot of variation in MA rates among TCs, which reflect the different geography and requirements of each town.

    Fair-Pricing the MA Contract in an Uncompetitive Situation

    During the parliamentary debate, the Law Minister also brought up Tampines and Choa Chu Kang TCs because these towns are supposedly comparable to or host a similar number of units as AHPETC. Incidentally, these two PAP TCs also charged the lowest MA rates in 2014 (see Table 1). The contrast is there, but Tampines and Choa Chu Kang are not easily comparable to AHPETC because all towns are different in terms of geography and other town characteristics that affect how they are managed.

    As stated earlier, we decided to award FMSS a one-year provisional contract to ensure a smooth transition to avoid any disruption in services to the residents before calling for a public tender in 2012. The question was how to fairly price the one-year MA contract.

    Reasonably, we used the contractual MA rates agreed to between the former Aljunied Town Council and their MA, CPG, as our reference point for fair-pricing the MA contract (Table 3). There was no reason to doubt the professionalism of the former Aljunied Town Council in contracting the following MA rates with CPG. More importantly, we believed, as evidenced by the varying MA rates in Table 1 & 2, the contractual MA rates with CPG reflected the cost of managing the bulk of the town in terms of its unique geography and town characteristics.

    Table 3. CPG’s contractual MA rates for Aljunied TC

    Period Residential Commercial
    1 August 2010 – 31 July 2011 $6.03 $12.80
    1 August 2011 – 31 July 2012 $6.37 $12.80
    1 August 2012 – 31 July 2013 $6.73 $12.80

    Hence, when Aljunied-Hougang Town Council (AHTC) appointed FMSS as MA for one year, the contract provided for the taking over of the management of the former Aljunied TC at the same MA rate agreed between the former Aljunied TC and CPG for that year (1 August 2011 – 31 July 2012). In other words, our contract with FMSS was substantially the same as CPG’s contractual MA rates for the second year, $6.37 for residential unit and $12.80 for commercial unit (highlighted in Table 3). This was the first cost component for the one year transitional contract. However, there was a second cost component that covered the taking over of the existing staff of the former Hougang Town Council at their existing salary, and also some additional staff who had to come in to prepare for the handover before the actual handover date.

    In its tenders for MA services in 2012 and 2014, AHPETC did not receive competing bids. Only FMSS submitted a bid for our public tender for MA in 2012. In the absence of a competing bid, we again returned to the CPG contractual rates and used the third year rate (2012) as the reference point (Table 3).

    We awarded FMSS the MA contract at the contractual rate for residential units of $7.01 for 2012/13. This rate represented a premium of approximately 4% compared to the third-year CPG residential rate of $6.73 for 2012. We also assessed the increase in the MA fees to be reasonable for several reasons, including the need to operate an additional TC office in Kaki Bukit and the lower economies of scale enjoyed by FMSS as a smaller operator compared to CPG. We were also aware of the MA rates in several PAP TCs being in the range of $6 to $7 at the time of the tender i.e. in 2012.

    The subsequent rise in FMSS’ contractual MA rate from $7.01 in 2012/2013 to $7.43 for 2013/14 for residential units mirrors the annual 6% rise in the CPG contractual MA rates for residential units.

    To summarise, our contractual commitments with FMSS have been based on strict reasoning using available market information in 2012 when tender was called in the absence of competing bids, while placing residents’ interests in undisrupted services at the forefront.

    Follow-ups on the Report by the Auditor-General’s Office

    AHPETC underwent a rigorous 10-month audit by the Auditor-General’s Office (AGO) in 2014. The AGO found some areas where there had been lapses in financial management and weaknesses in controls. AHPETC has made some improvements and has also acted promptly to hire external accountants to assist to clean up its accounts and to further strengthen its processes and controls. The work is making progress and certain financial issues will take time to resolve. AHPETC is also working towards filing its audited accounts by the deadlines set by the Ministry of National Development.

    Transition to Direct Management

    Come July 2015, we will be embarking on direct management of the TC, as no MA has submitted a bid to work for AHPETC. We will do our best to keep costs down and protect AHPETC’s long-term financial interests. On behalf of my fellow MPs and Town Councillors, I would like to thank you for your concern and support. Despite the challenging political climate, we will continue to serve you to the best of our ability.

    SYLVIA LIM
    CHAIRMAN
    ALJUNIED-HOUGANG-PUNGGOL EAST TOWN COUNCIL

    June 2015

    This letter was extracted from the June 2015 edition of Good Neighbours newsletter.

    Click here for the Open letter in Chinese

    Click here for the Open letter in Malay

    Click here for the Open letter in Tamil

     

    Source: www.ahpetc.sg

  • AHPETC: No Managing Agent Has Submitted Bid

    AHPETC: No Managing Agent Has Submitted Bid

    The Aljunied-Hougang-Punggol East Town Council (AHPETC) will not have a Managing Agent from July, as no one has come forward to submit a bid, said chairman Sylvia Lim in an open letter to residents published in the June edition of the Good Neighbours newsletter.

    “Come July 2015, we will be embarking on direct management of the TC, as no MA (Managing Agent) has submitted a bid to work for AHPETC. We will do our best to keep costs down and protect AHPETC’s long-term financial interests,” she wrote.

    She added that the Workers’ Party-run town council would continue to serve residents to the best of its ability despite the “challenging political climate”.

    Ms Lim said the three-page letter aimed to clarify any misconceptions that may have arisen, as well as to update residents on matters concerning the management of the town council.

    Earlier this year, a report by the Auditor-General’s Office pointed out serious lapses in the town council’s books. This sparked a two-day debate in Parliament.

    Among the lapses identified was a failure to manage conflict of interest when it came to transactions involving its Managing Agent FM Solutions & Services (FMSS). Its owners were also senior party officers.

    In the letter to residents, Ms Lim said AHPETC had not given contracts to friends, and that public tenders had been called in 2012.

    “AHPETC does not and cannot reserve contracts for friends in a public tender,” she said, adding that a tender was not called for MA services only in the one-year period from July 2011 to July 2012.

    The then newly-elected MPs had decided to award FMSS a one-year provisional contract – to ensure a smooth takeover of town management and avoid any disruptions in services to residents.

    The town council is also said to have overpaid FMSS by an estimated S$1.6 million a year, over a four-year period.

    But Ms Lim said what AHPETC pays its Managing Agent cannot be compared to the “weighted average” of rates that all other town councils pay.

    She pointed to tables detailing the rates for residential and commercial units between 2011 and 2014, saying that there is “a lot of variation” in rates among the town councils – which reflect the different geography and requirements of each town. This, in turn, affects how they are managed.

    Ms Lim added that this, and later contracts involving FMSS, were fairly priced and based on “strict reasoning” using available market information.

    In wrapping up her letter, Ms Lim told residents that since the AGO report, AHPETC has made some improvements, and hired external accountants to help clean up its accounts as well as to further strengthen processes and controls.

    “The work is making progress and certain financial issues will take time to resolve. AHPETC is also working towards filing its audited accounts by the deadlines set by the Ministry of National Development (MND),” she said.

    MND is currently appealing a High Court decision not to appoint independent accountants to safeguard Government grants to the town council. The court did also point out that grave and serious questions had been raised about the state of the town council’s accounts.

    The ministry said there is an urgent need for independent accountants to be appointed with powers of inquiry and recovery, given the “serious questions” raised about payments AHPETC had made to related parties — a reference to the town council’s managing agent firms.

    The case is likely to be heard on Aug 3.

     

    Source: www.channelnewsasia.com