MPs endorse motion on Auditor-General's findings of lapses at AHPETC

Parliament on Friday unanimously adopted a motion endorsing the Auditor-General's findings of lapses at the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC). -- ST PHOTO: KUA CHEE SIONG
Parliament on Friday unanimously adopted a motion endorsing the Auditor-General's findings of lapses at the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC). -- ST PHOTO: KUA CHEE SIONG

SINGAPORE - Parliament on Friday unanimously adopted a motion endorsing the Auditor-General's findings of lapses at the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC).

All 85 MPs present, including the nine WP MPs, voted for the motion tabled by National Development Minister Khaw Boon Wan.

The motion called on the House to note "with concern" the Auditor-General's report, specifically its findings in four areas:

-The deficiencies in AHPETC's financial and accounting systems, record-keeping and safeguards;

-Uncertain accuracy and reliability of its accounts;

-Lack of proper disclosure and oversight by its town councillors, especially over related-party transactions and conflicts of interest; and

-Risk that AHPETC has not properly managed and spent public funds.

In addition, the motion asked Parliament to call "on all town councils to uphold high standards of accounting, reporting and corporate governance so as to safeguard residents' interests".

MPs were also asked to support stiffer laws for town councils, "in order to hold those responsible for their good management to proper account".

On Friday - day two of the debate on the report - People's Action Party (PAP) leaders demanded that the WP do a forensic examination into the accounts of its managing agent, FM Services & Solutions (FMSS), and take legal action to reclaim public funds from it if necessary.

This is because AHPETC has paid the company $1.6 million more per year than other town councils over the last four years, they said.

Closing the debate, Mr Khaw said on Friday that "FMSS is very highly paid. And what a sterling service the FMSS has rendered AHPETC! It cannot even deliver a competent reliable system and administration of accounts and records. Without a reliable accounting and financial management system, there will be financial and accounting lapses, and opportunities for fraud, abuse and wrong-doing."

But WP leaders said that this higher fees was because no other established managing agent company would do business with it for political reasons.

Since it won Aljunied GRC in 2011, only FMSS has submitted a bid for AHPETC's contracts, and the other major companies that serve PAP-run town councils have not, said WP chief Low Thia Khiang.

Other WP MPs told the House on Friday that contractors which worked with previous PAP regimes would not work with opposition MPs.

FMSS is majority-owned by the secretary and general manager of AHPETC.

WP chairman Sylvia Lim said that other large managing agents could have lower costs than FMSS due to economies of scale, and that those companies have lowered their fees further over the past few years.

While FMSS did charge AHPETC fees "on the high-end of the scale", she said that the WP exhaustively debated the fee structure and came to a conclusion that this was acceptable as FMSS did not have the economies of scale that the other managing agent companies had, and that it was also providing additional services such as an IT system.

But PAP MP Hri Kumar Nair (Bishan-Toa Payoh GRC) said on Friday that the WP not being able to find a managing agent company is a "red herring" as some town councils run the town themselves, rather than use managing agent companies.

The WP has run the Hougang single-member ward since 1991, so it is not new to town management, said PAP MP Liang Eng Hwa (Holland-Bukit Timah GRC), adding that it should not have entered the political race in Aljunied GRC if it did not feel qualified to run a large town council.

Both him and Mr Liang noted that members of the public have told them not to "attack the WP" as the PAP would be accused of bullying the opposition party.

"An auditor friend asked me why PAP is doing the WP a favour by helping them get their house in order? And then be accused of bullying the WP? But what we are concerned about is public money, and that the WP is bullying its own residents," said Mr Liang.

"Why should the WP be let off easy just because they are the opposition?" asked Mr Nair.

On Thursday, Mr Khaw said the Government will withhold $7 million in grants from the town council until it sets its house in order.

The Town Councils Act will also be changed to give his ministry greater power to regulate town councils and take errant ones to task.

Even as Mr Low and Ms Lim stressed that the Auditor-General's report found no evidence of corrupt practices or missing money, Law Minister K. Shanmugam noted that "so many things had gone disastrously wrong".

The WP MPs and town councillors "appear to have seriously breached your fiduciary duties", he said, asking them to come clean and explain themselves to the public and residents.