Workers' Party (WP) chairman Sylvia Lim said the town council it runs never hid the fact that its senior officers were also owners of its managing agent, FM Solutions and Services (FMSS).
She also said the Aljunied-Hougang-Punggol East Town Council (AHPETC) has put in place measures to ensure transactions involving FMSS are subject to greater scrutiny.
Ms Lim, who is AHPETC's chairman, made these points in Parliament yesterday as she led her party's clarifications of the lapses found by the Auditor-General's Office (AGO) in a year-long audit of its accounts. Opening her 35-minute speech, she said: "We, the MPs of Aljunied, Hougang and Punggol East, are concerned about these matters."
One major lapse was the town council's failure to manage conflicts of interest in $25.9 million worth of transactions with FMSS and FM Solutions and Integrated Services (FMSI), which provides rescue and maintenance services.
The town council's senior officers are secretary Danny Loh Chong Meng, general manager How Weng Fan, and deputy general managers Yeo Soon Fei and Johnson Lieow Chong Sern. They are also owners of FMSS, and Mr Loh is the sole owner of FMSI.
AHPETC, Ms Lim said, had always acknowledged these links.
She also said that for a small company like FMSS, it is unavoidable for its directors to hold key positions in the town council they manage. But since the release of the AGO findings this week, she said media reports had created "misimpressions... that the town council secretary and its general manager... are freely being given contracts without tender and paying themselves handsomely without accountability".
This was not the case, she said. The managing agent did not have powers to award tenders or evaluate those it participated in. Instead, a committee of the party's MPs and appointed councillors made the decisions, she said.
Ms Lim also addressed the AGO's criticism of the town council not having checks on payments made to FMSS and FMSI.
The AGO had highlighted 84 invoices, worth $6.6 million, that Mr Loh and Ms How had issued as senior officers of FMSS and FMSI.
Then, as AHPETC officers, the duo approved or signed cheques for some of these invoices.
Ms Lim said about 96 per cent, or invoices for $6.4 million, were monthly payments for managing agent and lift services, based on rates agreed to in contracts. She said cheques made to FMSS also had to be co-signed by her, or either of AHPETC's vice-chairmen Png Eng Huat and Pritam Singh, since Sept 8, 2011.
On AHPETC being overcharged by FMSS for lift services in 2012, Ms Lim said she was responsible for the error. AHPETC had not called a tender for the contract, citing time constraints, and had set up a committee to assess the fee proposed by FMSS.
FMSS had promised to charge rates similar to those of former contractors, but it quoted a fee 30 per cent higher.
Explaining that FMSS had "used the wrong unit multiplier" to compute prices, Ms Lim said: "There was absolutely no intention on the part of the committee or the contractor to approve higher payment rates... I bear personal responsibility as I was chair of the evaluation committee."
About $122,000 has been returned to the town council.
She also said AHPETC has since introduced measures to better manage the conflicts of interest that could arise from its dealings with FMSS and FMSI.
For instance, since 2013, the MPs for Aljunied GRC, Hougang and Punggol East have attended project meetings to assess if ad hoc works being commissioned were necessary. Mr Muhamad Faisal Abdul Manap (Aljunied GRC), who chairs the town council committee that decides on maintenance and improvement works, said if there were doubts on the projects, he would do a site inspection with the ward's MP.
AHPETC also plans to draw up checklists to ensure those deciding on contracts and tenders have all the necessary information on these relationships.
"We have been honest in dealing with the lapses as highlighted in the Auditor-General's report... At present, there is a rigorous process in scrutinising proposals to ensure we are prudent in our expenditure. The town council, with the elected councillor, does not take the public funds for granted," said Mr Faisal.