AHPETC: Setup designed to take money from residents and enrich friends, says Shanmugam

Law Minister K. Shanmugam speaks to reporters on the final day of his one-week tour to Washington, United States. Alleging that the Workers' Party over-paid a managing agent run by its supporters, Shanmugam said in Parliament on Thursday th
Law Minister K. Shanmugam speaks to reporters on the final day of his one-week tour to Washington, United States. Alleging that the Workers' Party over-paid a managing agent run by its supporters, Shanmugam said in Parliament on Thursday that the WP was giving residents' money to its "friends". -- ST PHOTO: MELISSA SIM

SINGAPORE - Alleging that the Workers' Party over-paid a managing agent run by its supporters, Law Minister K Shanmugam said in Parliament on Thursday that the WP was giving residents' money to its "friends".

In a hard-hitting 45-minute speech hitting out at the opposition-run Aljunied-Hougang-Punggol East Town Council (AHPETC), Mr Shanmugam said: "The rhetoric from the WP is always about helping the poor man. The reality is that WP took money from the man in the street and gave it to FMSS, to their friends."

He was taking issue with the fees which FM Solutions and Services (FMSS) charges AHPETC. They are higher than in other town councils. From July 2013 to July 2014, FMSS charged $7.43 for each residential unit and $14.92 for each commercial unit, compared to $4.80 to $6.65 for units of each type, charged by other managing agents to their town councils, he said.

Mr Shanmugam calculated that the annual difference between what AHPETC paid FMSS and what other town councils pay is $1.6 million, amounting to a $6.4 million difference over four years.

These higher fees, said Mr Shanmugam, were one way in which AHPETC "was run for the benefit of FMSS". Another was the conflict of interest in how town council senior officers had ownership interest in FMSS.

The payments of "millions of dollars" from AHPETC to FMSS, a related party, was one of four fronts on which Mr Shanmugam attacked the WP.

Another was the lack of full disclosure of these ownership interests, and the lack of recorded discussion of the conflict of interest.

A third charge was that, contrary to what AHPETC has asserted, there has been a loss of public money due to its "over-payment" to FMSS. The overpayment should consitute a loss, but in addition, the lack of "any adequate check or control" could have resulted in other losses, said Mr Shanmugam.

"Where contracts have been entered into with related parties in breach of fiduciary duties, the law presumes loss. It will require the related party to justify every payment by showing what work was done and assessing the true value of the work," he said.

In closing, Mr Shanmugam addressed four of the WP MPs and Town Councillors individually, asking Mr Chen Show Mao how much he knew about the conflict of interest, and pressing Mr Pritam Singh on the WP's apparent lack of transparency in this case.

He also asked Town Council chairman Sylvia Lim why she had approved the system of payments, and demanded that party chief Low Thia Khiang "take responsibility" for the issue.