AHTC trial: Defence lawyer says PwC report is prejudiced

Ms How Weng Fan (second from right) arriving at the Supreme Court on Oct 15 with her lawyer Leslie Netto (right) and legal team. ST PHOTO: KHALID BABA

SINGAPORE - A report by audit firm PwC looking into past payments made by the Workers' Party-led town council was "prejudiced" and cannot be "regarded as an independent opinion of a fair-minded accountant", said defence lawyer Leslie Netto on Monday (Oct 15).

In his cross-examination of PwC partner Goh Thien Phong, Mr Netto, who represents Aljunied-Hougang Town Council's (AHTC) former managing agent FM Solutions & Services (FMSS) and its majority owners How Weng Fan and the late Danny Loh, suggested that the 2017 PwC report went beyond its remit and contained generalisations.

Mr Goh contested these, saying his firm based its report on available evidence.

In drawing its conclusions, the report also failed to consider issues such as the nature of town councils and how this relates to politics, said Mr Netto, on day seven of the multimillion-dollar civil lawsuit involving three WP MPs.

Mr Goh disagreed, saying his firm did consider the issues.

Among other issues, the PwC report said FMSS' fee structure appeared to have an element of "double charging", and that the 2011 appointment of FMSS as AHTC's managing agent for a year without tender may have had a bearing on the award of a subsequent contract when a tender was called.

The Pasir Ris-Punggol Town Council (PRPTC) had appointed PwC to review past payments by AHTC in relation to Punggol East after the People's Action Party wrested back the single-seat constituency in the 2015 general election.

Asked why PwC went into the issue of higher fees and "unjustified payments" in its report when this was covered by KPMG in an earlier one looking into AHTC's books, Mr Goh said PwC's report had clearly referenced KPMG's findings.

Mr Netto then asked where it was that KPMG referred to the payments as double-counting, to which Mr Goh said PwC arrived at the conclusion based on its own findings and judgment.

Mr Netto also put to Mr Goh that the PwC report was speculative in claiming the initial appointment of FMSS gave the company an advantage in subsequent tenders.

In response, Mr Goh said there were other service providers who approached the town councillors but were rejected. With the tender waived initially, people may have gotten an impression that it is not worthwhile putting in any tender, he added.

"These are not borne out by facts, Mr Goh, because they did not submit the tender," countered Mr Netto.

The defence lawyer argued that PwC's report also should have, and had failed to consider six other issues as an independent accountant, therefore showing "prejudice".

First, it should have considered the nature of town councils and how more time is needed to call for tenders when an opposition party takes over a GRC.

Second, the former managing agent CPG Facilities Management was unwilling to continue serving under the WP. Mr Netto said it was not in the interest of residents for the WP to keep an unwilling agent.

Third, the withdrawal of Action Information Management left the town council in a serious predicament without its computer system.

Fourth, that there are only three key players with experience running town councils - CPG, EM Services and Cushman and Wakefield.

Fifth, none of these players made a bid for the town council, and finally, there was "sufficient oversight" of FMSS by the town councillors.

Responding to each of these points, Mr Goh said he had considered them before forming his judgments.

While waiving a tender is justifiable when the situation is urgent and it is in the public's interest to do so, the town council had two to three months to call the tender, said Mr Goh.

He added that even though CPG expressed the desire to be discharged, this was after FMSS was promised to be awarded a one-year managing agent contract, and that it is the agent's duty to provide a computing system.

Mr Goh also questioned how it could be known that no one was prepared to tender, given that no tender was called initially, adding that given the way the first contract was awarded, it would not be surprising that people were not confident of the tender process.

Asked why he did not find it necessary to seek the views of the defendants, including Ms How, Mr Goh said there was no need to, given that his report referred to KPMG's findings, and any feedback she gave to KMPG would have been addressed in its report.

On whether considering Ms How's perspective would have changed things, Mr Goh replied that it would not.

"That's because you are prejudiced," Mr Netto reiterated.

The hearing will resume on Tuesday afternoon, with former WP chief Low Thia Khiang expected to take the stand.

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