AHTC trial: Workers' Party MPs happy with managing agent FMSS' performance, says defence

Ms How Weng Fan (right) and lawyers arriving at the Supreme Court, on Oct 11, 2018.
Ms How Weng Fan (right) and lawyers arriving at the Supreme Court, on Oct 11, 2018. ST PHOTO: KHALID BABA

SINGAPORE - A Workers' Party-led town council was satisfied with the performance of its managing agent, defence lawyer Leslie Netto said on Thursday (Oct 11) as he sought to show how FM Solutions & Services (FMSS) had delivered on its obligations.

He said that multiple reports - such as government-issued town council report cards - showed that Aljunied-Hougang Town Council (AHTC), under the management of FMSS, had consistently kept the estate clean and maintained its lifts well.

Mr Netto, who is defending the company and its owners How Weng Fan and the late Danny Loh, brought these examples up on the fifth day of a multimillion-dollar suit that aims to recover alleged excess payments made to FMSS.

But the subject of Mr Netto's cross-examination, KPMG executive director Owen Hawkes, said his focus was not to review the town council's estate cleanliness, but its financial governance and controls.

"Having been to Hougang many, many times, it's not my place to suggest it's some sort of 'Mad Max' (dystopia)... It's a perfectly pleasant area of the country. But how the town council manages itself, rather than things like maintenance, is my area of concern," he said.

KPMG was appointed to look into AHTC's books after the Auditor-General's Office found significant governance lapses in a special audit.

Mr Hawkes also disputed Mr Netto's proposition that AHTC was happy with FMSS' services.

Most damning, he said, was the fact that AHTC had withheld $250,000 in payments to FMSS after his firm found it had made more than $60 million in payments without using the proper accounting procedure.

"When we discussed this with the town council they appeared obviously concerned... It was pretty clear at the time they were not happy," he said.

Mr Netto said: "I think we'll have to listen to the MPs when they come on the stand. I think you'll see they were happy." He was referring to WP leaders Sylvia Lim and Pritam Singh, as well as former chief Low Thia Khiang, who are among the defendants.

Mr Netto also took issue with KPMG’s judgment of FMSS’ accounting problems, noting that the firm had to struggle without a proper computerised management system. This happened after an IT firm, owned by former PAP MPs, withdrew its software after both sides could not agree on terms following the 2011 General Election.

 
 
 

But Mr Hawkes said: "While I accept that implementing a new system is not an easy task, I don't think that five years later the accounting system should still be in a problematic state."

In wrapping up his arguments, Mr Netto also tried to show that his client, Ms How, wanted to be helpful and give KPMG more information and documents for it to piece together its report.

He noted that Ms How, in October 2016, sent a letter to Mr Hawkes, taking issue with KPMG's draft report on alleged improper payments, and asking for more than the four business days FMSS was given to respond.

Ms How, he added, did not receive a response from Mr Hawkes.

But later, when he was cross-examined by AHTC lawyer David Chan, Mr Hawkes explained that his firm had contacted FMSS in advance, requesting interviews and access to certain documents. This request was not met.

But several discussions with Ms How, such as two that took place over the phone, were factored into the KPMG report, he added. 

PricewaterhouseCoopers (PwC) partner Goh Thien Phong took the stand after Mr Hawkes was stood down.

PwC was appointed by Pasir Ris-Punggol Town Council (PRPTC) in 2016 to look into AHTC's accounts, as the Punggol East constituency had been managed by the WP's Aljunied-Hougang-Punggol East Town Council (AHPETC) from 2013 to 2015. Punggol East came under PRPTC after the WP lost the constituency in the 2015 General Election.

PRPTC has also filed a lawsuit to recover its share of losses allegedly suffered. These include $171,110 worth of improper payments made out from 12 invoices, which were without supporting documents.

Senior Counsel Chelva Rajah, who is representing the three WP MPs and two town councillors, said on Thursday that many of the supporting documents had been passed from AHTC to the PRPTC during a handover process in late 2015.

An e-mail sent by PRPTC's general manager Kwok Wei Kin on Dec 9, 2015, to then AHTC deputy general manager Vincent Koh, also thanked Mr Koh and his team for handing the documents over.

PwC started its audit work only on Nov 1, 2016, and these documents should have been in PRPTC's possession, Mr Rajah suggested.