The Ministry of National Development yesterday accused managing agent FM Solutions and Services (FMSS) of "grossly profiteering" at the expense of its only client: the town council run by Workers' Party.
FMSS made a net profit of $2 million in financial year 2013/2014, after paying its four owners - then senior officers at Aljunied-Hougang-Punggol East Town Council (AHPETC) - salaries that amounted to $1.14 million, the ministry said.
In the same year, AHPETC suffered an operating deficit of $2 million, it added. "Had the town council not overpaid FMSS, it might well have been able to break even." The ministry also noted that in one year, between FY12/13 and FY13/14, FMSS revenue rose by 30 per cent, from about $6.7 million to around $8.8 million. But its profit after tax rose 300 per cent, from around $511,000 to over $2 million.
Last night, WP chairman Sylvia Lim, who also chairs AHPETC, said: "It is shocking that despite our clarifications on your allegations relating to lost monies and overpayment, your Ministry continues to make spurious statements to distract the public and aimed at politically discrediting AHPETC." She said payments made in accordance with contracts "cannot be overpayment".
Law Minister K. Shanmugam also weighed in yesterday, saying there was "obvious overcharging". Payments to FMSS' owners were 36 per cent of the firm's revenue in FY2013/2014 - "huge profits, by any reckoning", he said.
The ministry's observations came after a review of FMSS' auditor by the Accounting and Corporate Regulatory Authority, which MND received on Aug 27.