PAP MPs seek answers on 'missing public funds'

WP's Low explains why party paid its managing agent more than others

AFTER two days of heated debate over questionable accounting decisions made by the Workers' Party-run town council, the party's chief finally lost his signature cool yesterday.

At the end of a lengthy exchange in Parliament with Education Minister Heng Swee Keat, Mr Low Thia Khiang (Aljunied GRC) addressed Prime Minister Lee Hsien Loong - who was sitting directly across from him - and summed up his frustrations.

"Nobody wants to work for me," he said. "That is the problem, Prime Minister!"

In a nutshell, that was the WP's explanation for why its town council is paying its managing agent, FM Solutions and Services (FMSS), the highest fees in town. The question has hung over the House since the debate began on Thursday over the Auditor-General's Office's (AGO) findings of accounting lapses in the WP-run Aljunied-Hougang-Punggol East Town Council (AHPETC).

Law Minister K. Shanmugam on Thursday distributed a table showing that the managing agent fees AHPETC paid were nearly double the average fees at People's Action Party (PAP) town councils. He charged that AHPETC had overpaid its managing agent company - which is owned by some WP supporters who are also senior managers of the town council - by $1.6 million a year over the past four years.

PAP MPs yesterday continued to press the WP for answers on the high fees and potential conflicts of interest involving FMSS.

"Where did the money go?" said Mr Heng. "Why are you so protective of your expensive managing agent that messed up the town council's work? Because they are the party supporters and friends?"

Mr Hri Kumar Nair (Bishan- Toa Payoh GRC) also took issue with the claim by WP chairman Sylvia Lim (Aljunied GRC) a day earlier that the AGO report found no monies missing and uncovered no criminal or dishonest activity.

"The AGO cannot say if public monies have all been accounted for because documents which AHPETC are obliged to keep are missing," he said.

"And as any person knows, loss does not only occur when money is stolen," he added, referring to "substantial overpayments" to FMSS.

Mr Low countered that the issue was not about overpaying or awarding a contract to a friend.

He reiterated that AHPETC had awarded FMSS the managing agent contract in an open tender, and had done due diligence on the fees proposed. It did not help that FMSS was the only bidder in AHPETC's tender, Mr Low said.

"Unfortunately, the environment is such that no one tendered for the managing agent job."

It was a common refrain among the seven WP MPs who spoke during the two-day debate, often to outline the extra challenges AHPETC faced as a town council run by an opposition party.

Ms Lee Li Lian (Punggol East) said a cleaning contractor for Punggol East ran into "issues" with the Manpower Ministry shortly after she took over the ward in 2013, and had to quit. A subsequent tender call drew two bidders who later withdrew from the process "without any valid reasons".

Her fellow WP MP Pritam Singh (Aljunied GRC) recalled an exodus of former Aljunied Town Council staff after the WP took over Aljunied GRC in 2011. This led to difficulties in ensuring the continuity of accounts and was a factor in the town council's accounting lapses, he added.

As for FMSS, Ms Lim said the town council had done checks on its fees in 2012 and found that they were not much higher than the rates charged by Pasir Ris- Punggol Town Council's managing agent.

AHPETC had taken into consideration the fact that FMSS managed only one town and did not have the same economies of scale as larger companies running the other town councils, she added.

"It is possible that the (other) managing agents have reduced their rates since then. The information that we had in 2012, the rates were at a higher level than what was circulated in the table (on Thursday)," she said.

In a statement yesterday, a Ministry of National Development (MND) spokesman said the rates were based on the latest contracts the town councils had signed, and were submitted to MND last year.

The spokesman added that Pasir Ris-Punggol Town Council was paying $6.20 for residential units and $11.50 for commercial units in 2012, "much lower" than AHPETC's rates of $7.01 and $14.08 respectively.

Mr Low went on to add that the WP had also decided not to manage Aljunied GRC on its own as it was a much larger ward than Hougang.

"At the point in time, we were very concerned about taking over a much larger GRC," he said, adding: "We thought it would be better" to hire experienced staff who are "prepared to form a company to manage the town council".

Mr Heng argued that the WP's justification of having to scramble to learn the ropes of town council management also did not hold water.

PAP MPs also had to start from scratch when town councils were first set up in 1986, he said.

"But they had plenty of integrity and sense of responsibility," Mr Heng added.

Responding to the WP's argument that it had no option but to hire FMSS as the only bidder in its tender, Mr Nair said town councils could choose to hire and train its own staff.

"For the last 19 years, we have been managing the town council ourselves," he said of Bishan-Toa Payoh Town Council. "Mr Low also had no managing agent when he ran Hougang Town Council. So, this is a red herring."