AHTC lawsuits

AHTC trial: PAP town councils enjoy economies of scale, says defence

PwC partner Goh Thien Phong leaving the Supreme Court yesterday. His firm looked into the financial management of Punggol East by AHTC, and found that the town council racked up $400,000 in extra fees in calling a tender for a new conservancy and cle
PwC partner Goh Thien Phong leaving the Supreme Court yesterday. His firm looked into the financial management of Punggol East by AHTC, and found that the town council racked up $400,000 in extra fees in calling a tender for a new conservancy and cleaning provider.ST PHOTO: KHALID BABA

Lawyer noted that AHTC's managing agent cost more as WP ran just one town council

Town council management fees in People's Action Party (PAP) wards were lower because they could enjoy economies of scale, said Senior Counsel Chelva Rajah.

But unlike the PAP, which had 15 town councils under its belt, the Workers' Party (WP) had only one: Aljunied-Hougang Town Council (AHTC).

For this reason, AHTC's managing agent, FM Solutions & Services, cost more than if the town council had stuck with CPG Facilities Management, Mr Rajah said yesterday.

He made the point when he was cross-examining PwC partner Goh Thien Phong, whose firm looked into the financial management of Punggol East by AHTC.

The town council had taken over the running of Punggol East constituency after the 2013 by-election, and was subsequently reconstituted as AHPETC.

But after the PAP took back the single-seat constituency at the 2015 General Election, the town council reverted to its old name.

The Pasir Ris-Punggol Town Council, which oversees Punggol East now, is suing eight defendants - including three WP MPs and two town councillors - over alleged losses suffered when the constituency was run by AHPETC.

Yesterday, the sixth day of a multimillion-dollar civil suit, Mr Rajah cited a May 2013 parliamentary statement made by Dr Teo Ho Pin, the coordinating MP for PAP town councils.

Mr Rajah noted that PAP town councils could call for joint tenders and reduce costs for residents.

Running an opposition town council does not have the advantages of these economies of scale, he suggested.

 
 
 

Mr Goh said AHTC could have chosen a managing agent that worked with the PAP town councils to enjoy similar rates.

Mr Rajah said simply: "For the lion to lie down with the lamb."

Earlier in his cross-examination, he took issue with PwC's finding that the town council racked up $400,000 in extra fees in calling a tender for a new conservancy and cleaning provider.

The incumbent provider, Titan Facilities Management, was chosen but, in the new contract, the cleaning rate per dwelling unit rose from $6.30 to $10.55.

But the auditor, in calculating the difference, had failed to take into account the number of parking spaces, Mr Rajah noted.

Mr Goh said none of the documents he had stated the correct number of units. Even factoring in Mr Rajah's estimated number of spaces, the new contract was still more expensive, he added.

To this, Mr Rajah said: "One of the less happy aspects of modern life is that the cost of living does not observe the laws of gravity."

Another area of disagreement was whether AHTC was justified in waiving the tender for a new managing agent.

Mr Goh said: "I don't see any reason why (AHTC) should get waivers because there was nothing urgent." He added that the town council had about two to three months to call for the tender.

Mr Rajah said that if Mr Goh "had approached this investigation with an open mind, you would have given far more attention to the plight in which the newly elected MPs of AHTC found themselves soon after the results of the 2011 General Election".

But Mr Goh countered that his audit did not "consider any emotional factor" as his role was to determine if Town Council Financial Rules had been breached.

One issue brought up repeatedly at the trial is whether AHTC should have agreed to CPG's request to terminate its contract before it was up.

Mr Rajah asked him if he was aware that CPG would not have been able to run the town council once the PAP-owned software company, Action Information Management, removed its computer system.

Mr Goh said: "That is CPG's problem. They may have to find another service provider for the computer system, but the fact remains they have a contract to fulfil."

 
A version of this article appeared in the print edition of The Straits Times on October 13, 2018, with the headline 'PAP town councils enjoy economies of scale: Defence'. Print Edition | Subscribe