$2.8m in extra payments to architect was justified, says WP lawyer

Senior Counsel Chelva Rajah argued that Design Metabolist had previously negotiated for a higher fee over the rate it agreed in principle with the town council.
Senior Counsel Chelva Rajah argued that Design Metabolist had previously negotiated for a higher fee over the rate it agreed in principle with the town council.ST PHOTO: KELVIN CHNG

Seven out of 10 times, Aljunied-Hougang Town Council (AHTC) picked the more expensive architect - LST Architects - for various works in the town council, costing it $2.8 million in extra payments.

But there was a justifiable reason for the decision, Senior Counsel Chelva Rajah suggested yesterday, the third day of a multimillion-dollar civil suit against five AHTC town councillors, including three Workers' Party MPs.

Mr Rajah argued that Design Metabolist (DM) - which KPMG said in its audit report was the cheaper option - had previously negotiated for a higher fee over the rate it agreed in principle with the town council.

In 2010, while Aljunied Town Council was under the purview of the People's Action Party, DM had doubled its fees for a Eunos Spring Neighbourhood Renewal Programme from the initially agreed amount.

The WP took charge of the town council after it won Aljunied GRC in the 2011 General Election.

Mr Rajah, in cross-examining KPMG executive director Owen Hawkes yesterday, also argued that it was not fair to arrive at the $2.8 million sum - which is part of the civil suits to recover allegedly excess payouts from eight defendants, including WP chairman Sylvia Lim and party leader Pritam Singh.

"It may well be that (DM) may not be prepared to take on the jobs unless they were paid a higher fee," said Mr Rajah.

 
 
 
 

Mr Hawkes replied: "It is possible, but you would have to ask them. The contract that we have does state a fixed fee."

The two men were locked in a back-and-forth exchange for a while before Justice Kannan Ramesh stepped in. He said, among other things, that the circumstances of the 2010 transaction - which resulted in a higher fee - are not known.

"That is something that needs to be asserted - you can't run it if it is not in your pleadings," Justice Ramesh added.

Earlier, Mr Rajah argued that while a town council was obliged under the Town Councils Financial Rules (TCFR) to always pick the cheaper option, it was allowed to choose a more expensive one if it could justify the decision.

LST Architects was deemed to be more efficient than DM, he said.

Through a tender, AHTC picked and placed both firms on a panel. AHTC could appoint either one for projects, without a separate tender process.

But Mr Hawkes said his firm held the view that it breached the TCFR. Mr Rajah said it was a common practice among many town councils, which Mr Hawkes accepted.

 
A version of this article appeared in the print edition of The Straits Times on October 10, 2018, with the headline '$2.8m in extra payments to architect was justified, says WP lawyer'. Print Edition | Subscribe