AHPETC rates had two extra charges: Ministry

These led to fees 20% higher than other councils'

Data released by the Ministry of National Development (MND) yesterday showed why the fees of the managing agent hired by the Workers' Party (WP) were 20 per cent higher than the previous agency under the People's Action Party in Aljunied GRC.

In a written reply to questions that Ms Sylvia Lim (Aljunied GRC) asked National Development Minister Khaw Boon Wan, MND said the Aljunied- Hougang-Punggol East Town Council's (AHPETC) 2011 contract with its agent was unique as it had other components not seen in contracts that other town councils had with their managing agents.

So while the basic rates of its agent - FM Services & Solutions (FMSS) - for residential and commercial properties "appeared to be pegged" to the rates of its predecessor, CPG Facilities Management, there were two additional fees.

These were for the cost of existing staff of the former Hougang town council - which merged with Aljunied Town Council after the WP won the constituency in the 2011 General Election - and for the hiring of new staff. "This had effectively made the FMSS' 2011 managing agent fees 20 per cent higher than CPG's 2010 fees. The overpayment to FMSS has further grown, as compared to other managing agents. By 2014, the overpayment to FMSS was estimated at $1.6 million per year," the reply said.

The issue of how much FMSS was paid dominated a two-day debate in Parliament last month over the Auditor-General's Office's (AGO) findings of accounting lapses in the WP-run town council.

PAP MPs said FMSS' fees were nearly double the average fees of PAP-run town councils. WP chief Low Thia Khiang explained then that only FMSS submitted an open tender bid for the role, making its fees the market rate that the town council faced.

Yesterday, MND pointed out that FMSS' rates were $7.87 per residential unit for the years 2011 and 2012, and $7.01 for 2013.

Explaining the numbers, it said that based on the AGO's audit report, FMSS' 2011 contract had a value of $432,319.91 per month, or $5,187,838.90 for one year. This was "an effective managing agent rate of $7.87 per unit (without making a distinction between residential and commercial units)".

It also revealed that CPG's rates when it was Aljunied Town Council's managing agent were $6.03 for 2011, $6.37 for 2012, and $6.73 for 2013.

Ms Lim had asked Mr Khaw for information on managing agents and rates of all town councils, as well as the rates that CPG charged when Aljunied Town Council was under the PAP. Contacted last night on the additional components in the FMSS contract, she said FMSS took over staff of Hougang town council. The staff cost for Hougang came to slightly more than $1.1 million, and was paid from out of Hougang town council's coffers. It was also necessary to hire new staff to handle the handover.

Also last night, Bishan-Toa Payoh GRC MP Hri Kumar Nair questioned why there was a need for additional fees for the Hougang town council staff who formed part of the enlarged Aljunied-Hougang Town Council. "Since the work of running the enlarged Aljunied-Hougang Town Council fell on former Hougang staff - some of whom became owners of FMSS - as well as the new staff whose salaries were provided for, why were additional managing agent fees payable for that year to FMSS?" he asked in a statement, noting that the fee was 20 per cent higher. He added that it was not clear why FMSS charged the Aljunied-Hougang Town Council an additional $1.1 million for Hougang staff, and another undisclosed sum for new staff, in 2011.

"I repeat the call I made in Parliament for the WP to commission a comprehensive forensic audit of the town council, and undertake to bring legal proceedings to recover any monies that may have been lost and seek damages for any breach of duty.

"That would bring an effective close to this matter and would benefit everyone, especially the residents of Aljunied. Curiously, the WP has not responded to this suggestion."


For more:

Auditor-General's Office's Report on Aljunied-Hougang-Punggol East Town Council

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