Audit of Workers' Party Town Council

Audit of Workers' Party-run town council flags major lapses

The Auditor-General has found "major lapses" in governance and compliance with the law in its audit of the Aljunied-Hougang-Punggol East Town Council (AHPETC) run by the Workers' Party (WP).

In a 59-page report issued last Friday and made public yesterday, the Auditor-General's Office (AGO) identified five broad areas of "weakness":

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The five areas of weakness:

Lack of governance over transactions at Workers' Party town council

There were conflicts of interest involved in transactions worth $25.9 million between the Aljunied-Hougang-Punggol East Town Council (AHPETC) and its managing agent, and the town council had failed to properly monitor and manage these contracts, the Auditor-General's Office (AGO) said in its report on the town council's accounts.

These conflicts had arisen as four of the town council's senior officers - secretary Danny Loh Chong Meng, general manager How Weng Fan, and deputy general managers Yeo Soon Fei and Johnson Lieow Chong Sern - had stakes in its managing agent FM Solutions & Services (FMSS) and had verified work and approved payment on behalf of AHPETC to their own company in some instances.

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Poor monitoring of service and conservancy charges at Workers' Party-run town council

The Aljunied-Hougang-Punggol East Town Council (AHPETC) did not have a system that could monitor its service and conservancy charges (S&CC), nor generate accurate historical data, said the Auditor-General's Office (AGO).

This led to the town council submitting "unreliable" arrears statistics to the Ministry of National Development (MND) and the town council's own finance and investment committee.

"Consequently, there is no assurance that S&CC arrears are properly monitored and managed," said the AGO.

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Lack of a proper record-management and accounting system at Workers' Party town council

The lack of a proper record-management and accounting system was why the Aljunied-Hougang-Punggol East Town Council (AHPETC) failed to produce accurate financial statements, said the Auditor-General's Office (AGO) yesterday.

The AGO said AHPETC did not adequately safeguard accounting documents for April to July 2011. Thus, its auditor was unable to conclude that its FY 2011/12 financial statements were true and fair. This in turn affected the town council's opening balances for the subsequent financial year.

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Workers' Party town council failed to comply with sinking fund requirement

The Aljunied-Hougang-Punggol East Town Council (AHPETC) failed to transfer monies to its sinking fund several times. When it did, there were occasions when the transfers were late - or short of the required amount, the Auditor-General's Office (AGO) said.

There were other instances of non-compliance with the Town Councils Act, involving the wrong use of money in sinking fund bank accounts.

"AHPETC did not transfer monies as required to the sinking fund bank accounts and did not manage its sinking funds properly. This included not transferring conservancy and service fees and grants allocated to sinking funds... accurately and promptly for the FY 2012/13."

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Insufficient internal controls in place at Workers' Party-run town council

The Aljunied-Hougang-Punggol East Town Council (AHPETC) did not have sufficient internal controls and this exposed it to risks such as the loss of monies or valuables and wrong payment for goods and services, said the Auditor-General's Office (AGO).

The AGO cited issues such as inadequate protection of cheques and safes.

"Cheques received and not banked in by the end of the day were not safeguarded under lock and key," it said.

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More reports:

Timeline of Workers' Party town council saga

FEB 10, 2014: Aljunied-Hougang-Punggol East Town Council (AHPETC) submits its audited FY2012/13 accounts to the Minister for National Development six months late and after seven reminders.

FEB 13: The Ministry of National Development (MND) expresses concern that it is the second year that AHPETC's auditors had made a submission with a note saying they were unable to fully verify the accounts.

FEB 14: AHPETC chairman Sylvia Lim says the MND's statement is incomplete and misleading, as the Workers' Party (WP) has not been able to get data from the former managing agent after it took over Aljunied GRC in 2011, as well as from the authorities like the MND.

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Many hats for two Workers' Party supporters raises potential conflicts of interest

The managing agent of Aljunied-Hougang-Punggol East Town Council (AHPETC) has come under the spotlight again.

FM Solutions & Services (FMSS) is majority-owned by Ms How Weng Fan and Mr Danny Loh. The husband-and-wife team is also employed by AHPETC.

Since Aug 1, 2011, Mr Loh has been secretary and Ms How has been deputy secretary and general manager of the town council.

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Workers' Party 'needs to clear air over AGO's report'

The reputation of the Workers' Party (WP) in managing a town council has been dealt a blow by the Auditor-General's report this week, but it remains to be seen if its political fortunes will be affected, observers and residents said.

They added that the ball is now in the WP's court to account for and explain in Parliament the lapses that the Auditor-General's Office (AGO) found in its audit of the financial statements of the Aljunied-Hougang-Punggol East Town Council (AHPETC) for financial year 2012/13.

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Duo behind managing agent long linked to WP and Hougang Town Council

They are known as the couple who set up FM Solutions and Services (FMSS) in 2011 to take on the role of managing agent at Aljunied-Hougang-Punggol East Town Council (AHPETC).

But Ms How Weng Fan and her husband, Mr Danny Loh Chong Meng, had cut their teeth in estate management years ago, at the former Hougang Town Council.

Working for Workers' Party (WP) chief Low Thia Khiang since the 1990s, Ms How rose up the ranks from estate manager to secretary of the town council.

Mr Loh, meanwhile, was providing lift maintenance and rescue services to the town council.

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Safeguards and steps to avoid conflicts of interest in running town councils

The two worlds of town councils and the companies they hire to manage estates often overlap.

Town councils sometimes take on staff from the companies they hire to provide services to make for smoother operations.

But in the case of Aljunied-Hougang-Punggol East Town Council (AHPETC), its general manager and secretary are not just employees of a company hired by the town council, but majority owners with financial stakes in them.

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Town councils' operating and sinking funds must be kept separate, say experts

Town councils must take care to keep their operating and sinking funds separate because they are meant for different uses, said experts yesterday.

They warned that placing money into the wrong fund can cause future problems of overspending.

Their comments come after the Auditor-General's Office (AGO) found that the Workers' Party- run town council had mistakenly paid for everyday upgrading works from its sinking fund, which is earmarked for longer- term maintenance works.

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