AHTC lawsuits

Auditor prejudiced in report on past payments: Defence

FM Solutions & Services' Ms How Weng Fan (above, left) with defence lawyer Leslie Netto, who cross-examined PwC partner Goh Thien Phong (right) yesterday. Mr Netto said that in drawing its conclusions, the PwC report failed to consider issues such as
FM Solutions & Services' Ms How Weng Fan (above, left) with defence lawyer Leslie Netto, who cross-examined PwC partner Goh Thien Phong yesterday. Mr Netto said that in drawing its conclusions, the PwC report failed to consider issues such as the nature of town councils and how this relates to politics, to which Mr Goh disagreed.ST PHOTO: KHALID BABA
FM Solutions & Services' Ms How Weng Fan (above, left) with defence lawyer Leslie Netto, who cross-examined PwC partner Goh Thien Phong (right) yesterday. Mr Netto said that in drawing its conclusions, the PwC report failed to consider issues such as
FM Solutions & Services' Ms How Weng Fan with defence lawyer Leslie Netto, who cross-examined PwC partner Goh Thien Phong (above) yesterday. Mr Netto said that in drawing its conclusions, the PwC report failed to consider issues such as the nature of town councils and how this relates to politics, to which Mr Goh disagreed.ST PHOTO: KHALID BABA

PwC contests claim that report went beyond its remit and failed to consider certain issues

A report by audit firm PwC looking into past payments made by the Workers' Party (WP)-led town council was "prejudiced" and cannot be "regarded as an independent opinion of a fair-minded accountant", defence lawyer Leslie Netto has said.

In his cross-examination of PwC partner Goh Thien Phong, Mr Netto, who represents Aljunied-Hougang Town Council's (AHTC) former managing agent FM Solutions & Services (FMSS) and its majority owners How Weng Fan and her late husband Danny Loh, suggested that the 2017 PwC report went beyond its remit and contained generalisations.

Mr Goh contested them, saying his firm based its report on available evidence.

In drawing its conclusions, the report also failed to consider issues such as the nature of town councils and how this relates to politics, Mr Netto said yesterday, the seventh day of the multimillion-dollar civil lawsuit involving three WP MPs.

Mr Goh disagreed, saying his firm did consider the issues.

Among other matters, the PwC report said FMSS' fee structure appeared to have an element of "double charging", and that the 2011 appointment of FMSS as AHTC's managing agent for a year without tender may have had a bearing on the award of a subsequent contract when a tender was called.

PwC was appointed by Pasir Ris-Punggol Town Council to review past payments by AHTC in relation to Punggol East, after the People's Action Party took back the constituency in the 2015 election.

 
 
 
 

Asked why PwC went into the issue of higher fees and "unjustified payments" in its report when this was covered by KPMG in an earlier one on AHTC's books, Mr Goh said PwC's report had clearly referenced KPMG's findings.

Mr Netto then asked where in the KPMG report did it say the payments constituted double-counting. Mr Goh said PwC arrived at the conclusion based on its own judgment.

Mr Netto also put to him that the PwC report was speculative in claiming the initial appointment of FMSS gave the company an edge in the subsequent tender.

Mr Goh replied that other service providers had approached the town councillors but were rejected, and with the tender waived initially, people may have had the impression that it was not worthwhile putting in any tender.

"These are not borne out by facts because they did not submit the tender," Mr Netto countered.

The defence lawyer argued that PwC's report also should have, and had failed, to consider six other issues - hence, showing "prejudice".

First, it should have considered how more time is needed to call for tenders when an opposition party takes over a GRC.

Second, the former managing agent CPG Facilities Management was unwilling to continue serving under the WP, and it was not in the interest of residents for the WP to keep an unwilling agent.

Third, the withdrawal of Action Information Management left the town council in a serious predicament without its computer system.

Fourth, there are only three key players with experience running town councils - CPG, EM Services and Cushman & Wakefield.

Fifth, none of them made a bid for the town council and, finally, there was "sufficient oversight" of FMSS by the town councillors.

Responding to each point, Mr Goh said he considered them before forming his judgments.

While waiving a tender is justifiable when the situation is urgent and in the public's interest, the town council had two to three months to call the tender, he said.

He added that CPG had expressed its desire to be discharged but it was done after FMSS was promised a one-year contract, and it is the managing agent's duty to provide a computing system.

Mr Goh questioned how it could be known that no one was prepared to tender, when no tender was called initially.

He also said there was no need to seek the views of the defendants, including Ms How, as his report referred to KPMG's findings, and feedback she gave to KPMG would have been addressed in its report.

On whether considering Ms How's perspective would have changed things, Mr Goh said it would not. "That is because you are prejudiced," Mr Netto retorted.

The hearing resumes today, and former WP chief Low Thia Khiang will take the stand.

A version of this article appeared in the print edition of The Straits Times on October 16, 2018, with the headline 'Auditor prejudiced in report on past payments: Defence'. Print Edition | Subscribe