AHPETC lapses 'astounding', says Khaw

The Auditor-General has confirmed the Government's fears that "something is seriously wrong" at the Worker's Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC), National Development Minister Khaw Boon Wan said yesterday.

Calling the lapses found at AHPETC "astounding" and "clearly unacceptable", he said at the start of a four-hour parliamentary debate:

"The Auditor-General's findings... paint a picture of financial mismanagement, incompetence and negligence in corporate governance.

"If an auditor makes such a finding on a listed company, it will immediately cause consternation among the shareholders, and a call for the removal of the CEO and the board of directors."

He also charged that the MPs running AHPETC had been "evasive, unresponsive and misleading" during the audit process.

Given the serious questions raised about AHPETC's management of public funds, Mr Khaw said the Government will withhold $7 million in grants from AHPETC until it sets its house in order.

It will also seek to change the law to give it greater powers to investigate errant town councils and take them to task.

"MND is studying what other legal recourse the aggrieved parties may have," he said.

In a report released on Monday, the Auditor-General's Office (AGO) said it found five areas of lapses in governance and compliance at AHPETC, such as failing to deposit the correct amounts in its sinking fund and failing to properly disclose and evaluate conflicts of interest.

Speaking in public for the first time about the findings, WP leaders acknowledged mistakes, but said these largely stemmed from human error and inexperience.

They also called for depoliticisation of the transition process after an election, noting that the WP had to build a town management operation from scratch when it took over Aljunied GRC in 2011, as the managing agent hired by the previous People's Action Party regime requested release from its contract, while the IT systems provider abruptly terminated its services.

WP chief Low Thia Khiang said that in the years since, none of the managing agents serving PAP town councils has bid for tenders issued by AHPETC because of political reasons.

So, AHPETC has relied on FMSS, which is majority- owned by AHPETC's secretary and general manager.

The uneven playing field was such that "if an opposition party aspires to be the next government, it may need to build an army of civil servants first. This is a strange political situation for any functioning democracy to be in".

This argument was rejected by Law Minister K. Shanmugam, who said that when WP took charge of the town council in 2011, the contract of the managing agent CPG Facilities Management still had two years to run.

This would have provided continuity. Instead, WP let it go and FMSS was set up exactly one week after its electoral victory - indicating that the move could have been premeditated.

His remarks drew a lively exchange as ministers and WP leaders clashed over whether AHPETC had misled residents and mismanaged public money.

Both Mr Low and WP chairman Sylvia Lim emphasised that the AGO found no evidence of corrupt practices or missing money in its exhaustive examination of AHPETC, merely lapses due to human error.

But Mr Shanmugam disputed this. He charged that money had been lost through overcharging by FMSS.

In failing to either probe this or exercise oversight over its staff who owned FMSS, the WP MPs have "unlawfully" breached their fiduciary duties to protect the financial interests of residents, he said. The debate continues today.

rchang@sph.com.sg

This article was first published on February 13, 2015.
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