Letter of demand from FMSS is 'old news'

Questions about a letter of demand to pay up a $3.5 million debt to a former managing agent (MA) came hard and fast during a Workers' Party (WP) press conference yesterday.

This came on the same day when WP filed a healthier annual report for the financial year (FY) 2014/2015, showing that the town council was in surplus.

WP had received a letter of demand from FM Solutions & Services (FMSS) in late July, the party chairman Ms Sylvia Lim confirmed to The New Paper.

On the letter of demand, Ms Lim said: "This is quite old news because it has been overtaken by events."

The letter came a month after the contract between Aljunied-Hougang-Punggol East Town Council (AHPETC) and FMSS expired.

Since then, the party has paid "a substantial amount" of the disputed claims, while the rest of the claims will be set for an "amicable" mediation before the Singapore Mediation Centre in October.

AHPETC withheld the remaining payment as "it will exercise due diligence to check and verify whether those claims are accurate and valid".

Ms Lim did not disclose how much of the $3.5 million debt was paid to FMSS or whether it did so before the one-week deadline stated in the July 20 letter.

Private process

She said: "I don't think it is helpful (to disclose the information) because mediation is a private process.

"I hope you all can understand why, because mediation is supposed to be a conciliatory process so we don't want to jeopardise that."

She explained that if mediation fails, the MA agreement between AHPETC and FMSS further provides for the matter to be solved via arbitration.

"There will not be any litigation concerning this case," she said.

The public only caught wind of the letter or the existence of the debt for the first time yesterday, when TNP broke the story.

When asked by a reporter why AHPETC did not publicly declare the existence of the debt, Ms Lim said there was no need as the issue was between the two parties and doing so might breach agreements.

Explained Ms Lim: "If you ask the People's Action Party (PAP) town councils for their MA agreements, you will probably see similar clauses, where disputes are meant to be resolved via mediation... which I think is a good provision."

She also rubbished the notion that this would affect WP's moral authority in calling for more transparency in the PAP.

"Why? It is just a letter of demand. People can demand things but whether they are actually legitimate or not, or to what extent, that is another question altogether," she said.

A large number of the claims concerns "project funds" as FMSS was authorised as a project manager under its MA agreement with AHPETC.

Ms Lim revealed that these funds are claimed by FMSS as a percentage of the project value, and consists of sinking fund expenditures.

The debt "will not affect the bottom line" of AHPETC's finances for FY 2014/2015 as most of it concerns the next financial year, she said.

This article was first published on September 1, 2015.
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