The Workers' Party (WP) yesterday hit back at the Ministry of National Development (MND) over claims that its town council had overpaid its managing agent.
In a strongly worded letter, party chairman Sylvia Lim said she was appalled at the ministry's "series of careless accusations" aimed at discrediting her party politically.
Dismissing the accusation of overpayment, she said the Aljunied-Hougang-Punggol East Town Council (AHPETC) had paid its managing agent based on its contractual rates. "It is shocking that despite our clarifications on your allegations relating to lost monies and overpayment, your ministry continues to make spurious statements to distract the public and aimed at politically discrediting AHPETC," she said.
She was responding after the ministry issued a statement yesterday accusing FM Solutions & Services (FMSS) of profiteering at the expense of the WP-run town council.
The ministry also wrote to Ms Lim to ask if she intended to recover the "monies lost due to overpayment".
The town council was the only client of FMSS in the financial years 2012/2013 and 2013/2014, when the company's owners received about $1.5 million and $3.2 million. This works out to 22 per cent and 36 per cent respectively of the company's revenue in those years.
Calling this profit margin "abnormal", the ministry reiterated its concerns that the town council had "overpaid FMSS excessively".
Ms Lim refuted this in her letter, which she made public on the WP website. She said the town council did not overpay FMSS, and asked what the ministry meant by an "abnormal" profit margin. She noted that managing agents of other town councils had not made known their profit levels.
She added that FMSS was appointed managing agent from 2012 to 2015 after a public tender. The company's contract to provide essential maintenance services to the town council was also awarded in a public tender.
The town council paid FMSS in line with contractual rates, and "payment in accordance with contracts cannot be overpayment", said Ms Lim, the immediate past chairman of the town council.
The ministry had also taken issue with the fees and salaries paid to key town council officers who were also the owners of FMSS.
The late Mr Danny Loh, his wife How Weng Fan, Mr Yeo Soon Fei, and Mr Johnson Lieow Chong Sern were paid about $1.1 million in FY 2013/2014 alone. On that point, Ms Lim said what FMSS paid its employees was not within the town council's control. The town council also "does not ask its contractors about their profitability or internal arrangements", she added.
She also said it is "misleading and unfair" to compare the rates charged by FMSS with rates charged by managing agents of People's Action Party town councils.
When FMSS put in a bid for the job in 2012, it had no competitors. Thus, its bid was assessed based on rates charged by CPG Facilities Management, which was the town council's managing agent when Aljunied GRC was under the PAP, said Ms Lim.
Pointing to this, she said the political environment here had put "non-PAP town councils" at a financial disadvantage as companies were less likely to bid for their jobs. "Your ministry ought to recognise the existence of an imbalanced system and take into consideration the political reality of the situation," she said.
The ministry had also said that the latest findings - following an ad hoc review by the Accounting and Corporate Regulatory Authority (Acra) of FMSS' auditor Teo Liang Chye & Co - underscored the need for independent accountants to be appointed to AHPETC. There is a pending judgment from the Court of Appeal on this.
But Ms Lim said there was no basis for it, adding: "We also question your ministry's political motivation for issuing a public release on this matter at such a premature stage, when you say that your ministry has not even completed a review of the findings by Acra."
When asked by The Sunday Times, the ministry said Acra had made known its findings last Thursday. MND then "made a public statement immediately, as this is a matter of public interest involving public and residents' monies".
This article was first published on August 30, 2015.
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