Debated in Parliament on 13 Feb 2015.
Debate resumed.
Mdm Speaker, I rise to speak because I am concerned about the well-being and interests of the residents of Aljunied, Hougang and Punggol East. I am concerned about their lives and their homes. They have been short-changed by their Members of Parliament and they have been kept in the dark. I am concerned about the well-being and interests of all Singaporeans. Elected Members of Parliament are expected to be clean and honest and to act with integrity.
This Motion boils down to one word – trust. The people trust that the Members of Parliament will keep their promises with integrity. The people trust that we will take seriously our full responsibility to serve our people and to serve their best interests. So, I am sad to observe that elected Town Councillors of AHPETC have betrayed the people's trust.
They betrayed the people's trust in three ways. One, they betrayed the people's trust by failing to act in the best interests of the residents. Two, they betrayed the people's trust with a consistent pattern of evasive behaviour. Third, they betrayed the people's trust by promising one thing and doing another.
First, the WP has betrayed the trust of the residents of Aljunied, Hougang and Punggol East. The residents cannot trust the WP on several counts. For a start, residents cannot trust the WP to get them a good deal. In fact, the WP has gotten them a raw deal. Their Managing Agents, FMSS and FMSI, charged the highest rate in Singapore for their services. Compared to the Managing Agent's fees paid by other Town Councils, residents paid more than $2 more a unit – one year, $1.6 million – and this went on for four years. Till now, after all the debate in the House, the public does not know, none of us knows, the reasons why FMSS and FMSI's rates are higher than everywhere else.
Residents cannot trust elected Town Councillors not to sacrifice their long-term interests. In fact, these long-term interests are being sacrificed: $12 million went missing from their Sinking Fund – $12 million; missing. It was only after the AGO pointed this out that this was put back. And even so, one year after the financial year had ended, they still owed a substantial sum to the Sinking Fund.
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If not for the Auditor-General, the Town Councillors – the elected Town Councillors – would have kept the residents of Aljunied, Hougang and Punggol East in the dark. Nothing is transparent.
This is a very serious matter. It is wrong for the Town Councillors to argue that as long as money was put back, nothing was wrong in the first instance. The fact is that they put the money back only because they were caught. Why did this happen? Either the Managing Agent is totally incompetent or they deliberately decided not to fill the Sinking Fund to show a better financial picture and have a large operating account to pay for expenses, the largest item being the Managing Agent's fees. This happened because the Town Council was running into cash flow problems from their profligate management and they put off paying into the Sinking Fund, so that they may have money to pay. Now, really, that is compromising the long-term interests of residents to enrich their friends.
They did not forget to pay the Managing Agent's fees every month. They did not forget to collect S&CC from the honest, hardworking residents every month. But they forgot to pay large sums that were supposed to go into the Sinking Fund, and repeatedly. Was it because the Finance and Investment Committee chaired by Mr Chen Show Mao was not doing its work? Or was it another lapse by the Chairman? No explanation has been forthcoming.
Now, this is serious. Sinking Funds are for long-term cyclical maintenance. We need to replace lifts for residents' safety, do major repairs like re-wiring and reroofing, repaint blocks. The safety and well-being of residents and their homes are at stake.
Down the line, residents may find their Sinking Fund is all depleted, with nothing left to maintain the town safety and their well-being. When this happens, who suffers? Not the Town Council, not the Managing Agent. Who suffers are the residents. Worse of all, they would not know where the money has all gone.
This is a serious matter. In fact, the Town Council Act lists only three offences, and the use of Sinking Funds for operating expenses is one of them. It is precisely to guard against Managing Agents and Town Councils acting to meet short-term interests. Sadly, this is precisely what we are seeing – short-term, opportunistic behaviour.
Residents cannot trust the elected Town Councillors to account honestly for where their money is. The Town Council cannot even keep basic accounts properly. You saw in the AGO report – inaccurate arrears, lapses in internal controls, poor records, late accounts, missing documents. These are not technical issues. These raise fundamental questions about whether the accounts can be trusted. All of this money comes from the people in one way or another – whether it is the S&CC that residents pay or the Sinking Fund that was built up
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over the years from money paid by residents or the Government grants that MND provides out of taxpayers' money.
We cannot even trust the books. We are in the dark on the true state of affairs. If we are not vigilant, can we be sure that, down the road, somebody may not be cooking the books? Why did a surplus of $3.3 million in the operations become a deficit of $730,000 in just two years? Mr Pritam Singh attributed everything to lift upgrading. We must naturally ask, "Where did the money go?" We have asked, but we have not had a good answer. Though it may not be obvious on the surface, beneath the surface, the Town Council is rotting. And the rot is serious.
I am also very concerned about the second way the WP has betrayed the people's trust. The pattern of behaviour; the consistent pattern of denial, deflection and protection of the Managing Agent which suggests a serious rot is happening. Clearly, the Managing Agent FMSS has failed. The elected Members of the Town Council should be held responsible. They appointed the Managing Agent. They are responsible for supervising the Managing Agent, for setting up a proper structure. You can outsource work; you cannot outsource responsibility. The responsibility lies squarely with the Members of Parliament on the Town Council.
Why did the elected Town Councillors allow such a deeply flawed structure to be set up in the very first place? We have not heard any good answer. Yesterday, Ms Lim said the Accounting and Corporate Regulatory Authority (ACRA) record of FMSS was tabled. Was it discussed at any Town Council meeting? Was it debated? I think she has not given us the full truth.
The elected Town Councillors, instead of disciplining their Managing Agent and taking corrective action, defended them strongly. In 2013, they said, in Parliament, and I quote, "FMSS was engaged based on its directors' experience in property management, professional skills and track record in running Hougang Town Council."
What we have heard in this House so far is that they are inexperienced and these mistakes happened because people resigned. But Ms Sylvia Lim assured us in this House that they are professional and experienced. So, who is telling us the accurate version? And you are talking about experience. How much experience do you need to know that you cannot be handing money to your supporters, at the expense of over-charging your residents? How much experience do you need to truthfully disclose information to your auditors, including your own auditors? In fact, the AGO audit would not have been necessary if you had been honest and forthright in disclosing information to your own auditors. Where is the
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transparency that Mr Pritam Singh has been advocating so strongly?
Elected Town Councillors have acted in the best interests of their friends, the well-paid Managing Agent. They have neglected the interests of the residents of Aljunied, Hougang and Punggol East. Can residents trust that you are acting in their interests? Why are you so protective? Why are they so protective of their expensive Managing Agent that messed up the Town Council's work? Because they are their party supporters and friends?
Yesterday, in this House, Ms Sylvia Lim rejected the suggestion that the arrangement with FMSS was to benefit their friends. So, may I ask: are they your friends, or, at least, were they? Yes? Did they benefit? Yes, richly so. The structure that the WP set up allowed this to happen. You awarded contracts at these exorbitant rates and allowed them to get away with it. What other conclusions can be drawn?
On the other side, we know that AHPETC's financial position, even based on your own figures, which may not be the most reliable, has deteriorated sharply. The finances are now in the red. From a surplus of $3.3 million in the operations, it has now become a deficit of $730,000 in just two years. It is astounding. Two short years.
The WP asserted that no money was lost. What is astounding is how they even twisted the comments of AGO to justify their case. Mr Hri Kumar has dealt with this earlier on, but Mr Pritam Singh continued to repeat this. I urge you to read the auditor's report carefully.
At the very least, you would agree with me that it is not honest to twist the AGO's comments deliberately in this self-serving way.
All the WP MPs have said that they would take collective responsibility. They have said that they would support this Motion. I hope the support is in substance, not just form. If they support the Motion in substance, one would have expected that they will conduct a forensic audit, that they will take legal action against the Managing Agent FMSS; that they will file accounts immediately, on time, as required by the law and any administrative action; that they will put in place checks and balances where there is a severe conflict of interest. And their residents deserve to know what had happened. Are you prepared to come clean and explain and answer all the questions which have been raised in this House? How exactly will you safeguard the interest of residents?
The third way that the WP has betrayed the trust of our people is that they promise one thing and do another, quite the opposite. They say something in one forum, then, in another forum, they say something else.
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The WP's platform in the last General Election was First World Parliament where the Opposition will, I quote, "function as a robust check and balance against the Government". Over the last two days, we have seen so clearly how they have created a system where there is no check, no balance. You cannot even check yourself, or are you not willing to check yourself? They have been entrusted with running a Town Council. Where is the First World Town Council that they should be delivering? Instead, we have a Town Council who cannot account for where the resources go to.
And, in fact, the real check in this instance came from the Government, the AGO. You have a pattern of behaviour where you did not answer to your own auditors, as a result of which the Auditor-General had gone in. If not for the AGO, Singaporeans would not have discovered this mess that the elected Town Councillors have created.
The WP also spoke vigorously about accountability, but surely, you will agree that the most basic aspect of accountability is the ability to keep proper accounts of the money that have been entrusted to you. I can understand if you are keeping accounts for the first time, but you are not – you have told residents of your experience in running Hougang Town Council. So, till today, we do not know the true state of accounts of AHPETC.
The WP said one thing and did another. Are they consistent with their statements? Mr Low started the debate yesterday by saying that he will be accountable. And then, immediately, Ms Sylvia Lim tried to explain away all their failings. Mr Low said that he will account in Parliament and, indeed, Ms Lim told the press earlier that the WP will explain in Parliament. But Mr Singh said in Chamber yesterday that he would only answer to his residents door-to-door. In fact, Mr Pritam Singh spoke about transparency, that the WP will press the Government for as much information as possible. But they do not even provide information to their own auditors.
What the House witnessed yesterday is unbelievable. Mr Pritam Singh had said this, and I quote, "We will constantly press the Government for more information, especially since it is so selective with the information it releases." When asked pertinent questions on transparency and accountability by Mr Shanmugam, Mr Pritam Singh said that he would not give a reply in Parliament – the First World Parliament which he claims he wants to build and which Mr Low Thia Khiang said he would account to. He refuses to answer to Parliament. So, why is Mr Singh so selective about where he answers his questions?
One of my colleagues bumped into Mr Yee Jenn Jong a month ago. When he asked him about the Town Council, he evaded the question and gave him a non-answer, "Answer will be given at the right time and at the right place." And when pressed that he was a WP Central Executive Committee member and should have asked the Party Chairman to know what is
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going on, he said this, and I quote, "It is a matter for the elected Members."
Just last evening, Mr Yee Jenn Jong and a group of his WP supporters, dressed in blue, were asked by a resident about what was going on in AHPETC. But he did not answer and walked away quickly. So, is this the answer Mr Singh promised to residents? A WP Central Executive Committee (CEC) member and his activists met residents and they evaded the question. So, would not answer auditors. Would not answer Parliament. Would not answer residents. Who is left in Singapore that the WP thinks is worthy of an answer?
Sadly, we saw in this House yesterday this pattern of behaviour of saying whatever suits them for the moment, among the WP MPs.
Mr Low Thia Khiang claimed that it is difficult for the Opposition to run Town Councils, or get qualified people to run Town Councils, that they have to start from scratch. But the PAP Town Councils also started from scratch when they were first formed. The PAP Town Councillors had no experience in municipal administration. But they had plenty of integrity and sense of responsibility. Mr Low said that we must, therefore, de-politicise the transitioning process. Newly elected Members of Parliament should not be tested, implying that they should simply be elected to oppose the Government in a First World Parliament, and not to have to show that they can actually govern.
This is the precise opposite of the philosophy of the Town Council scheme. Indeed, it is the opposite of what Mr Low Thia Khiang used to maintain, running Hougang Town Council for 20 years until the WP's team messed up in AHPETC: that, contrary to what the PAP thinks and claims, there is nothing to running Town Councils and the Opposition run them as well as any PAP Town Councils and, therefore, people should vote for them. Mr Low calls for the Town Council issue to be de-politicised, but he is politicking. How can he be disclaiming responsibility to govern locally while asserting the right to challenge the Government nationally?
What is even more disturbing is what the WP Members of Parliament have been promising residents.
Let me just quote three examples. The first quote: "The Workers' Party has over 20 years of experience in managing Town Councils well. And not just small Town Councils, but a huge GRC Town Council in Aljunied. We know the ins and outs of running a constituency. Even when obstacles were thrown in our path to trip us up, we have still managed to ensure residents' needs are well taken care of." This was by Mr Gerald Giam when he spoke to residents at a rally on 23 January 2013.
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Earlier on, we heard Mr Png Eng Huat spell out all the difficulties. But your fellow colleagues, your fellow Party Members, said, "We know the ins and outs of running a constituency. Even when obstacles are thrown into our path to trip us up, we managed." But why are you attributing all the problems that you have to staff resigning, to difficulties, to challenges in the IT system, and so on? I do not understand.
Let me move on to a second quote: "If WP wins Punggol East, I am confident that we will manage the Town Council competently. WP has had more than 20 years of experience managing Hougang SMC. After GE2011, we quickly adapted to take charge of Aljunied GRC under a very short timeframe. We will take over the Town Council functions with as little disruption as possible to the residents. I have the experience and the know-how in running a Town Council." This was by Ms Lee Li Lian at the same rally to residents in January 2013.
So, we have heard that you can take charge of a Town Council, a big one too, under a very short timeframe. So, all the explanations that all the WP MPs have given us so far – which is the correct version? That you have plenty of problems, plenty of challenges or that you can take charge within a very short timeframe, that you can overcome any obstacle and that you have no disruption, and that you are experienced and have the know-how? Which is the correct version, may I ask?
Let me mention a third quote: "Workers' Party MPs are committed to being politically accountable to voters for town management under the current regime. Whatever else is done in other countries, the responsibility for town management has been legislated to the MPs under the TCA. We accept this responsibility and have pledged during elections to manage town councils entrusted to us to the best of our ability. We intend to continue keeping this promise." "We accept responsibility... ...We intend to continue keeping this promise." This is by Ms Sylvia Lim in the Parliamentary session on 13 May 2013. So, as you can see, these are all quite recent.
So, I was most astounded to hear what Mr Low Thia Khiang said yesterday in this House – that we should de-politicise, we should look at the transitioning and all that. So, Mr Low, you are the Secretary General of the WP and have just said the exact opposite of what Ms Sylvia Lim, Chairman of the WP, said in this House in 2013. Did you just change your mind when things went wrong in AHPETC, or you never believed in what you were doing? Or were Mr Gerald Giam, Ms Lee Li Lian and Ms Sylvia Lim misleading residents when they made those speeches, and the WP had no intention whatsoever of fulfilling your promises? So, can you tell this House, and all Singaporeans, what are your real beliefs and values?
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Do you have any conviction? Or do you just say whatever is expedient for the moment even if it means misleading Singaporeans? Is it not dishonest to claim that you believe in something and do the opposite, and to say one thing in one forum and a completely different thing on another occasion?
There also seems to be several versions of the WP floating around. Which one do we trust? The one that claims to be transparent and accountable, which wants to build a First World Parliament; or the one that politicks and says whatever is convenient? The one that politicks, like Mr Pritam Singh, who tries to avoid answering in Parliament but is prepared to say whatever he wants, and to whomever he wants, outside. So, which WP is the true WP?
What is most disturbing in this entire sorry episode is the way that the WP has sought to downplay the crux of the matter, sought to deflect the issue by playing victim to a challenging operating environment that the Opposition faced and then claiming inexperience.
Let me recount what happened in the House yesterday. Mr Low started with a clever opening to play victim – that the Opposition faced a challenging operating environment, and that is why they had these lapses. And then he insinuated that Town Councils are politicised, and he then took an entirely different line from what Ms Sylvia Lim and the rest of the Members of Parliament have been saying.
Ms Sylvia Lim went through a lot of details on the various AGO observations, circulated an action plan and promised to do better. Ms Lim said that Sinking Funds have been put back but she never told anyone of us that they were caught by their own auditor and then the AGO for not putting money into the Sinking Fund. They were forced to put the money back.
Ms Lim and the other MPs never answered the critical question – were all Town Councillors aware of the structure of the ownership of FMSS that leads to substantial over-payment, and was there a proper discussion on how you were going to safeguard the interests of the residents?
And Ms Lim sought to show that the lapses were technical, bean-counting, and the WP would fix them by hiring more accountants and doing more checks. And then, of course, that is a dodge. And then, of course, we heard from the other Members of Parliament as well.
Ms Lim also circulated a table showing various committees and formal checks. Reading it, I was very impressed. I would like to point out to this House that the AGO report indicated that as of 12 December 2014, the last Finance and Investment Committee meeting was held in April 2014. They did not meet for eight months, but the table that Ms Lim circulated said
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they met monthly. This is in the AGO report – you can read that. So, is this another instance of saying one thing and doing another?
So, sadly, we saw – and today – we heard Mr Pritam Singh, we heard Mr Png Eng Huat – they explained all the technical details, they sought to deflect, but they never got to the heart of the issue. They never got to answer the questions that need to be answered. I was hoping that Mr Pritam Singh would change his mind and tell us today, but he did not.
So, we saw a big wayang in this House. Ordinarily, such a wayang would have been comical. But in the context of how important integrity and trust is in how we govern this little red dot, I am so disappointed, I am so saddened by this entire sorry saga. What we are seeing are not isolated lapses of behaviour. What we are seeing is a troubling pattern of dishonest misleading behaviour – to say one thing but to do the opposite. To say one thing that suits them to residents, then to say a different thing in Parliament or elsewhere when it suits them better.
This is wrong. This is a serious problem of integrity. It costs the WP nothing to promise the world. But there is a real cost to Singaporeans – real lives are affected – when they break their promises.
Let me now conclude with why this Motion is important for all Singaporeans.
At the Ministry of Education and in our schools – tens of thousands of teachers spend many, many hours striving to provide the best possible education for our children, so that they may have a better future. Hundreds of thousands of parents are concerned about their children's future. We spend day and night thinking about our children's future. But our children can only have a better future if Singapore, as a nation, succeeds and remains relevant to the world. That we retain the values and the qualities that are essential for our success.
We have seen how in many countries – when elected officials engage in self-serving practices, when they put their interests ahead of the public interest, when they do not act with integrity and when they put the interests of their cronies first – the country fails. And it is the man in the street and the young and the future generation who suffer the most.
As a little red dot, good governance is critical to Singapore's future. Elected public officials must act with integrity and a deep sense of responsibility, and serve our people wholeheartedly. In the many decisions we take, there may be errors – human or system – but what matters most is that elected officials act with integrity and do our very best to serve
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the public interest.
As Minister Khaw Boon Wan pointed out yesterday, a Town Council requires elected Members of Parliament to govern and not just politick. It is easy to shout campaign slogans and make all sorts of promises, but do you really believe in what you say wholeheartedly and walk the talk? Running a Town Council in a clean, competent and accountable way is a test of the integrity of the Member of Parliament and his sense of responsibility and accountability. In other words, can we trust him or her?
This Motion is not about partisan politics – I have no joy pointing out the many failings and questionable practices of the WP. This Motion is important for all Singaporeans because it is about our long-term future. Unless elected Members of Parliament act with integrity and a deep sense of responsibility and take the trust of the people seriously, we will not be able to maintain a system of good governance – clean, honest, accountable, competent – and pass this on to our future generations. We must not betray the trust of Singaporeans. Singaporeans deserve better. So, let us all honour the trust that Singaporeans have placed in us. Mdm Speaker, I support the Motion.
Mr Low Thia Khiang.
Thank you, Madam. I have a clarification. I remember Minister mentioned that there was $12 million lost. May I clarify whether he meant $12 million lost from the Town Council's account? Does he mean that?
Mdm Speaker, I said that if you look at the accounts, $12 million was missing from the Sinking Fund, and this was caught by the Auditor-General.
Missing from the Sinking Fund – was it missing or lost from the Town Council?
I said that it was missing. I hope that you have read the AGO report because it was very clear that the $12 million that ought to be put into the Sinking Fund was not there, was missing from the Sinking Fund, and the Auditor-General had to say, "You have to put this back." The rules are very clear as to when you have to put into the Sinking Fund. And even despite the reminders from the Auditor-General, you were late. And even now, not all of it has been put back.
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Thank you. So, it is the $12 million that ought to be put back into the Sinking Fund. The $12 million is in the operating fund account. [Interruption] But it is not missing from the Town Council.
As I have said, if not for the Auditor-General doing this audit, Singaporeans would have been kept in the dark about what happened to your Sinking Fund. Singaporeans would have been kept in the dark. The residents of Aljunied, Hougang and Punggol East would have been kept in the dark.
Mdm Speaker, I disagree. It will never be kept in the dark. You have to submit the audited accounts anyway. Yes, eventually, you will have to submit the accounts.
That is indeed so, that you have to submit the audited accounts. But you did not. Your accounts were late for two years in a row. The first audit had four disclaimers, and the second had 13. So, from year to year, it got from bad to worse.
Yes, it had not been submitted. We admit that, and we explained why it was so. And we are here today and yesterday in this House to explain and to account for why we were in the situation as it is. We take the report of the AGO very seriously. We have shown that we have dealt with the problem and improvements have been made.
As I had indicated in my speech, Mdm Speaker, there are many issues on which the residents and Singaporeans deserve a straight answer. How is it that the Managing Agent rates that you are paying to FMSS are so much higher than anywhere else? Where did the money go? Where did it come from? And how was such a structure created in the first instance? And how did the financial position of the Town Council deteriorate so quickly within two short years? Those are the critical issues.
Why was FMSS set up? Why was it set up the way it was? First and foremost, whether the elected Members of the Town Council even disclosed this ownership to everybody in the Town Council? Was it debated amongst the Town Councillors, all of them, not just one or two of them? Were actions taken to ensure that proper safeguards were put in place? What happened to all the money? All these are critical questions.
So, we heard, indeed, we heard a lot of technical explanations which essentially gave the impression that this was a technical issue. As I had said, this is not a technical issue. This issue is about integrity. It is about trust. It is about our convictions and our beliefs. Our convictions and our beliefs that, as elected Members of Parliament, we are here to serve the
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people of Singapore, not our friends.
Madam, we have explained yesterday and today the oversight mechanism of the Town Council, and that the Managing Agent contracts are tendered out. We tendered out the Managing Agent contract and this is the result of the tender. We have also done due diligence to look at the Managing Agent tender. So, this is what we have done. We have done our part. But, of course, we admit that the account is long overdue. We have accepted that and we accepted the AGO's finding, and we will look into the issue.
So, the question is: did the elected Members of the Town Council of AHPETC overpay? And do you accept that the figures that were circulated yesterday that, perhaps, you have overpaid by at least $1.6 million a year, over four years, to your Managing Agent? And if you do, and if you support this Motion fully, what action will you be taking to recover the monies? I think that deserves a straight answer.
Madam, may I?
Yes.
Madam, first of all, I would like to clarify that what the Minister said about us not transferring monies into Sinking Fund until we were caught by the AGO, it is not correct. We actually made some transfers before even the AGO audit commenced. Of course, it is true that we did not make the transfers on time; it was not done deliberately. As I mentioned in the House yesterday, we thought that it was acceptable to keep the monies in the Operating Fund, pay Sinking Fund expenses out of there and then net the thing off. I think I said that in my speech. So, there was some misunderstanding of that on our part. But we admit that the rule, read strictly, is clear and that we should have done the quarterly transfer.
Secondly, in respect of the Managing Agent rates, we actually did our checks at the time that the tender was awarded. We looked at the rates that were being charged. Although we noted that the rates were at a higher end, but we had the rates that were charged, for example, in Pasir Ris-Punggol from 2011 to 2014. And the rates that are in the Letter of Offer are actually higher than what was shown yesterday in the rates circulated by the Minister, and he clarified that these are the new rates.
So, it is possible that the Managing Agents have reduced their rates since then, but the information that we had in 2012, the rates were at a higher level than what was circulated in the table yesterday.
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The discussion was very detailed, the analysis of the Managing Agents rates. We looked at some factors such as: first of all, they were providing more staff than the previous Managing Agent; secondly, they are a company set up just to service us and we require them to operate quite a number of offices because of the boundaries of the town. Our town operated a total of five offices and one collection centre. So, it is quite a lot of administrative costs. And third of all, they are a company set up focusing on our work and, because of that, they may not have the same economies of scale as the larger companies that are running the other Managing Agents. So, these were some of the factors that we took into account.
Additionally, there was also the consideration that there were many additional lifts coming on stream, particularly in the Hougang SMC, which was experiencing the LUP all at once, and the lift testing fees were to be paid by the Managing Agent. So, these are some of the factors. The discussions were very frank and also based on the expected cost structure. We benchmarked the salaries that they were paying their staff; we got an HR consultancy to come in to see that it is within the market benchmark. So, we did exercise some due diligence on that.
Thank you, Mdm Speaker. Can I just clarify with Ms Lim on that last answer? She said that some monies were transferred back to the Sinking Fund before the AGO came in and, therefore, they must know what the rules are. They would have only transferred back because they knew what the rules are. So, the question is why did they not transfer everything back before the AGO came in?
Madam, as I mentioned earlier, we were doing the calculation as to what Sinking Fund expenses had been paid out of routine funds. So, it took us quite some time to net off the thing. And AGO advised us later on that this is a complicated way of doing things. So, it took us some time to do that. But, as I mentioned earlier, we do agree that the transfers were late and it should not have been done late.
Mdm Speaker, on the Sinking Fund issue, Ms Lim has basically said that the Managing Agent did not do a good job of it. But she had told this House in May 2013 that they were hired on the basis of their professional skills and experience. So, how did that happen?
And on the rates that you quoted, and about all the due diligence that you have done, we are aware that FMSS is an exempt company, so the simple question is: did they make money and did the Town Council lose money as a result? So, never mind all the details about computations. But the heart of the matter is: did they make money? If so, are you prepared to say how much? And how much money did the Town Council lose, meaning how much
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money did the residents of Aljunied, Hougang and Punggol East overpay?
Thank you, Madam. Madam, these rates were through an open tender and awarded. That is the rate that they tendered for and we awarded the contract. Do you award a contract based on a certain rate agreed and subsequently you say they overcharged and you want the money back? I do not understand the logic.
Madam, would the Minister agree that it would make all this confusion clearer and easier if, in the public tender for Managing Agent contract, there are more than one tenderer? That would be easier. Then, we will have to answer today in Parliament, "Why are you not awarding the contract to the lowest tenderer?" I think it would be much, much easier and not to confuse as to why you give it to your friend and all that.
But the fact is, unfortunately, the environment is such that there is no one tendering for the Managing Agent job. Nobody wants to work for me. That is a problem, Prime Minister. That is the environment we are in now.
But Mr Low, I think we must remember one very critical detail, which is that the owner of FMSS – the General Manager, the Secretary and the Deputy General Manager – set up a company seven days after the General Election with a paid-up capital of $500,000. First of all, there is a very clear conflict of interest between what your Managing Agent, as owners, would do and what they as officers of the Town Council would do. You would surely agree that the incentives are very different when they are owners versus when they are just employees.
Second, for many, many years, Ms How and her team had been working with you in Hougang Town Council. You could have hired them as employees to do the work. In fact, as far as the cleaning, maintenance, services and all that, all the Town Councils outsource this work. So, there are plenty of big contractors all over Singapore who will be willing to do cleaning work, maintenance work, lift services work. And at the point when you terminated the CPG contract, it was pointed out in this House yesterday that the option rested with you. You could have extended it for another two years.
So, the issue that the elected Members of AHPETC need to explain is why did you not extend the contract, and why was a company set up as an exempt private company seven days after the election and, in fact, before you initiated discussions with CPG? In other words, the termination and the intention to set this up were, as Minister Shanmugam pointed out yesterday, premeditated. And did the company make money? I think I have asked this question many times but you have not answered.
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I am not privy to the company's accounts; that is a private account, so I do not know. [Interruptions] Whether or not I will do that, I —
It is Singaporeans' money. How much money did your friends make?
Can I advise Members to address the Chair when you are responding or making your clarifications and not to each other?
To be fair, I think this is something which I have to respect; that is an individual company. Let us come back to the other question. Ms Lim has explained yesterday the circumstances under which CPG, I mean, we signed a deal with CPG to agree for the termination. They were not prepared to work for us.
Whatever it is, you can question about why the company was set up. But the fact is that they were only given the transitional contract for one year, and there were two tenders subsequently called. So, there was no guarantee. If let us say, for instance, that I want to set up a company, go and find $1 million or $500,000 in capitalisation to do a specific job, there is no certainty that I will be able to continue to do the job. So, is there an incentive for them to do this, if there is intention for greed and money? There is no guarantee, because they will have to go through a public tender. That is why I said it would be easier if the public tender had more than one tenderer and the other tenderer shows a lower rate. And if we are not awarding to them, then I would have to answer here.
Mdm Speaker, I think the hon Member has not answered the very straightforward question which I have posed, which is, yesterday we saw the big differences in the Managing Agent rates. As elected Members of Parliament running the Town Council, is it not in your instinct to say: "How did this happen? Are our residents getting a good deal? Why is this so? How much money are they making?"
Yes, it may be a single bid but is it not your responsibility to look at what happened? So, would you ask FMSS and FMSI how much profits have they made out of this contract over the last four years? Minister Shanmugam had said that the estimate is that the Town Council had paid at least $1.6 million more than you should every year for the last four years. So, if you are serving your residents well, should you not jump at that figure and say, "I must do something about this. I must get to the bottom of this"? Rather than to say, "Well, this was an open contract, there was only one bid and that was that."
And also, you did not answer my question which is, there were options. You said that they were experienced, they were professionals. Why did you not just simply hire them as employees and continue to run? You would know the cost with great clarity. You would know
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how much – because Ms Sylvia Lim mentioned about benchmarking. So, you would know exactly how much that you can pay Ms How and her team fairly, competitively and you would have avoided all these problems.
But you have not explained why such a convoluted structure and what you have done to prevent the conflict of interests. You are not prepared to ask how much money FMSS have made. You are not prepared to look into how much the Town Council has overpaid and is this money lost through the front door.
Madam, I will reiterate again. The Town Council paid the Managing Agent based on the contract sum agreed upon via a public tender. Why we did not decide to manage ourselves was because it was a very much larger GRC. And at that point in time, in the Hougang SMC, there were about 20-odd staff and we know we would need about a hundred staff to manage. At that point in time, we were very concerned about taking over a much larger GRC. If you manage it yourself, you will probably have a lot of other things that you have to look into.
So, we thought it would be better that if the Town Council, the old Town Council's staff, I mean, they have the experience and are prepared to work with this company and are prepared to form a company or to manage the Town Council. They are prepared to do that.
Mdm Speaker, may I ask the hon Member whether it is perfectly alright to overpay his Managing Agent? Is that the Member's conclusion?
Madam, what is there to decide on whether they are overpaid? This is a public tender, they tendered at that rate. We have done due diligence to check around about the rate.
I think, Mdm Speaker, I find this discussion puzzling because, in fact, Ms Sylvia Lim had just, a few moments ago, told us that in terms of payment of staff, they had done a benchmarking. I assume that you did that to ensure that you do not overpay. Now that you have seen all the figures, it is a very clear instance that you have overpaid and the simple question is: "What are you going to do about it?"
May I suggest, Mdm Speaker, that we do not prolong this – where you just assert that, in form, there was a tender and this was the outcome and all that. As I said in my speech repeatedly, it is not about form; it is not about technical rules. It is about integrity, it is about trust, it is about how we wholeheartedly do our very best to serve the people who have elected us, to serve Singaporeans who have elected us. We should not just go behind the facade saying that the technical rules have all been obeyed, this was the outcome, and
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accept that. Now, having seen the numbers, I think the public can conclude what ought to be done.
Minister Khaw Boon Wan.
Mdm Speaker, over the last two days, we have heard several serious speeches on a serious topic. After all, this is the first time in our history that the Auditor-General had to conduct a special audit on a Town Council. Findings of incompetence and inadequacies in corporate governance were uncovered. The sorry state of affairs in the AHPETC's financial administration and its systemic nature bear grave implications not only for the residents but also for the sustainability and viability of the Town Council governance framework as we know it today.
Institutions that collect and spend public money must always ensure a high standard of transparency and accountability. Institutions are not perfect and there is always scope to improve. Occasionally, they may even make mistakes. Where there is criminal intent, the law will take its course. When mistakes are made, we expect the leaders in charge to take ownership and admit them and to promptly institute changes to avoid any repeat.
I thank Minister of State Sam Tan and Mr Liang Eng Hwa for reminding the House of the honour and privilege of being elected Members of Parliament, and of our duties and responsibilities as Town Councillors. As Members of Parliament, we set the tone and the standard of corporate governance in our respective Town Councils. As the Chinese saying goes: “上梁不正下梁歪”. If the top beam is not straight, the lower beams are bound to be crooked. If the leader sets a bad example, or condones bad behaviour by his senior staff, the other subordinates will likely follow suit.
Mr Hri Kumar voiced his grave concerns over the poor state of affairs in AHPETC. He shared his years of experience dealing with wrongdoings in the commercial world and related them to the current saga. He highlighted the potential risks of abuses that the Town Council was in, if its weaknesses are left unrectified. He and others wondered how the Members of Parliament there could have allowed such lapses to happen and to persist for so long.
Indeed, it is sad reading the Auditor-General's report, especially the appendices where AHPETC was asked to respond. Not only are the AGO's findings troubling, but the defensiveness of AHPETC in response to these findings suggests that instead of just taking ownership and to resolve to rectify the problems uncovered, AHPETC is constantly looking
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for excuses to mitigate and rationalise the lapses.
But it is sadder listening to their speeches yesterday and today. I was initially cheered by Mr Low Thia Khiang's declaration that WP would support the Motion. I thought, finally, they have acknowledged the mess they are in and their residents can now look forward to be eventually out of the hole. But my optimism was short-lived.
He went straight into a political speech, playing the victim of an unfair political world created by the Government and calling for the depoliticisation of the transition process. And soon after, Ms Sylvia Lim and their other Members of Parliament spoke, repeating their objections to the AGO findings, objections which were already rebutted explicitly by AGO and documented in the AGO report. They were recycled in this House in the hope, I presume, that not many people would have read the appendices where such exchanges were recorded. This consistent pattern of evasive behaviour gives us cause to doubt the sincerity of AHPETC Members of Parliament when they come to this House to declare their support for the Motion and assure that they will make necessary changes.
Madam, I am a forgiving man. I listened very carefully to their speeches, hoping to find some trace of sincerity and genuine remorse. Sadly, I found none. Instead, there was a certain arrogance, a disdain for having to come and address this House to answer for the adverse findings of the AGO audit. Yesterday, Mr Pritam Singh's refusal to reply to our Law Minister Shanmugam's questions was classic: "Well, Minister, if you were a resident, I will answer your question"! If there is no remorse, there can be no genuine acceptance that one is at fault and that one is morally, if not duty-bound, to make things right.
It reminded me of my days running hospitals. Often, I got to meet some diabetic patients at risk of further complications leading to blindness, organ failure. Some of them were able to avoid the complications by taking charge of their illness, changed their lifestyle, ate healthily, more brown rice, exercise regularly. But, unfortunately, for some, even as they assured their doctors of compliance – "Yes, I will do this; I will improve" – actually just lived in denial, only to see their health continually deteriorate. And because I stayed in the Ministry of Health for so many years, I got to see those patients eventually and, predictably, ending up with chronic kidney failure, as dialysis patients. It was very sad and could have been avoided. They only realised it when the organ finally failed, but it is too late.
Madam, I would urge that AHPETC come out of denial and see the gravity of the situation for what it is. The AGO findings are not trivial. The lapses are symptomatic of a systemic failure: the failure to have proper controls and a reliable record and accounting system. This is the staple that every Town Council must have in order to operate. How else can you safeguard public monies? Indeed, the AGO's conclusions are that until those weaknesses are addressed, AHPETC cannot safeguard public monies; its accounts are
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inaccurate and unreliable.
In 1989, when we created the Town Councils, then-Deputy Prime Minister Goh Chok Tong explained in this House that the strategic intent was to empower elected Members of Parliament to be responsible for and be a part of governance of Singapore. It is to allow the Members of Parliament to demonstrate to the residents their ability to govern. All political parties, we assume, must aspire to eventually run the Singapore Government. Now, if they cannot even run a Town Council well, how can they be entrusted with the even more critical responsibility of running the whole country?
By vesting the Town Councils with powers to manage the HDB estates, the Government hands over significant authority to the Members of Parliament: powers to set and enforce by-laws; powers to collect S&CC; and the authority to procure and deliver programmes and services for their residents. A dysfunctional Town Council can have grave consequences for the residents.
In the past 25 years, there have been Town Councils run by PAP, as well as by Opposition Members of Parliament. While there were occasional hiccups, the Town Council framework has generally served us well. This is because there was a common understanding that each Member of Parliament would assume his duty of running a Town Council seriously. There was also a common understanding of the role of Town Councils that, while they exercise autonomy, they are not sovereign bodies above the law. They must work in keeping with national policies, national interests and the law. They are certainly not a local warlord, above the law and accountable to only themselves.
The AGO audit findings confirmed the sad state of the situation at AHPETC. At the core of this tragic saga is the incompetence of its Managing Agent, FMSS. Its incompetence spawned the many symptomatic lapses that the Auditor-General had observed in the Town Council.
FMSS, as we heard yesterday, is very highly paid. And what a sterling service the FMSS has rendered the Town Council! It cannot even deliver a competent reliable system and administration of accounts and records. Without a reliable accounting and financial management system, there will be financial and accounting lapses and opportunities for fraud, abuse and wrongdoing. And in such a setting, when wrong-doers dip their fingers into the pie, the acts may not be discovered for a long time. If I may quote another Chinese saying: “混水摸鱼”, that is, "When the water is murky, it is easier to fish." In other words, opacity creates opportunities for crooks to make money. Eventually, the financial health of the Town Council will be placed at risk. This can only be at the expense of the residents.
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That is why we require all organisations to prepare fully audited financial accounts, unqualified. Unfortunately, we all know now, the Town Council had not been able to do so for several years. I think Mr Liang Eng Hwa put it quite succinctly – FMSS has severely short-changed the Town Council. The residents there pay more and get less!
Minister Shanmugam probed further and asked about the financial position of FMSS, and whether FMSS would publish its accounts. Minister Heng did the same thing just now. And, as we heard, there was no reply. But I bet that FMSS is one of those rare companies which are profitable from Year One. And if my guess is correct, we can safely assume where the husband-and-wife team places their priority. To preserve the peace with the residents, they work on the visible aspects of Town Council work: cleaning the floors, maintaining the lifts. And in any case, such work is not done by them. It is outsourced to external contractors and, in fact, FMSS is paid to oversee them.
As for the invisible aspects of Town Council work that residents do not get to see, like corporate governance, accounting procedures, timely payment into the Sinking Funds, and reducing operating deficits, they probably figure that such things, being out of sight, can wait. But this is also at the expense of the residents, though the effects may not be obvious immediately. It is only as a result of their own auditor's disclaimers, and now the deeper findings of the AGO audit, that we have sight of the mess that they have been hiding from all of us.
Minister Shanmugam gave us a vivid analysis of the intrinsically troubling structure of FMSS and its relationship with AHPETC. He is our Law Minister. He said in this House that the structure is downright unlawful and that it is a serious breach of fiduciary duties for any Town Councillor to have approved such a process. Inflated fees were paid to FMSS, in return for gross incompetence, placing the Town Council's financial health at risk. The excess fees paid to FMSS, we have heard, were estimated at $1.6 million per year. So, in four years, it is $6.4 million; $1.6 million per year, $6.4 million for four years.
In three short years, the Town Council's finances deteriorated from a $3.3 million surplus to a deficit of almost $¾ million. In short, FMSS and its owners who, de facto, run the Town Council have milked it, and residents' money and public funds have, in this manner, been abused. That was the conclusion and the statement by Minister Shanmugam.
So, in this House yesterday, he asked the elected Members of Parliament whether they were aware of this governance structure and process. No answers, whether collectively or individually. Instead, we were inundated with speeches over several hours on minutiae details, details which are already recorded in the appendices of the auditors' report; minutiae details which they have also offered to the Auditor-General, and many of which had been rejected by them. But they recycled it here and conveniently kept silent on the key
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questions put up by the Minister for Law.
WP MPs have made light of the AGO findings when they asserted yesterday that AGO had found no evidence of loss of money or fraudulent activity. But as we have now heard, this is a misrepresentation of AGO's conclusions. Mr Hri Kumar highlighted this point, too. AGO pointed this out in Appendix A of its report when the WP tried to put such words in AGO's mouth. AGO did not draw such a conclusion, that there was no loss of money or fraudulent activity. In fact, with so many documents missing, and the accounts unreliable, who can be sure that there was no wrongdoing?
Instead of making such an assertion attributing a conclusion to the AGO audit which, in fact, the AGO had categorically rejected, Mr Low or Ms Sylvia Lim should just roll up their sleeves and do real work: mount a serious forensic investigation, as suggested by Mr Hri Kumar, into the records and pursue all the findings of the AGO report, clean up the accounts, correct the flawed structure, institute a robust system, discipline any errant officers, get the Managing Agent to return the money, explain to their residents. They have a lot of work to do.
While the incompetence of FMSS, the Managing Agent, caused all these problems, it was, in the end, only the proximate cause. The primary cause was, unfortunately, the dereliction of duty by the Town Councillors, condoning this, allowing it to happen, and then making excuses for it when uncovered, instead of putting things right. Only they, the Town Councillors, can unwind the mess. If I may borrow another Chinese saying: “解铃还需系铃人”, that is, "Only he who attached the bell can remove it."
The systemic failure at AHPETC resides in the arrangement that they have allowed – the de facto management of AHPETC being also the owners of the Managing Agent, resulting in the adverse outcome of over-charging and the obvious ineffectiveness of any oversight by the Town Councillors. The result is the deteriorating financial health of the Town Council, with all signs suggesting it is only going to get worse this year and the next. If a listed company had such an auditor's report, the Chairman of the company would be duty-bound to investigate and to satisfy himself and his shareholders whether fraud or criminal conduct was involved. In this instance, the ball is in the WP's court.
Regardless, we must not allow FMSS to profiteer from their incompetence. All the more when it is at the expense of residents and public monies. Even if it was not illegal, it is morally wrong. Mr Low should not condone this. He should hold his Managing Agent accountable. I expect him to take action against FMSS for their monumental incompetence. That would be the right thing to do. Mr Hri Kumar was helpful and described a road map forward for them
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to follow.
Meanwhile, I welcome Mr Low's support of the Motion. But he must walk the talk. If I may borrow the Minister for Law, Mr Shanmugam's words, as he put it yesterday. It cannot be just lip service, a convenient way of sliding past this debacle, to live and fight another day. Demonstrate your sincerity through real actions. There is another Chinese saying for this: “听其言，观其行”, that is, "Watch his actions, even as you are listening to his words."
How to show sincerity?
(a) Take concrete steps to recover the losses that they have allowed to take place. Make restitution to the residents for the losses to their Town Council.
(b) Submit a clean set of accounts for FY2013 to Parliament by 30 June this year. Submit your accounts for FY2014 on time, like all the other Town Councils, by 31 August this year. Account to Parliament, account to your residents, here, in this House.
And these are not high hurdles. These are the basic requirements for any organisation, for anyone seeking to run for office in any organisation. Every Town Council has been able to do this, including those run by Opposition MPs in the past. This is what supporting the Motion means.
Mr Liang Eng Hwa said that he would call for a Division when the vote on the Motion is taken. I support his call. This is a matter on which it is important for each one of us to take a stand explicitly.
Mdm Speaker, this has been a very painful debate. But if our discussions have given us pause to reflect on our responsibilities as Members of Parliament and as Town Councillors, and strengthened our resolution and determination to do better, regardless of which party we belong to, then something good may yet come out of all this.
Let us support the Motion. This Motion is not about PAP versus WP. This Motion is about Singaporeans. This Motion is about our residents.
Let us do our very best to uphold high standards of governance, transparency and accountability so that we can protect their interests. Let us do our best to protect and safeguard all the public monies that have been entrusted to our Town Councils. Madam, I beg to move.
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Ms Sylvia Lim.
Thank you, Madam. I would just like to clarify with the Minister on what he mentioned about requiring the Town Council to submit unqualified or clean accounts for the next two years by a certain deadline. As the Minister would have noted in the AGO report, there were a couple of disclaimers that were highlighted. Some of them had been cleared. Some of them we will put in efforts to clear them. But there may be a few which will remain, such as operating balances and so on. So, I just hope that we can work with MND to come up with something satisfactory for MND to accept.
Madam, I am a reasonable man. I am also a generous man. I am also a very religious man. So, where possible, I will try to help, whoever. It does not matter whether you are PAP or non-PAP. The key point is: are you sincere in wanting to help your residents? If you are honest, if you are clean, I will do my best to help you.
Question put.
Mr Liang, you wish to say something?
Madam, I call for a Division.
Instead of claiming a Division, would you prefer to have your vote recorded instead?
Madam, I call for a Division, please.
Will hon Members who support the Division please rise in their places?
All hon Members rose.
Okay, Members, you can sit down; looks like everybody has stood up. Clerk, ring the Division bells.
After two minutes –
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Serjeant-at-Arms, please lock the doors. The Question is, "The Motion standing in the name of the Minister for National Development." Mr Liang, you have claimed a Division, would you like to proceed?
I call for a Division.
Take a Division. Before I proceed to start the electronic voting, Members are advised to read the instructions for voting, which are found in the left compartment of their seats, where their earpieces are placed. Do not forget to press the button that you are "Present". Otherwise, your vote will not be reflected. You may now begin to vote.
Members are advised to check that their names are registered on the display board according to your vote indication.
There are a few Members who have not pressed their "Present" button. The Clerk will now proceed to call your names so that you can indicate your vote.
Hon Member Mrs Lina Chiam was called.
Yes.
Mr Thomas Chua.
Are Nominated Members allowed to vote?
Yes. You are allowed to vote. Can you please indicate your vote so that we can record it manually?
Yes.
*Hon Member Mr Tharman Shanmugaratnam was called. (proc text)]
Yes, Madam. I had already voted "yes".
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There are 85 "Ayes", nil "Noes", nil "Abstention". The "Ayes" have it.
Resolved, that this Parliament:
(i) notes with concern the Auditor-General's Report on the Audit of Aljunied-Hougang-Punggol East Town Council (AHPETC) (Paper Misc 1 of 2015), specifically its findings on:
(a) the deficiencies in AHPETC's financial and accounting systems, record-keeping and safeguards;
(b) the uncertain accuracy and reliability of AHPETC's accounts;
(c) the lack of proper disclosure and oversight by AHPETC's Town Councillors, especially over related-party transactions and conflicts of interest; and
(d) the risk that AHPETC has not properly managed and spent public funds;
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(ii) calls on all Town Councils to uphold high standards of accounting, reporting and corporate governance so as to safeguard residents' interests; and
*(iii) supports strengthening the legislative framework for Town Councils, in order to hold those responsible for their good management to proper account. (proc text)]
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PAPERCUTS