Asking CPG to run AHTC without a computer system akin to building a house without bricks: Defence

Asking CPG to run AHTC without a computer system akin to building a house without bricks: Defence

AHTC (6)

SINGAPORE: The defence for the Workers' Party (WP) Members of Parliament and Aljunied-Hougang Town Council (AHTC) town councillors embroiled in a civil lawsuit over how they ran the town council on Friday (Oct 12) compared their situation after taking over the town council to building a house without bricks.

Referring to the circumstances AHTC was in, with a managing agent that allegedly wanted to withdraw from serving it and without a computer system, Senior Counsel Chelva Retnam Rajah said it was akin to asking a reluctant builder to build a house without bricks.

“I have a contract and the contract is to build my house,” he said, referring to the existing contract AHTC had with managing agent CPG Facilities Management.

"Under the contract, I'm supposed to provide the bricks," he continued. The bricks here refer to the computer system that had been withdrawn by the company that supplied it.

IT firm Action Information Management (AIM) had withdrawn its Town Council Management System (TCMS) from AHTC in 2011. It had bought the software belonging to the People's Action Party (PAP) town councils in 2010, in an open tender.

“And then I say I can’t provide the bricks," he said. “What should I do?”

To this, PricewaterhouseCoopers (PwC) partner Goh Thien Phong, who was on the witness stand, answered: "Look for another brick provider."

READ: Defence produces email that disputes assertion AHTC breached town council rules

While it has been widely discussed during the trial that CPG was contractually obliged to continue providing its services to AHTC after WP took over Aljunied GRC from the People’s Action Party in the 2011 General Election, the point that CPG was not obligated to provide a TCMS was raised by the defence only on Friday, the sixth day of the trial.

The suit was brought by AHTC and Pasir Ris-Punggol Town Council (PRPTC) against WP MPs Low Thia Khiang, Sylvia Lim and Pritam Singh; AHTC town councillors Chua Zhi Hon and Kenneth Foo; AHTC’s former managing agent FM Solutions and Services (FMSS); and FMSS employees How Weng Fan and Danny Loh.

They are accused of breaching fiduciary duties and allowing more than S$33 million in “improper” payments made by AHTC to FMSS and others.

AHTC had released CPG from its contract as a managing agent and appointed FMSS, which was run by Ms How and Mr Loh, who were also appointed to key positions in AHTC.

Mr Goh had contended that CPG had a contractual obligation to continue with the town council "whether there was a computer system or not”, and added that the lack of a computer system was "CPG's problem to handle".

Pointing out that CPG had no contractual obligation to provide the computer system, Mr Rajah contended that CPG could not have run the town council without this financial and accounting software even if they had been kept on by AHTC.

READ: AHTC trial: S$60 million in payments recorded manually, says KPMG

In his responses to Mr Rajah, Mr Goh repeatedly stressed that his role as an accountant was to see if there were breaches to the Town Councils Financial Rules (TCFR) and the circumstances of the breaches.

“I cannot second-guess,” he said, pointing out that based on his findings, all he could see was that it was "mutually agreed" that CPG be released from its contract with the town council.

"I cannot see any evidence that CPG talked to the town councils ... and they said sorry, I cannot fulfil this contract," he added.

"And if the contract is not fulfilled, what would the political fallout be?" Mr Rajah asked.

The exchange was cut short by Justice Kannan Ramesh, and Mr Rajah said he would continue the point in his submissions.


PwC had been appointed by PRPTC to review the past payments made by Aljunied-Hougang-Punggol East Town Council (AHPETC) when WP was managing the Punggol East constituency from 2013 to 2015.

Among its findings was an allegation that FMSS and its service provider FMSI charged "significantly higher fees" than other more experienced vendors who served other town councils.

In response to this, Mr Rajah referred to a 2013 ministerial statement on town councils by Dr Teo Ho Pin, coordinating chairman of town councils run by the ruling PAP.

In his statement, Dr Teo said that the 15 PAP-run town councils at the time "took advantage of their economies of scale to implement many joint projects to bring cost savings to their residents".

READ: Defence rebuts PwC's findings that invoices issued breached  financial rules

For example, Dr Teo said, the PAP-run town councils jointly called a tender to provide 24-hour emergency maintenance services for their residents. These included lift rescue services, emergency repairs and call centre services.

"You are aware of the fact that PAP town councils can and have worked together to reduce economies of scale to reduce cost operations," Mr Rajah said to Mr Goh. "And so running an opposition town council ... does not have the advantages of any of these economies of scale enjoyed by the 15 PAP town councils operating together."

Mr Goh responded: "Well, I suppose this is a hypothesis. If the opposition ward can make use of the managing agent that serves PAP town councils, then they can also enjoy the economies of scale."

"And the lion will lie down with the lamb," Mr Rajah countered, drawing laughter from the courtroom.

"Well, I didn't ask the lion," replied Mr Goh.

The trial continues on Monday, with another defence lawyer cross-examining Mr Goh.

Source: CNA/aa(hm)