MND had 'no difficulty' accepting AHTC's waiver of tender for managing agent, says defence

MND had 'no difficulty' accepting AHTC's waiver of tender for managing agent, says defence

SINGAPORE: The Ministry of National Development (MND) and its then-minister Khaw Boon Wan knew that Aljunied-Hougang Town Council (AHTC) had waived a tender for a managing agent, and had accepted that the waiver was “properly called for and exercised”.

That was an argument put forth on Wednesday (Oct 10) by the lead defence lawyer for Workers’ Party (WP) Members of Parliament Sylvia Lim, Low Thia Khiang and Pritam Singh, as well as AHTC councillors Chua Zhi Hon and Kenneth Foo Seck Guan.

This waiver was “not justified”, according to audit firm KPMG in its October 2016 report. It also concluded that the contract which AHTC subsequently entered into with FM Solutions and Services (FMSS) was done “improperly”.

The KPMG report forms part of the basis for the civil lawsuit against the WP MPs, AHTC councillors and FMSS employees.

FMSS, a new company, was appointed as the town council’s managing agent after the Workers’ Party won Aljunied GRC in the 2011 General Election.

The three MPs are accused of breaching their fiduciary duties in appointing FMSS, which allegedly led to improper payments amounting to about S$33 million made to FMSS and its service provider.

AHTC trial
(From left) The Workers' Party's Pritam Singh, Low Thia Khiang and Sylvia Lim. 

In his cross-examination of KPMG executive director Owen Hawkes on Wednesday, Senior Counsel Chelva Retnam Rajah referred to an extract from a sitting of Parliament on May 13, 2013, when Mr Khaw talked about the waiving of tenders, among other town council issues.

Mr Rajah quoted Mr Khaw who said in his speech: “The Town Councils Financial Rules (TCFR) also provide latitude to town councils or their chairmen to waive requirement to call for tender altogether.

“Ms Sylvia Lim would be familiar with this because she exercised this latitude when her town council waived competition and appointed FMSS as its managing agent in 2011.

“MND left the appointment to her best judgment and did not object. We have to apply the Town Councils Act and the TCFR fairly, evenly and consistently.”

AHTC court sketch of Owen Hawkes
Court sketch: Senior Counsel Chelva Retnam Rajah cross-examines KPMG executive director Owen Hawkes on Wednesday (Oct 10). (Illustration: Lydia Lam)

In presenting his argument, Mr Rajah said: "So it would appear that as far as Mr Khaw was concerned, he didn't have too much difficulty with the fact that a waiver had been given as far as the first managing agent contract agreement was concerned.”

"Do you accept that?" he asked Mr Hawkes.

"You're correct," he responded. "Well, it says that MND left the appointment to the 'best judgment'."


Mr Rajah then referred to an extract from a 2013 MND report produced after the prime minister directed the ministry to review the sale of the Town Council Management System (TCMS) software belonging to PAP town councils to IT firm Action Information Management (AIM). 

In the report, MND said the review team sought input from Potong Pasir Town Council (PPTC) and AHTC.

The review team found that for PPTC and AHTC, “most major contracts and systems continued after the changeover, which ensured continuity of services to residents", according to the MND report.

"The only exception was the managing agent contracts, where both town councils appointed new managing agents," the report continued.

"Due to the urgency of the town councils' needs, both town councils exercised a waiver of competition for tender for a one-year contract."

READ: Hard for opposition town councils to find managing agents, AHTC’s previous vendor an ‘unwilling horse’, says defence

READ: Workers' Party took on a town council which was ‘stripped of its computer system’, says defence

Mr Rajah pointed out that the report went on to say "there was no compromise of services", and that the appointment of FMSS by AHTC "allowed AHTC to ensure continuity of service to residents".

"That appears to be MND's view," Mr Rajah said.

"That does indeed appear to be their view," Mr Hawkes agreed. "I have to say I don't entirely understand why they feel that appointing a new managing agent is the only way to ensure continuity of services, but it seems to be their conclusion."

Mr Rajah then asked Mr Hawkes if he was aware of the statements by Mr Khaw and MND when the KPMG report was made.

To this, Mr Hawkes said he was, but did not check with MND, as "our job is to look at, for example, the exact circumstances of the waiver, whether it was done in accordance with the TCFR".

READ: An 'egregious, cavalier misuse of public funds': Town council lawyers rip into Workers' Party leaders

Mr Hawkes also pointed out that the 2013 reports Mr Rajah referred to pre-dated the 2015 report by the Auditor-General’s Office, which flagged major lapses in governance and compliance at the town council. It was after this report that KPMG was appointed to look into AHTC’s accounts.

Mr Rajah wrapped up his cross-examination of Mr Hawkes on Wednesday morning – day four of the trial. Proceedings continue in the afternoon with another defence lawyer Leslie Netto beginning his questioning of Mr Hawkes.

Source: CNA/ll(gs)