Workers’ Party, FMSS will enter mediation to resolve dispute over unpaid contract fees

Workers’ Party, FMSS will enter mediation to resolve dispute over unpaid contract fees

The mediation process is set to take place in October, said party Chairman Sylvia Lim, who said there would be no litigation between the Workers’ Party and the former Aljunied-Hougang-Punggol East Town Council managing agent.

The Aljunied-Hougang Punggol East Town Council logo. (Photo: Xabryna Kek)

SINGAPORE: The former managing agent of Aljunied-Hougang-Punggol East Town Council (AHPETC), FM Solutions & Services (FMSS) has sent a legal letter of demand to the Workers’ Party-run town council saying that it is owed more than S$3.5 million for services provided between April and July this year. The story was first reported by The New Paper on Monday (Aug 31).

When asked about it later on Monday, Workers' Party chairman Sylvia Lim said "this is quite old news because it has been overtaken by events".

"This letter was received by the Town Council in late July, about one month after the managing agent contract had expired," said Ms Lim during the WP press conference to introduce its final three candidates for the General Election. Describing it as a "normal course of events” Ms Lim explained that “all our contractors know that the Town Council, when it receives claims, it will exercise due diligence to check and verify whether those claims are accurate and valid."

She said that "since that time, we have made some further payments to FMSS but there are some payments that are not being made because the town council sees those claims as disputed claims".

Ms Lim added that FMSS and AHPETC will settle their differences over the outstanding payments through mediation.

"Right now, the parties - both FMSS and ourselves - we have agreed to following the Managing Agent (MA) agreement, which provides for any disputes between the parties to be settled by mediation," said Ms Lim.

"So this matter is actually set for mediation before the Singapore Mediation Centre. And the process is supposed to be amicable, and we will go through that process which is fixed for October," she said. "And if for some reason that process does not yield the agreed result, then the MA agreement further provides for the matter to be solved by arbitration," she added.

"There will not be any litigation concerning this case."

FMSS' contract to manage AHPETC expired on July 15, but it has been the Town Council's managing agent since 2011.

Ms Lim refused to confirm the amount of money still owed after the initial payments, and said: "I don't think it's helpful to talk to us about the details of the numbers. Because for one thing, mediation, it’s supposed to be a private process. So I don't think its very helpful for us to go into the details of the amounts."

Ms Lim also explained the Town Council’s position over the seven-day deadline for payment mentioned in the letter.

"It doesn’t matter what deadline people give us well, because fundamentally, for the TC, we still have to exercise our due diligence. If it's to take more than seven days or a week for us to verify, the TC will do the due diligence accordingly," she said. "We will not pay out just because people give us deadline to pay."

The WP chairman added that the money owed will not affect the FY14/15 annual report.

"It does not impact the figures for FY 14/15, in fact, most of the claims relate to the current FY, FY 15/16," said Ms Lim. "And a substantial portion of them are actually related to projects. They are actually sinking funds payments, so that do not impact on the routine funds."

Later on Monday, Ms Lim posted an open letter on the WP website - reiterating her earlier arguments - to "reassure" residents of Aljunied-Hougang-Punggol East town that there was "never any conflict of interest whatsoever" between WP and FMSS. She also said that allegations that AHPETC is bankrupt and running huge deficits are "misguided".

FMSS was set up seven days after WP won in Aljunied GRC in the 2011 General Election, and it replaced CPG Facilities Management as AHPETC's managing agent.

The legal letter comes even as the Ministry of National Development (MND) has said that FMSS has been "grossly profiteering" off the Town Council. MND said the Accounting and Corporate Regulatory Authority (ACRA) conducted an ad-hoc review of FMSS' auditor, Teo Liang Chye and Co. In FY 2013/2014, while AHPETC suffered an operating deficit of S$2 million, FMSS made a net after-tax profit of S$2 million, after paying its directors and shareholders fees and salaries amounting to S$1.14 million, MND said in a statement on Saturday (Aug 29).

When asked about the MND statement on Monday, Ms Lim said that it is not for the WP to explain what the Ministry meant by "grossly profiteering".

"I think the MND is the one that came up with this term 'grossly profiteering', so I think they should tell us what is an acceptable level of profit in their view, and perhaps also tell us how much money has been made by the Managing Agents managing the PAP Town Councils," said Ms Lim. "This is just a statement from them, and I don't think it's for us to explain what they mean."

In an earlier response on Saturday, WP said that they were appalled by MND's "series of careless accusations". National Development Minister Khaw Boon Wan added that the contract awarded by WP to FMSS was "an arrangement to reward their supporters and friends", and was a "very sad" outcome for AHPETC residents.

The Workers' Party is currently managing AHPETC, after no one came forward to submit a bid, WP chairman Sylvia Lim said in an open letter to residents in June.

Source: CNA/av