Government goes on offensive against AHPETC's managing agent's "gross profiteering"

We have a few questions about this that we feel you should be thinking about too.

Jeanette Tan| August 30, 05:29 PM

So, we've noticed that government and key People's Action Party (PAP) ministers have spent this weekend launching their latest offensive against the Workers' Party (WP)'s Aljunied-Hougang-Punggol East Town Council (AHPETC) and its finances.

This belaboured point, which by now is clear to us as the key rallying cry weapon the PAP will wield against WP in the General Election, sees a new development: The AHPETC's previous and sole managing agent, FM Solutions and Services (FMSS), has allegedly been "grossly profiteering" at the Town Council's expense.

Photo by Lim Weixiang for Photo by Lim Weixiang for

On Sunday afternoon, Minister of National Development Khaw Boon Wan spoke to media in a suspiciously unreported context about this, asserting that the AHPETC was "rewarding their friends excessively", leading to a "very sad outcome" for their residents.

Shanmugam Video8

Just a day earlier, Law and Foreign Affairs Minister K Shanmugam called a doorstop on Saturday evening to speak about a statement from Khaw's ministry — the Ministry of National Development — on the issue.

According to the statement, and Shanmugam, while the AHPETC has been swimming in debt, FMSS has seen ridiculously healthy profits, with massive salaries being paid to its directors and the majority shareholders.

From the Ministry of National Development's statement issued on Saturday:

In FY13/14, while AHPETC suffered an operating deficit of $2.0 mil, FMSS made a net after-tax profit of $2.0 mil, after paying its directors/shareholders fees and salaries amounting to $1.14 mil.

FMSS, by the way, was AHPETC's managing agent from July 15, 2011 to July 14, 2015 — exactly four years. The statement, which summarises findings from an ACRA "ad-hoc review" of FMSS's auditor, also shows the profits earned by the company:

For FY12/13: FMSS made a profit after tax of $510,904. This was after FMSS paid its three Owners/ Directors, fees and salaries of $702,295, and consultancy & secretarial fees of $300,000. Total payments to the three FMSS Owners/Directors for FY12/13 amounted to $1,513,199.

For FY13/14: FMSS made a profit after tax of $2,035,784.  This was after FMSS paid its four Owners/Directors, fees and salaries of $839,696, and consultancy & secretarial fees of $300,000. Total payments to the four FMSS Owners/Directors for FY13/14 amounted to $3,175,480.

Between FY12/13 and FY13/14: While FMSS’ revenue increased by 30% in one year, from $6,740,572 to $8,773,429, its profit after tax rose 300%, from $510,904 to $2,035,784.

It does indeed look pretty damning.

sylvia-lim-3rd-press-con Photo by Pandora Wong for

On Saturday evening, WP chairwoman Sylvia Lim responded with this letter to the MND. Here's the gist:

1. FMSS was appointed the AHPETC's managing agent through a legitimate public tender. It also won the Town Council's essential maintenance service contract after a similar open tender.

2. All payments made to FMSS followed contracts that were signed and agreed upon, and therefore can't be called over-payment.

3. Lim says she wasn't aware of these figures from within FMSS, and details of payouts or any other arrangements within it lie beyond the knowledge or control of AHPETC.

... AHPETC does not ask its contractors about their profitability or internal arrangements. We emphasise that AHPETC has ensured that payments made to FMSS are in line with and within the budget provided under the tender awarded.

4. At the same time, she questioned the MND's definition of "gross profiteering" on FMSS's part, saying they never showed the profits and salaries paid out by other managing agents for comparison.

5. She also said the Ministry's release of this statement is curiously timed ("We question your political motivation") , given that it hasn't even completed its review of ACRA's findings on FMSS.

By the way, she also made reference to this open letter that she sent to residents under their jurisdiction in June. It doesn't answer all the questions, though, so we hope to hear further from them during the rallies in the upcoming hustings.

Now here are some questions we would like to ask, perhaps alongside regular Singaporeans and voters:

- Why is the MND sending out a press release on a Saturday, when government agencies work a five-day week? This isn't exactly breaking news. But we noticed that Saturday saw the launch of the GE manifestos by the PAP and WP. Hmmm...

- Why is the MND releasing this information while its review of ACRA's findings is still not completed? And again, why on a Saturday?

(Responding to this on Sunday afternoon, Khaw said there is "nothing unusual" about the timing of MND's Saturday announcement. He said ACRA ran its ad-hoc review of FMSS's auditor between Aug 14 and Aug 27. This announcement came two days later.)

- Why is the Law Minister giving a door stop on a statement released by the Ministry of National Development before the National Development Minister?

- What are the profit margins and salaries being paid to key staff in PAP Town Council-hired managing agents, and how do these compare with the ones earned by FMSS?


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