On the fifth day of the AHTC trial, KPMG executive director Owen Hawkes was cross-examined by Leslie Netto, the lawyer for defendants How Weng Fan, the widow of FM Solutions & Services owner Danny Loh, and FMSS itself.

This time, as reported by The Straits Times, Hawkes raised two more issues that KPMG had with the Workers' Party (WP) Aljunied-Hougang Town Council (AHTC) -- namely, AHTC's inadequate financial governance and controls, and AHTC's satisfaction with the delivery of FMSS's services.

Hawkes also drew notice to an exchange of sorts with How in 2016 prior to the publication of KPMG's report on the issue of financial control lapses and "improper" payments.

Meetings were not sufficient financial control

Elaborating on his position, Hawkes stated that while satisfaction with service delivery by FMSS was important, especially with regard to the residents, it was not the whole job of FMSS in its position as a managing agent of the town council as it also had to conduct financial reporting.

In response, Netto brought up How's affidavit, stating that,"AHTC had monitored and supervised works done by FMSS. Monthly quarterly town councils, sub-committee meetings. Weekly chairman’s meeting. MP estate visits."

However, Hawkes noted that while KPMG had indeed "...looked at minutes of meetings...the meetings did not address particular KPIs on financial controls, that we could see from the minutes."

This led to Netto's articulating on his rebuttal by highlighting how there were also monthly and quarterly town council meetings which saw officers give presentations to the town council to update them on the finances of the TC, complaints from the residents, whether they had been addressed, and ongoing maintenance works.

To this, Hawkes replied, "We’re kind of flogging the same horse, effectively", pointing out how the question was whether the meetings were a sufficient form of control."

Hawkes said that in his many occasions of “having been to Hougang...it’s not as if it’s some kind of Mad Max style wasteland". However, Hawkes said that there is a difference between satisfactory service delivery and sufficient financial controls, adding that his focus was to review the town council's financial governance and controls, not estate cleanliness.

AHTC wasn't satisfied with FMSS

Accordingly, Netto's cross-examination of Hawkes shifted to AHTC's satisfaction with the service delivery of FMSS, with Hawkes disputing Netto's position that such was the case.

Here, Hawkes pointed out how the town council had withheld up to S$250,000 from FMSS fees with respect to deficiencies arising out of the Auditor General’s report, adding that, "having spent 22 months working with AHTC, there were pretty significant issues and it’s hard to say they [AHTC] were happy."

In particular, as reported by Channel NewsAsia, one issue of note was the processing of S$60 million worth of payments through manual journal entries instead of going through accounts payable, "which is a significant form of [financial] control for organisations."

Hawkes further noted that, "When we discussed this with the town council, they appeared concerned...I think it was pretty clear at the time that they were not very happy."

In turn, Netto brought up the absence of the town council management system (TCMS) as the main reason for the lack of a proper accounting system:

"You talked about the accounting problem, and this had got a lot to do with the upgrading of the computer system, and they are not denying it because the TCMS was taken away. Are you aware that it was?”

This led to Hawkes acknowledging that while it was no small task to replace the accounting system, the issue was that:

"...by the time KPMG was instructed to perform our review of various instances of non-compliance of the Town Councils Act, that was about five years later, which is quite a long time later... ...I don’t think five years later, the accounting system should still be in a problematic state."

Hawkes then returned to the issue of AHTC's satisfaction with FMSS, pointing out how:

"AHTC withheld $250,000 from FMSS, that doesn’t indicate satisfaction to me. Personally I don’t consider $250,000 to be a minor amount for me, if my bank took it from me there would be trouble."

Exchange with How over a draft of KPMG's report

Subsequently, Hawkes brought up an exchange of sorts with How over the draft of KPMG's report, detailing that How had challenged a draft of the report in a phone call.

This resulted in Netto pointing out how How had also sent Hawkes a letter in which she detailed her dissatisfaction over the period of four working days given for a response to the "massive allegations":

"For us to give our comments, a huge review would have been needed. Time not sufficient. It would appear that you were not sincere in obtaining a response."

Accordingly, Hawkes rebutted Netto by arguing that KPMG was indeed sincere as they had invited her and FMSS staff for interviews, along with requesting for documents to be provided. What's more, one of Hawkes' colleagues had accordingly called How to discuss the letter.

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Netto said however that How stated that she did not receive a reply to her letter and the KPMG report was subsequently published on Oct. 31 2016.

The trial is expected to continue on Oct. 12.

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Top photo by Sulaiman Daud