The key issue raised on the sixth day of the Aljunied-Hougang Town Council (AHTC) trial on Oct. 12 was whether and how a tender waiver showed favouritism to FMSS.

It was raised by Senior Counsel Chelva Rajah, defence lawyer for the three Workers’ Party (WP) Member of Parliament (MPs) and two town councillors, in his cross-examination of Goh Thien Phong, a PricewaterhouseCoopers (PwC) accountant involved in the saga.

As reported by Today, Goh had alleged that there were "overpayments and/ or unjustified payments" to FM Solutions & Services (FMSS), which could have benefited persons with conflicts of interest.

Such payments were done under the issuing of the initial and subsequent managing agent contracts to FMSS.

Moreover, a tender waiver of the initial contract was alleged by Goh as an illustration of "favouritism" shown by the WP town council to FMSS.

What is PwC's role in this?

During the 2015 General Election, WP lost the ward of Punggol East to PAP, which came under the management of the Pasir Ris-Punggol Town Council (PRPTC).

In 2016, PwC was appointed by the Pasir Ris-Punggol Town Council (PRPTC) to look into AHTC's accounts.

In 2017, PwC released a report that alleged improper payments were made by the WP Aljunied-Hougang-Punggol East Town Council (AHPETC), back when Punggol East was still under the WP town council.

Accordingly, PRPTC filed a lawsuit, claiming that decisions made by the town councillors of AHPETC caused it to suffer “loss and damage”. The lawsuit also claims compensation.

PRPTC are represented in the trial by Drew & Napier.

An issue of tenders

Goh elaborated that the basis of his allegations came from how the initial managing agent contract was awarded without a tender to FMSS over CPG Facilities Management.

This led to Rajah asking Goh if he was aware of the tender being waived and that, moreover, neither the Ministry of National Development (MND) or the Minister for National Development had any difficulties with the waiver.

Rajah also further pressed Goh if he had considered the prospect of CPG Facilities management -- the managing agent at the time of WP's takeover of the town council -- pulling out, along with the fact that CPG did indeed pull out.

For it was such circumstances which necessitated the calling of a waiver in the tender, in order to ensure that there was a smooth handover of town council services.

In response, Goh pointed out how the discharge of CPG from town council services in August 2011, two months after it had expressed its desire to be discharged, was sufficient time to allow for a tender to be called.

"Favouritism"

Turning to the second managing agent contract, Rajah highlighted how the tender was called only one year after the first contract.

However, Goh pointed out that while two other parties apart from FMSS also collected the tender request, they did not submit for the tender in the end.

Goh stated that this could have been a result of the first tender being waived, leading to the perception that "favouritism" was being "shown to FMSS".

At this point, the cross-examination took on a more pointed tone, as reported by Today, with Rajah stating to Goh:

"This is not the kind of statement you should be making in your report... as an expert accountant.”

Goh replied:

“I investigate into circumstances surrounding the award of the managing agent contract [and] that determines why the town council had to pay a higher price (with FMSS than CPG)."

This resulted in Rajah pointing out how Goh's allegations were:

"... [coming] together... in a mind that is looking to find fault."

Pressing forward his case of the circumstances surrounding the town council, Rajah subsequently brought up how CPG could not continue as a managing agent once the town council management computer system (TCMS) had been withdrawn as its only obligation was to manage the accounting system (AIMS), not provide the system.

This drew a rebuttal from Senior Counsel Davinder Singh, the lawyer representing PRPTC, who stated that he "did not appreciate the case" that "CPG was terminated or not continued because they could not continue without AIMS," adding that it was the first time he had heard of it.

Joint tenders in PAP town councils help push down costs

Rajah then turned to address the issue of higher operating costs incurred by AHTC in engaging the services of FMSS, noting that the amounts paid were "on the higher end of the scale" in comparison to what the other managing agents were charging the PAP town councils.

Goh replied that his findings were consistent with the findings of auditing company KPMG -- that the fees were significantly higher than those charged by CPG.

This led to Rajah bringing up how the 15 PAP town councils have worked together in benefitting their residents through the calling of joint tenders for managing agents, which brought down the costs of services, and how the benefit of such "economies of scale" was not enjoyed by the opposition town council.

In his reply, Goh posited a "hypothesis" that if the opposition town council had the same managing agent as the PAP town council, they could "enjoy the economies of scale".

To this, Rajah said, "If the lion will lie down with the lamb."

The trial continues on Monday, Oct. 15.

Top image by Matthias Ang

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