Between ALJUNIED-HOUGANG TOWN COUNCIL. And 5. KENNETH FOO SECK GUAN. Between PASIR RIS-PUNGGOL TOWN COUNCIL. And 5. KENNETH FOO SECK GUAN

Transcription

1 HC/S 668/2017 ) 1st to 5th Defendant; 6th ; Sylvia Lim Swee Lian; IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE Between ALJUNIED-HOUGANG TOWN COUNCIL (ID Unknown) Plaintiff And 1. SYLVIA LIM SWEE LIAN 2. LOW THIA KHIANG 3. PRITAM SINGH 4. CHUA ZHI HON 5. KENNETH FOO SECK GUAN 6. HOW WENG FAN 7. HOW WENG FAN HC/S 716/2017 ) (PERSONAL REPRESENTATIVE OF THE ESTATE OF DANNY LOH CHONG MENG, DECEASED, IN HIS PERSONAL CAPACITY AND TRADING AS FM SOLUTIONS & INTEGRATED SERVICES) 8. FM SOLUTIONS & SERVICES PTE. LTD. Defendants Between PASIR RIS-PUNGGOL TOWN COUNCIL Plaintiff And 1. SYLVIA LIM SWEE LIAN 2. LOW THIA KHIANG 3. PRITAM SINGH 4. CHUA ZHI HON 5. KENNETH FOO SECK GUAN 6. HOW WENG FAN 7. THE PERSONAL REPRESENTATIVES OF DANNY LOH CHONG MENG, DECEASED (No ID. No. Exists) 8. FM SOLUTIONS & SERVICES PTE. LTD. Defendants AFFIDAVIT OF EVIDENCE-IN-CHIEF OF SYLVIA LIM SWEE LIAN

2 - 2 - I, Sylvia Lim Swee Lian ( ) of, do solemnly and sincerely swear and say as follows: 1. I am the 1st Defendant in Suit No. 668 of 2017 ( Suit 668 ) and Suit No. 716 of 2017 ( Suit 716 ) (collectively referred to as the Suits ). 2. Insofar as the matters to which I depose herein are within my personal knowledge, they are true. Insofar as the matters are not within my personal knowledge, they are true to the best of my knowledge, information and belief and are based on the relevant documents pertaining to this action. 3. I refer to the 1st to 5th Defendants Defence (Amendment No. 1) in both Suit 668 and Suit 716 ( the Defences ). I confirm that the facts set out in the Defence are correct to the best of my knowledge, information and belief and shall rely on them for purposes of my Affidavit of Evidence-In-Chief ( AEIC ) herein. Background 4. I am a Member of Parliament ( MP ) from the Worker s Party ( WP ) and was part of a group of candidates from the WP who successfully contested and won the electoral division of Aljunied Group Representation Constituency ( Aljunied GRC ) in the 2011 General Elections held on 7 May 2011 ( the 2011 GE ). Mr Yaw Shin Leong of the WP won the electoral division of Hougang Single Member Constituency ( Hougang SMC ). 5. After the 2011 GE, Aljunied Town Council ( ATC ) and Hougang TC ( HTC ) were amalgamated on 27 May 2011 to form the Aljunied-Hougang Town Council ( AHTC ) and I became an elected member of AHTC, the Plaintiff in Suit On 26 January 2013, a by-election for Punggol-East was held and Ms Lee Li Lian of the WP was elected to the Punggol East Single Member Constituency ( Punggol East SMC ) seat. Pursuant to the Town Councils (Declaration of Towns) Amendment) Order 2013 (G.N. No. S 97/2013), AHTC was reconstituted as Aljunied-Hougang-Punggol East Town Council ( AHPETC ) with effect from 22 February 2013 and Punggol East SMC was handed over to AHPETC on 1 May 2013.

3 The WP MPs of Aljunied GRC were re-elected in the 2015 General Elections held on 11 September 2015 ( the 2015 GE ). Mr Png Eng Huat ( Eng Huat ) of WP, who was elected to Hougang SMC in a by-election in 2012, was also re-elected in the 2015 GE. The People s Action Party ( PAP ) won the electoral division of Punggol East SMC. Pursuant to the Town Councils (Declaration of Towns) Order 2015 (G.N. No. S 577/2015), Punggol East SMC became part of Pasir Ris-Punggol Town Council ( PRPTC ) and AHPETC was reconstituted as AHTC on 1 October As such, the references to AHTC will cover AHTC from 27 May 2011 to 21 February 2013 and AHPETC from 22 February 2013 to 30 September 2015, and AHTC from 1 October 2015 to date. The Reports relied upon by the Plaintiffs in Suit 668 and Suit The following reports are being relied upon by both the Plaintiffs in Suit 668 and Suit 716 (the Suits ): (a) On 18 February 2014, the Minister for National Development invited the Deputy Prime Minister ( DPM ) and Minister for Finance to consider exercising his power under section 4(4) of the Audit Act to direct the Auditor-General s Office ( AGO ) to conduct an audit of AHPETC s FY accounts. The DPM exercised his powers and directed the AGO to carry out an audit of AHPETC s FY financial accounts, records and books ( AGO Audit ) according to prescribed Terms of Reference. The AGO in turn appointed PricewaterhouseCoopers LLP ( PwC ) to carry out an audit on selected areas of AHPETC s accounts on behalf of the AGO ( PwC Audit ). The key objective of the PwC Audit was to to analyse the inflows and outflows of six current bank accounts operated by AHPETC in FY 2012/13 (April 2012 to March 2013) and to identify and follow up on irregular transactions so as to ascertain the legitimacy of these transactions. On 9 February 2015, AGO issued its final report on the AGO Audit which incorporated the PwC Audit ( the AGO Report ). (b) AHTC, the Plaintiff in Suit 668, appointed KPMG LLP ( KPMG ) as its accountants to review past payments made by AHPETC. KPMG published its report on 31 October 2016 ( the KPMG Report ).

4 - 4 - (c) PRPTC, the Plaintiff in Suit 716, of its own volition, appointed PwC as its accountants to review past payments made by AHTC/AHPETC. PwC published its report on 30 April 2017 ( PwC Report ). 10. Insofar as the AGO Report, the KPMG Report and the PwC Report allege impropriety or wrongdoing on my part or that of the other Town Councillors, these allegations are denied. Where relevant, I have addressed these allegations in this AEIC. Persons Involved 11. The names of the key parties involved in this matter and the respective abbreviations used are set out below: Name Abbreviation a) Ms Sylvia Lim Swee Lian (myself) Sylvia Lim b) Mr Low Thia Khiang Mr Low c) Mr Pritam Singh Pritam d) Mr Chua Zhi Hon (also known as David Chua) David e) Mr Kenneth Foo Seck Guan Kenneth f) Ms How Weng Fan Ms How g) Mr Loh Chong Meng (Danny), the late husband of Ms How Mr Loh h) FM Solutions & Services Pte Ltd FMSS i) FM Solutions & Integrated Services FMSI j) Mr Chen Show Mao Show Mao k) Mr Muhamad Faisal bin Abdul Manap Faisal l) Mr Yaw Shin Leong Shin Leong m) Mr Jeffrey Chua Leong Chuan Jeffrey n) CPG Facilities Management Pte Ltd CPG o) Mr Koh Weng Kong Vincent Vincent

5 - 5 - The Plaintiff 12. For purposes of Suit 668, AHTC acts on the instructions of an Independent Panel ( IP ) appointed pursuant to a consent order made by the Court of Appeal in CA/CA 114 of 2015, a copy of which can be found at S/No of the CB. The IP comprises of the following persons: (a) Mr Philip Antony Jeyaretnam SC, Chairman of the IP, an Advocate & Solicitor and Global Vice-Chairman and ASEAN CEO of the law firm of Dentons Rodyk; (b) Mr N. Sreenivasan SC, an Advocate & Solicitor and Managing Director of the law firm of Straits Law Practice; (c) Mr Ong Pang Thye, an Accountant and Managing Partner of KPMG. The 1st to 3rd Defendants 13. From 1991 to April 2011, the 2nd Defendant, Mr Low was the MP for Hougang SMC. 14. At the 2011 GE, the 1st to 3rd Defendants, myself, Mr Low and Pritam were elected as MPs for Aljunied GRC, together with Show Mao and Faisal. Shin Leong was elected as the MP for Hougang SMC. 15. Upon the merger of Aljunied GRC and Hougang SMC into AHTC on 27 May 2011, the 6 MPs mentioned above became elected members of AHTC. 16. Some of the Town Councillors of AHTC for the period of 2011 to 2015 were: (a) Chairman of AHTC: From June 2011 to August 2015, Sylvia Lim (myself). From August 2015 to September 2015 (during the time of the 2015 GE), Mr John Chua, an appointed Town Councillor of AHTC. From October 2015 to date, Pritam.

6 - 6 - (b) The 2 Vice Chairmen of AHTC: From June 2011 to February 2012, Shin Leong, and From June 2011 to July 2012, Mr Low. From mid-2012 to August 2015: Eng Huat, and From August 2012 to August 2015, Pritam. The position was vacant from August 2015 to September 2015 (during the time of the 2015 GE). From October 2015 to date, Sylvia Lim (myself), and Eng Huat. (c) Secretary of AHTC From June 2011 to July 2011, Jeffrey. From August 2011 to May 2015, Mr Loh. From June 2015 to date, Vincent. (d) Deputy Secretaries of AHTC From June 2011 to July 2015, Ms How. From June 2011 to July 2011, Mr Seng Joo How and Mr Tan Kok Cheow (who are both CPG employees). (e) General Manager of AHTC From May 2011 to August 2011, Jeffrey. From August 2011 to July 2015, Ms How. (f) AHTC s Tenders & Contracts Committee Members ( T&C Committee ): From 14 June 2012 to date, Chairman of the T&C Committee, Pritam. Members From 14 June 2012 to 1 December 2016, David. From 14 June 2012 to date, Kenneth

7 - 7 - From 14 June 2012 to date, myself, Sylvia. 17. In respect of paragraphs 13 to 16 above, I refer to the various Government Gazettes setting out the above that can be found at S/Nos. 1457, 1458, 1461, 1467, 1471, 1479, 1481, 1491, 1492, and 1497 of the CB. The 4th to 5th Defendants 18. Kenneth and David, the 4th and 5th Defendants respectively in each of the Suits, are resident volunteers and joined AHTC on my invitation. They were appointed Town Councillors from May David ceased being an appointed member of AHTC from 1 December Kenneth continues to be an appointed member of AHTC. 19. I am surprised that both Plaintiffs have seen fit to sue resident volunteers to the Town Council ( TC ) such as Kenneth and David, especially so as the Plaintiffs have not alleged in either Suit that either one of them had by their personal actions caused loss to the TC. Neither were there any personal gains on their part. Their alleged wrongdoing is in respect of decisions that were collectively made at the AHTC Meetings and by the Tender & Contracts Committee ( T&C Committee ). The responsibilities and duties of Town Councillors are based on the Town Councils Act (Cap. 329A) ( TCA ) and Town Councils Financial Rules ( TCFR ). The Town Councillors, including Kenneth and David do not therefore owe fiduciary duties to the TC. 20. The intent of the TCA was to encourage ownership amongst the residents by devolving some of the powers of township management into the hands of grassroot leaders and their elected MPs. Section 8(2) of the TCA requires two-thirds of the appointed members to be residents. This intent is also reflected in the Parliamentary Debates on the Town Councils Bill that took place on 28 June 1988 in the speech of the First Deputy Prime Minister, Mr Goh Chok Tong (as he then was): First, it [TCA] transfers some power from the HDB to the MPs and grassroots leaders. It gives them, and the residents, greater power and responsibility to manage their own affairs and to participate in their estate's development. Second, because MPs will have increased authority and responsibility, voters will be more likely to vote carefully and sincerely, and to choose honest and effective MPs. (emphasis added)

8 - 8 - A copy of this Parliamentary Report dated 28 June 1988 can be found at S/No of the CB. The 6th, 7th and 8th Defendants 21. The 6th Defendant is Ms How. I have known Ms How since late 2001 when I joined WP. She was then the General Manager/Secretary working for the HTC, assisting Mr Low who was the Chairman of the HTC. I got to work with her when I was appointed a Town Councillor of HTC sometime after The 7th Defendant is the estate of the late Mr Loh. Mr Loh was providing Essential Maintenance Services Unit ( EMSU ) services for Hougang SMC between 15 October 2007 to 14 October 2012 under his sole-proprietorship, FM Solutions & Integrated Services ( FMSI ). He was also the Managing Director and a shareholder of the 8th Defendant, FMSS, until he passed away on 27 June From my involvement in HTC, I was aware at all material times that Ms How and Mr Loh were married. I also worked with them directly when Mr Loh was Secretary of AHTC from 1 August 2011 to 31 May 2015 and when Ms How was the Deputy Secretary of AHTC from 9 June 2011 to 14 July 2015 and General Manager of AHTC from 1 August 2011 to 14 July The 8th Defendant is FMSS. Based on ACRA Business Profile of FMSS, the company was incorporated in Singapore on 15 May 2011 with Mr Loh as the sole director and shareholder. A month later, in June 2011, four other directors were added: Ms How, Vincent, Mr Yeo Soon Fei and Mr Chng Jong Ling. These four directors also became shareholders of FMSS. A copy of the relevant ACRA Business Profile Searche showing the above can be found at S/No of the CB. 25. For ease of reference, the following table of the appointment holders in AHTC and AHPETC during the relevant period is reproduced from the KPMG Report (with some additions in italics):

9

10 The MND Town Council Review Report dated 30 April 2013 (the MND Report ) that can be found at S/No of the CB summarises the nature of TCs as follows: (a) TCs were set up nationwide in 1989 by an act of Parliament to serve two objectives. Firstly, TCs were set up to enable elected politicians, i.e. MPs who were elected by constituents, to be given authority and responsibility to take charge of their constituents estate and allow each Town to develop its own distinctive character under the MP s leadership. Secondly, TCs so set up made MPs accountable to their direct voters for the running of their estate, as these voters can take into account the MP s performance in running the TC when they go to the polls. (b) TCs deliver a public service previously handled solely by HDB across the country. The persons selected to lead the management of TCs are selected on a political basis. They are MPs serving the constituents of the wards that have elected them, and an intent of the Town Councils Act was that how they manage and run their TCs will have a bearing on their electoral fortunes at the next election. Given the political character of the TC s leadership and the political implications attached to the management of the TC, it is inevitable that the TC s function is carried out in a competitive politicised context. (c) The Town Councils Act (TCs Act) and subsidiary legislation such as the Town Council Financial Rules (TCFR) reflect a recognition of this political nature of TCs. The intent is to give the elected MPs as much latitude as possible to run the TCs within broad and general rules laid down to ensure proper governance and safeguard public interest The TCFR also sets out the rules for good financial governance. However, the regulatory approach by MND is again one of a light touch in order to respect the autonomy of and to provide flexibility to MPs running their TCs and be directly accountable to residents, without excessive intervention by the Government (d) An issue that has been raised in public discussions is that of conflict of interest and whether the interests of the TCs were protected, because AIM, a PAP owned company, was contracting with TCs which were headed by PAP MPs. In considering the issue of conflict of interest, the background to the setting up of TCs and the nature of the TCs as explained earlier is important. TCs were set up for, and fulfil a political purpose, and therefore latitude has always been given to TCs to exercise autonomy, where they see fit, in engaging those who share their political agenda or are affiliated to their parties... (emphasis added) 28. During the reading of the Town Councils Bill as recorded in the Parliamentary Report of 28 June 1988, the then Minister for National Development, Mr S. Dhanabalan had stated that: Who will monitor the Town Councils and whether, in the course of monitoring, the Town Councils will be closely controlled by the Government? That is not the intention. The intention is to give the Town Councils as much latitude as possible for them to manage their areas the Town Councils will be given a lot of latitude to employ the kind of people who are necessary, to pay them the kind of fees that are necessary to get the work done And if disparities arise, it will arise because of the Town Councils themselves making the decision...

11 If the Government intervenes too much to fix the salaries and fees in every respect, then the Government will be accused of interfering and controlling the Town Councils too much. If you allow Town Councils to decide these things for themselves, of course, some disparities may arise. But I think we should take the risk of allowing such disparities to arise rather than be too close in our control of Town Councils. Basically, the idea is to allow Town Councils to make the decisions as to the kind of services they should buy and what they should pay for these services, whether the payments are to companies or to individuals. (emphasis added) A copy of the Parliamentary Report dated 28 June 1988 can be found at S/No of the CB. 29. The Town Councillors are lay persons who more likely than not have no experience in estate management. The Government s political scheme for the running of TCs meant that the Town Councillors are MPs and resident volunteers with little or no specific experience in estate management unlike the Housing Development Board ( HDB ) which was previously managing the estates. No formal training was given by the Ministry of National Development ( MND ) or HDB to incoming Town Councillors. We are left to fend for ourselves. This is one of the main reasons for TCs to engage MAs. 30. To my knowledge, the only time there was an official guide provided to assist appointed Town Councillors was on 13 May 2016, which was coincidentally one month after KPMG produced its first monthly report on the control failures of AHTC. That was when I had received an from the Senior Minister of State for Home Affairs and National Development, Mr Desmond Lee, enclosing powerpoint presentation slides which contained general guidance notes on the role of Town Councillors. The aforesaid and the attached slides can be found at S/No. 786 of the CB. Clearly the need for a guide only became apparent as a result of this case. The Appointment of FMSS as the MA of AHTC 31. The matters concerning the appointment of FMSS as MA were earlier iterated in Part 3 of the AHTC s response to the IP appointed by AHTC to follow up on the KPMG Report. Part 3 of AHTC s response can be found at S/No of the CB. 32. Almost immediately after the 2011 GE from on or about 9 May 2011, WP had to take steps to take over ATC. On 9 May 2011, the Ministry of National Development ( MND ) wrote to

12 all newly elected MPs stating that we had to let MND know by 12 May 2011 the arrangements for the formation of the TC (i.e. whether we would have separate townships of ATC and HTC, or have a combined TC comprising Aljunied and Hougang). MND also highlighted in its letter that after the gazetting of the new towns by 24 May 2011, the new towns would assume responsibility for the new areas with effect from 1 August We therefore had less than 90 days to complete the take over from the incumbent party managing the TC. A copy of the said letter can be found at S/No. 133 of the CB. 33. Given the urgency of the handover as highlighted above, there were discussions between the Aljunied and Hougang MPs on our plans for the handover. These discussions included the concerns raised by Mr Low, who was the most experienced MP in our team. Based on his past experience when taking over and running HTC after he was first elected to Hougang SMC in 1991, Mr Low viewed it as highly likely that the operating of the TC would face various difficulties and obstacles. Mr Low strongly believed that the current MA for ATC, CPG, would not want to continue under the WP. Given the long period in which PAP was managing ATC, he expected the existing staff and some of the contractors of ATC to be loyal to PAP and be unwilling to work with the WP. He also warned us that we should expect the outgoing PAP administration to take steps which would make WP s management of the TC challenging. Both these warnings by Mr Low came to pass: (a) (b) The incumbent MA, CPG, informed us that they did not wish to continue as MA under the WP. AHTC s use of the Town Council Management System ( TCMS ), which was used to run ATC, was terminated soon after the WP took over ATC. The TCMS was owned by PAP. Both of the above events will be elaborated on in this affidavit. 34. As discussed by the elected MPs shortly after the 2011 GE, a contingency plan was required in the event CPG did not wish to continue. With this object in mind, Mr Low told us that he had spoken with Ms How about starting a company with her husband to manage the TC under the WP s leadership together with the existing key staff of HTC in the event that CPG did not wish to continue as ATC s MA. Mr Low believed that this was the safest option given Ms How s experience in managing WP s HTC as General Manager and Mr Loh s experience in providing EMSU services through FMSI for Hougang SMC and from

13 his own knowledge of how they had performed in Hougang, that they could do this job for ATC. 35. On 9 May 2011, the MPs-elect met in the morning. One of the decisions made was to appoint an MA to manage the amalgamated HTC and ATC, i.e. AHTC, instead of selfmanagement. Following this meeting, Mr Low sent an later that day at 5:07pm to the MPs-elect on certain updates, including the fact that CPG began had begun showing signs that it would not continue acting as MA. Mr Low s read as follows: Dear Team, The following are new developments after we have the discussion this morning: 1. I am asking Ms How, GM of HGTC to attend the both meetings to meet Secretary of Aljunied TC and HDB Town Council Secretariat. This is because feedback received by Hougang TC that CPG Facilities Management has started not to manage or go into inactive management of the contract for some projects and some areas are poorly maintain. We need to understand the situation in greater details and may have to take over the management earlier or risk residents suffering from poor service and rubbish piling up. 2. The name of the Town Council merged should be Hougang Aljunied Town Council because majority of the HDS properties we managed will be in Hougang area and Singaporeans generally identify with Hougang TC for all kinds of feedback based on calls received. For areas at Bedok such as Bedok Reservoir and Bedok North estate, they do not identify with Aljunied either, they are likely to identify more with Hougang. 3. I have also communicated to Ms How our decision that a) Hougang TC will be merged with Aljunied TC b) We will appoint managing agent to manage the town instead of self management c) Party Chairman Sylvia Lim has been elected amongst us as elected members to be chairman of the Town Council. Aljunied Team will meet at Hougang TC office tomorrow morning at 9.45am as planned. (emphasis added) The above from Mr Low can be found at S/No. 134 of the CB. 36. On 14 May 2011, Mr Low received an from a reporter from the Straits Times, Ms Teo Wan Gek. She had contacted him over a statement that was just issued by HDB claiming that the AHTC would take over all existing agreements of the ATC. She sought clarification on whether this included agreements such as, inter alia, the MA Contract with CPG. Mr Low replied wanting it to be made clear that the contracts would have to be reviewed before they are taken over. He forwarded the to me, asking me to watch the developments on the matter and also asked that the CPG MA Contract be reviewed. The can be found at S/No. 146 of the CB.

14 In respect of Mr Low s concerns and suspicions regarding CPG, Mr Low was not alone. Various WP members believed that CPG and some contractors would be uncooperative. On 13 May 2011, another WP member, Mr Tan Thuan Tong ( Mr Tan ), ed Mr Low and warned that he had information that CPG would withdraw from ATC. Mr Tan s was forwarded to Ms How by Mr Low and Ms How replied to say that what was stated by Mr Tan more or less coincides with what [ATC] Secretary told [her]. ATC s Secretary was Jeffrey, who was the Managing Director of CPG. The above exchange was forwarded to me and I forwarded the same to the other elected MPs. The exchange of 13 May 2011 can be found at S/No. of 143 the CB. 38. On 13 May 2011, Ms Ng Swee Bee ( Swee Bee ), ed Mr Low. Swee Bee is a WP member who would eventually become an appointed member of the AHTC. Swee Bee forwarded a copy of an online article which she had come across in which the article s author had raised concerns over the issue of conflict of interest between the TC and the MA. This was in respect of the Managing Director of the MA, Jeffrey, who was also the General Manager and Secretary of ATC. The author of the said article ends off the article by stating: What I find extremely worrying, however, is that this matter only came to light because the Workers Party won Aljunied GRC, and there now needs to be a handover. If the PAP had won, would this unhealthy arrangement have continued? Are there any other such apparent conflicts of interest that we do not know about? (emphasis added) Copies of Swee Bee s of 13 May 2011 which she forwarded to Mr Low and the online article itself can be found at S/No. 145 and 1150 of the CB. 39. Mr Low forwarded Swee Bee s above to Ms How on 14 May 2011 at 1:06 am. In Ms How s response on the same day, she stated that we have known of such arrangement since day 1. The current GM of Jalan Besar Town Council who was my lecturer and then was holding Deputy GM post was asked about this conflict of interest and his answer was simply that it is a practice!. Ms How also suggested the approach of keeping the Secretary of the Town Council as a distinct and separate entity from the MA to ensure that a proper check and balance was in place. Ms How s reply can be found at S/No. of 145 the CB.

15 By a separate sent on 14 May 2011 at 1:05 am, Mr Low forwarded Swee Bee s of 13 May 2011 to me. After having done some informal consultations about the practices in other TCs, I was of the view that there should not be a conflict given that the General Manager reports to and takes instructions from the TC and it is the TC that makes the decisions. This is reflected in my sent on 14 May 2011 at 8:49 am to Mr Low, Pritam, Faisal and Show Mao. A copy of this can be found at S/No. 147 of the CB. 41. On 19 May 2011 at 12:44 am, Mr Low responded to Ms How s of 14 May 2011 stating that he would ask me to look into the TCA to see the extent of the alleged conflict of interest, including the practice and rationale of appointing the MA to be General Manager and Secretary. Ms How responded by on the same day at 10:56 am to suggest that Mr Low be the Secretary of AHTC and the General Manager be from the MA. Mr Low and I also discussed this on 19 May During this discussion, I informed him that I was of the view that any potential conflict of interest could be managed. I regarded the Secretary and the General Manager as performing executive roles, and not decisionmaking roles. Further, it was industry practice that other TCs had Secretaries and General Managers who were senior managerial staff of the MA. We were of the view that if other TCs had found ways to manage such potential conflict of interest, we could do the same. If CPG did not wish to continue, we were of the view that we should appoint people whom we could trust, such as Mr Loh and Ms How. I told Mr Low that I would raise this issue of alleged conflict of interest with Jeffrey at an upcoming meeting with CPG that was fixed for 30 May 2011 and find out what his views were, as this had been the practice of ATC all these years. 42. After our discussion, Mr Low replied to Ms How at 6:06 pm on 19 May 2011 as follows: Dear Ms How, I have a short discussion with Sylvia today, we agree it is cleaner and easier to work by appointing Danny [Mr Loh] to be GM/Secretary of TC. This is on understanding that you will be actively involve with the company which will be appointed as MA for the transition period with a contract for one year. Please prepare the necessary personnel/company credential and information and document for the appointment by the council. As for the conflict of interest, we find that it is not a big issue as all transaction has to follow the Financial Rules and MA's company is subject to the Companies Act.

16 Please confirm whether Toh Kay Seng is going to be a shareholder. If he is, I will Not propose to reappoint him as councillor. Low Thia Khiang (words in square bracket added) 43. As Mr Low correctly put it in his above , the conflict of interest was a minor concern because all transactions performed by the TC would have to be in compliance with the TCA and TCFR and the MA was governed by the Companies Act. In Mr Low saying that FMSS will be appointed as MA for the transition period with a contract for 1 year, I understood him to be merely informing Ms How that if her company was appointed as MA, it would only be for a short interim period as that had been the decision agreed amongst the elected members. 44. On 20 May 2011, the elected MPs and I met with the HDB to discuss various issues relating to the handing over of ATC. Following this meeting, Mr Chong Weng Yong ( Mr Chong ) of HDB sent an on 1 June 2011 to the elected MPs, a copy of which can be found at S/No. 180 of the CB. In this , Mr Chong set out the handover date of ATC from PAP to WP as 1 August 2011 which was the date mandated by MND. At this stage, the discussions relating to FMSS taking over the role as MA of AHTC was in the context of a contingency plan in the event CPG confirmed that it did not wish to continue. The 30 May 2011 Meeting with CPG 45. On 30 May 2011, the 6 elected members of AHTC and Ms How had a meeting with CPG s representatives comprising Jeffrey, Ms Pan Wanjing (Jeffrey s Personal Assistant) and another person whom I believe was Mr Seng Joo How ( Seng Joo How ), the Deputy General Manager of ATC. This meeting took place at AHTC s office at Block 810 Hougang Central at around 10am. This meeting was called as the MPs pushed Ms How to get a meeting with CPG and CPG only fixed this meeting after AHTC was gazetted on 27 May The meeting was to discuss the steps necessary for the handover of ATC to us. At the meeting, Jeffrey indicated to us that CPG did not wish to continue as MA of ATC after 31 July 2011 and asked to be released from the CPG MA Contract. In the following days after this meeting, Jeffrey informed us that the reason for CPG not wishing to continue was that

17 CPG also served as MA for Ang Mo Kio TC, which was helmed by the Prime Minister. As such, it would be bad for CPG s business to be serving PAP TCs as well as a TC run by an opposition party. He requested that CPG be released by 31 July We were not surprised by this because we had already contemplated the likely withdrawal of the MA services of CPG. Jeffrey s indication was therefore not unexpected. 47. As Mr Low and I had discussed earlier, during the above meeting I sought Jeffrey s views on the issue of a potential conflict of interest in having an officer of the MA being employed as the Secretary or General Manager of the TC. During PAP s management of ATC, Jeffrey was both the Managing Director of CPG and General Manager and Secretary of the TC. Jeffrey matter-of-factly explained that ATC had the following system in place which addressed this issue: (a) The job specifications for the MA were drawn up in the MA contract by an independent firm of quantity surveyors. The job scope was not determined by the MA; (b) MND was informed of the contracts which ATC entered into with the MA through the regular quarterly declarations made by the TC. This was a requirement of the MND; (c) (d) As Secretary and General Manager, his role was executive in nature. The decisionmaking authority lay with the TC and all he did was execute the decisions made by ATC; and, ATC was subject to annual audits by external auditors. 48. This explanation by Jeffrey is consistent with what was reported in a newspaper article from the Today Newspaper dated 30 May It was a report on the industry practice of TCs having Secretaries and General Managers who were also managerial staff of the MA. Based on the Newspaper Article, it appeared that it was an industry practice that a TC would be staffed by the MA whenever an MA is engaged. It was reported that: [the] general managers [are] accountable for the day-to-day administrative functions of town councils. Some of them are also employees of managing agents who win contracts from the town councils to service the estate. This arrangement known to occur in at least four town councils in Singapore has raised the issue of conflict of

18 interest in town council management. At Aljunied and Jurong town councils, the respective GMs, Mr Jeffrey Chua and Mr Ho Thian Poh, in fact also hold the position of managing directors CPG Facilities Management and UGL Premas. CPG is currently the MA of Aljunied Town Council UGL Premas, meanwhile, is the parent company of Emasco Township management, the MA of Jurong Town Council. (emphasis added). 49. This industry practice was similarly reported in a Straits Times newspaper article dated 31 December 2016 entitled Jurong-Clementi to hire managers directly where it was reported that that the key staff at most town councils are often employees of the managing agent. A copy of this newspaper article can be found at S/No of the CB. 50. We informed Jeffrey that we would update the rest of AHTC at the upcoming 1st AHTC Meeting about the request for CPG s early release. My handwritten notes of the 30 May 2011 meeting can be found at S/No of the CB. My handwritten notes confirm the following: (a) That CPG would be released as MA pursuant to its request and AHTC would need to find a replacement. (b) In the interim care taking period, CPG would manage the TC from 27 May 2011 to 31 July (c) The new staff will have to understudy the existing staff in order for the takeover. (d) The retention of CPG to continue projects for cyclical works that CPG had kick started earlier and were well in progress. 51. On 30 May 2011 at 3:34pm, I sent an to Jeffrey requesting for a copy of the presentation slides used during the briefing that was given during the meeting and I also told him that as you are still our secretary, we will require your assistance to facilitate this meeting. Jeffrey provided a copy of the presentation slides as requested in his reply. The presentation slides confirmed CPG s position that it wanted to be released by 31 July 2011 given that it referred to a care taking period from 27 May 2011 to 31 July 2011 and an Interim Management Arrangement. After the meeting with Jeffrey, I sent an to Ms How at 4:26pm informing her, among other things, that we would need to include the appointment of FMSS as MA for Hougang SMC in the agenda for the coming

19 - 19-1st AHTC Meeting on 9 June Copies of my exchange with Jeffrey and my e- mail to Ms How can be found at S/No. 174 of the CB. 52. Shortly after the meeting on 30 May 2011 where Jeffrey indicated that CPG did not wish to continue as MA, Jeffrey also told Ms How and myself that PAP-owned Action Information Management Pte Ltd ( AIM ), which owned the rights to the TCMS used by all PAP TCs, would be terminating AHTC s use of the TCMS with one month s notice. This added to the already challenging situation faced by AHTC then and I will elaborate on this later in this affidavit. Discussions relating to the MA Services for AHTC in relation to withdrawal of CPG & AIM 53. In early June 2011, there were various discussions with Ms How to determine what we should do in respect of the withdrawal of CPG. This was a complex issue because it seemed clear that it was pointless for AHTC to try to retain CPG as the MA if CPG did not wish to continue to provide MA services to the TC. If AHTC was embroiled in a dispute with CPG to compel CPG to perform the MA contract, the residents risked facing disruptions to vital services such as maintenance of estate cleanliness. This was politically too costly a step for AHTC to take as we had to consider both the adverse effect this would have to the interests of the residents as well as the political fall-out to WP. 54. During this period, AHTC was in a serious dilemma of almost crisis proportions. While Mr Low s views seemed to be correct insofar that we would likely have to appoint FMSS to be the MA of AHTC, the transition of the management of the TC from the PAP to the WP would have been much easier if CPG were willing to remain as MA. 55. By the time of the 1st AHTC meeting on 9 June 2011, it seemed clear to me that the steps for transition from CPG to FMSS difficult though they would be were necessary and would have to be taken. 56. Eventually, I spoke with Jeffrey prior to the 1st AHTC Meeting on 9 June 2011 and accepted CPG s request that the CPG MA Contract be terminated mutually subject to the views of the Town Councillors. CPG had requested to be released by 1 August 2011 which was the date by which the new AHTC would assume responsibility for the electoral

20 boundaries of Hougang SMC and Aljunied GRC. I also told Jeffrey that his request would have to be discussed at the 1st AHTC meeting on 9 June The fact that I was told by Jeffrey about AIM terminating its contract with AHTC was recorded in the Minutes of Meeting with MND on 15 March A copy of the minutes is exhibited at TAB 1 of SL- 1. Meeting with Mr Loh on or around 2 June Despite the urgent need for a replacement MA for CPG, we wanted to carry out the necessary due diligence to ensure that FMSS could indeed undertake the role of MA of AHTC. 58. On or around 2 June 2011, Faisal, Mr Low and myself met with Mr Loh for him to give a presentation on whether FMSS would be capable of taking on the role of MA for AHTC. From what I recall, the other elected members were invited but were unable to attend. In the course of the presentation, we discussed the sort of requirements the TC would need and how FMSS would fulfil those needs. Mr Loh also presented a basic plan showing FMSS key personnel and their expertise, proposed organisational charts for AHTC s various branch offices, and the pricing structure which was at the same rates as charged by CPG for Aljunied GRC. FMSS also proposed to take over all existing staff of HTC with effect from June Mr Low, Faisal and I examined the proposal and asked Mr Loh various questions. After further discussion, all of us agreed that FMSS s proposal was a reasonable one to be discussed further with the other elected members as soon as possible. The 1st AHTC Meeting on 9 June On 1 June 2011, I had ed the elected and appointed members of AHTC about the 1st AHTC Meeting fixed for 9 June 2011 at 8.30pm. These documents can be found at S/No. 184 of the CB. 61. On 9 June 2011 at 12.31pm, I received an from Ms How in respect of the matters to be discussed at the 1st AHTC meeting. In this , Ms How recommended that we do not confirm termination of CPG s services on 31 July 2011 as requested by them because

21 she wanted to ensure that there was enough time for her to receive a proper handover. Where TCMS was concerned, she also expressed her concern that the contract with AIM should be retained until 31 August 2011 so that there was more time to conduct the necessary parallel runs to ensure that the replacement computer systems for TCMS were functioning properly. I responded with some of my comments to the points she raised in my reply sent at 12.41pm that same day. Copies of the exchanges can be found at S/No. 196 of the CB. 62. On 9 June 2011, AHTC had its first TC meeting. The Minutes of this meeting can be found at S/No. 871 of the CB and a copy of the transcripts of an audio recording taken at this meeting is exhibited at TAB 2 of SL-1. Based on the minutes and the transcript, it will be evident that the following key matters were discussed at the meeting: (a) CPG wanted to be released from its MA Contract by 1 August Our position on CPG s request for release was that we could agree to this date if we were ready to do so by then; (b) Upon my recommendation, Jeffrey was appointed as the interim secretary of AHTC. This was for the caretaking period from 27 May 2011 to 31 July Pursuant to this, a list of 2 groups of authorised bank signatories was made. Group A signatories comprised Jeffrey as the Secretary, and appointed officers such as Ms How, Mr Chng Jong Ling (Finance Manager) and Vincent. Group B signatories comprised myself as Chairman, and Mr Low and Shin Leong as Vice- Chairmen. Where the amount of expenditure did not exceed $50,000, the payment had to be approved only by the Secretary and 1 appointed officer from the Group A signatories. For any amounts exceeding $50,000, the payment has to be approved by a Group B signatory and any one of the Group A signatories. (c) Together with Jeffrey s appointment as Secretary, Seng Joo How and Mr Clarence Tan Kok Cheow, both CPG employees, were appointed as Deputy Secretaries. Ms How was also appointed as a Deputy Secretary; (d) The Town Councillors approved the delegation of authority to me under Section 32 of the TCA for me to exercise the powers, functions and duties of AHTC in its

22 name and on its behalf to better facilitate the handing over ATC from the PAP to the WP; (e) There were some term contracts entered into by ATC expiring on 30 September 2011 such as the EMSU contracts with EM Services Pte Ltd ( EM Services ) for Kaki Bukit Division of Aljunied and with CPG for the remaining divisions of Aljunied; and, (f) While the CPG MA Contract had another 2 years remaining, CPG would facilitate the handover till AHTC on 1 August 2011 and will then sign a Deed of Mutual Release and Termination on 1 August As a result of Jeffrey s announcement at the meeting that CPG did not wish to continue, all the Town Councillors present became aware of the need for prompt action to be taken in order to ensure that AHTC could perform its functions to serve the residents of the town. As such, it was unanimously decided by all the Town Councillors at the 1st AHTC Meeting on 9 June 2011 that the authority to exercise the powers, functions and duties of the Town Council in the name and on behalf of the Town Council during the interim to better facilitate the handover was delegated to me as Chairman of the TC under Section 32 of the TCA. This delegation of authority to me was critical given the emergency brought about by the impending departure of CPG as MA and the withdrawal of TCMS. The urgency of the circumstances justified a situation where I could not have sought prospective approval from AHTC for the actions I deemed necessary for a smooth handover. Nevertheless, where I thought it necessary, I would still consult the Town Councillors for their views. 64. On 16 June 2011, Ms How and I had a meeting with Jeffrey and Seng Joo How. This meeting was also attended by Jeffrey s Personal Assistant, Ms Pan Wanjing. Various topics were discussed at this meeting concerning the existing needs of AHTC and the matters that needed to be addressed as part of the handover. As can be seen from paragraph 9.1 of the Minutes that were taken of this meeting, a copy of which can be found at S/No. 873 of the CB, AHTC wanted to appointed CPGFM to continue as Project Manager to complete the following jobs which were in progress under a separate agreement. Although CPG was not going to continue as AHTC s MA, there was still a

23 need for CPG to see through various jobs that it had commenced earlier and which were at an advanced stage of progress. 65. It was also discussed and recognised at this meeting that there was a need to delegate authority under the TCFR to Jeffrey and Ms How as Secretary and Deputy Secretary of AHTC respectively so that CPG and FMSS could concurrently perform their duties as MAs of Aljunied constituency and Hougang constituency respectively. Accordingly, I issued a letter on 16 June 2011 to Jeffrey and Ms How to give them the authority to incur the necessary expenditures to enable CPG and FMSS to perform their tasks as MAs. A copy of my letter of 16 June 2011 can be found at S/No. 215 of the CB. 66. After this meeting on 16 June 2011, I updated the elected MPs of the various issues that were discussed to keep them in the loop by sending them an that same day at 11:47 pm, a copy of which can be found at S/No. 214 of the CB. 67. On 22 June 2011, Ms How sent an to me at 3:57 pm attaching a letter from FMSS setting out its proposal for the appointment of MA for AHTC. I then forwarded Ms How s to the elected MPs on 6 July 2011 at 3:40 pm as I wanted their views on whether they had any concerns about the appointment of FMSS as MA on the terms as set out in the draft letter. My of 6 July 2011 at 3:40 pm stated: As you know, Ms How and Danny are operating under FM Solutions & Services Pte ltd to offer Managing Agent services to AHTC. They are already understudying and taking over the work in stages. It is expected that by 1 Aug, most of the functions will be taken over, except for the computerised S&CC collection systems which will take more time due to the need to conduct parallel runs to test the new system. Attached are documents I received 2 weeks ago. In gist, we agree to appoint them for one year before we tender out the job. The rates quoted are similar to the ones CPG is using for AJTC for its 2nd yr of service. I am making one clarification on the project management rates of 3.5% (which CPG is charging AJTC for 2nd and 3rd yr of project mgt) and once I am satisfied, I will sign the letter of intent. Pls let me know if you have any concerns. I intend to sign by Friday. (emphasis added) The chain with FMSS and my of Thursday, 6 July 2011 to the elected MPs as described above can be found at S/No. 238 of the CB.

24 The rest of the elected members replied to say that they had no concerns. Copies of the responses I received from Shin Leong, Mr Low, Faisal and Pritam can be found at S/Nos. 241, 244, 245 and 246 of the CB. While I do not have a record of Show Mao s e- mail response, it can be seen from paragraph 102 below which set out Show Mao s amendments to the draft media statement which covers, amongst others, the appointment of FMSS as MA, that he too clearly agreed to the appointment. 69. In my subsequent correspondence with Ms How, she informed me in her response sent on 6 July 2011 at 7.01pm that the project management rate being at 3.5% was what CPG was charging in their second year, which was the year in which FMSS was taking over. As FMSS was stepping into CPG s shoes to take on the role of the MA, it appeared reasonable for FMSS to be receiving the rate that CPG would have received. In my to Ms How on 6 July 2011 at 3:32 pm, I had expressed the following: Generally I note that the letter of intent and the schedule of fees is similar to what the current MA, CPG, is charging the AJTC for the 2nd year of its service. This is fine. The aforesaid correspondence with Ms How can be found at S/No. 239 of the CB. FMSS Letter of Intent 70. FMSS issued its Letter of Intent dated 15 June 2011 which sets out its proposals for appointment as MA as follows: 1. Former Aljunied Town Council a) We shall take-over the management of the former Aljunied Town Council Town Council (sic) on 15 July 2011 at the prevailing Managing Agent s fees and fees structure as per the existing Managing Agent contract between Aljunied Town Council and M/S CPG Facilities Management Pte Ltd made on 8 June A copy of the applicable contract sum and breakdown is attached as Annex 1. b) In view of the boundary change, we will adjust the Managing Agent fees based on the revised quantum of residential dwelling units, commercial units, market/hawker stalls and motorcar/motorcycle/lorry parking lots. 2. Former Hougang Town Council a) We shall take-over all the existing staff of the former Hougang Town Council at their existing salary and terms of appointment on 15 June 2011 for preparation of takeover. Our Managing Agent fees shall be based on the annual staff cost as per the accounts as at 31

25 March 2011 which is $1,114, subject to adjustments, if any based on the final audited accounts. 3. Reimburesment (SIC) of New Staff a) We shall engage new staff as necessary for the preparation of handing and taking over and shall claim such staff costs on a full reimbursement basis. 4. Scope of Work a) Our scope of work for Aljunied-Hougang Town Council shall follow the specifications stipulated under the Managing Agent s contract of the former Aljunied Town Council. (emphasis added) 71. The above letter was signed in acceptance by me on 8 July 2011 on behalf of the TC pursuant to the authority that was vested in me. As FMSS letter provided for a second signatory, this was later signed by Shin Leong on 18 July I note that Shin Leong signed the letter after FMSS had commenced work as MA of Aljunied GRC on 15 July A copy of the signed Letter of Intent is found at S/No. 211 of the CB. 72. Hence, FMSS became the MA of Hougang division of AHTC on 15 June 2011 and the MA of AHTC on 15 July The Delegation of Authority to Me by AHTC 73. Subsequent to me signing the FMSS Letter of Intent, I had some doubts on whether AHTC s delegation of authority to me could override the usual financial expenditure limit of the TC Chairman as stated in the TCFR. It appeared to me that even though AHTC had delegated authority to me to proceed to appoint FMSS pursuant to Section 32 of the TCA without any limitation, I might still be bound by the limits specified in Rules 34(1)(b) and 34(1)(c) of the TCFR, which states that the authority to incur expenditure for any one item shall not exceed $100,000 for the Chairman but can exceed $100,000 for the TC. 74. Further to the above, I was also re-considering whether the 2nd AHTC Meeting should proceed on 21 July 2011 as tentatively planned, because one key item to be discussed would be the appointment of FMSS as MA and of Mr Loh as Secretary. As Jeffrey and his CPG colleagues would be present at this meeting. It would have been inapt or awkward to discuss details of the appointment of FMSS in the presence of the incumbent MA.

26 As such, I wrote to Shin Leong, Mr Low and Ms How on my abovementioned concerns on 13 July In my , I asked them for their views on whether the 2nd AHTC Meeting that was fixed for 21 July 2011 should proceed as planned or after 1 August 2011 when Jeffrey and CPG were no longer involved in AHTC s activities. 76. Shin Leong s response was that we were not hiding anything and that Jeffrey s presence was no hindrance. He therefore suggested that the meeting proceed on 21 July Insofar as Shin Leong mentioned in his that Jeffrey was personally friendly and cooperative, I agreed with him. A copy of my of 13 July 2011 and Shin Leong s response can be found at S/No. 250 of the CB. 77. Mr Low s response, which can be found at S/No. 251 of the CB, was that there was no need to raise the issue at the meeting, subject to Ms How s advice. Ms How did not respond. Mr Low suggested that if we were going to raise the issue at the meeting, due diligence on FMSS should be undertaken prior to the meeting and this should be made clear and put on record. I understood his to mean that ultimately, the responsibility for the TC fell on all the elected members and that we had to act in good faith and not contravene what is required in the TCFR. He also suggested that we document the reason for waiver of tender for MA services and the due diligence review of FMSS (such as discussions with the elected members) in the form of a report to AHTC with the new Secretary of AHTC. 78. I responded to Mr Low shortly thereafter on 14 July 2011 and proposed that: OK. In such an event, can we: a) Release Jeffrey as secretary and appoint Danny on 1 Aug; b) have AHTC meeting ASAP after 1 Aug i.e. on 4 Aug, to appoint the MA? 7th month will be in full swing then. c) alternatively, we can go by circulation to appoint the MA if we cannot meet. 79. Mr Low responded shortly after on the same day, to say, inter alia, that: 1. Having the council meeting on 4th August to appoint MA officially is a better option. The interim 4 days of 1st to 4th August have to be resolved.

27 Danny can provide the draft report and assessment under your instruction based on what we have gone though at the meeting and submit the FM Solution s MA proposal (all elected members have a copy right?) to the meeting for deliberation. 3. If we have 7th month dinner to attend on 4 August, fix the meeting at 7pm, end the meeting by 8pm, main agenda to appoint MA for AHTC. We can then attend the dinner by 8.30pm which is the usual time anyway. The correspondence between Mr Low and myself on 14 July 2011 as described above can be found at S/No. 255 of the CB. 80. Work on the AHTC takeover continued in the meantime. On 14 July 2011 at 3pm, I had a meeting with various parties, including Ms How and Jeffrey. This was for me to be kept updated and to issue instructions. The minutes of this meeting can be found at S/No. 876 of the CB and shows the meeting noted that: (a) Jeffrey would be released on 1 August 2011 and in respect of CPG s services, a Deed of Mutual Release would be prepared for my execution as Chairman of the AHTC; and, (b) I approved the one-month parallel run proposal as set out above. 81. On 15 July 2011, residents of the Aljunied and Hougang constituencies were informed by way of notification that the management of the town had changed. On 16 July 2011 at 3:08 pm, I sent an to the Town Councillors to inform them of the notification and further proposed that the 2nd AHTC meeting take place on 4 August 2011 instead of 21 July It was subsequently agreed that the 2nd AHTC meeting take place at 7.00 pm on 4 August My correspondence with the Town Councillors and others can be found at S/No. 257 of the CB. 82. In furtherance of its wish to terminate the MA contract, CPG appointed solicitors to draft the Deed of Mutual Release. A draft of the Deed was sent to me by CPG s officer, Seng Joo How on 18 July 2011 at am. It is important that I highlight the following statement from Seng Joo How in his to me which again confirms that CPG wanted to be released:

28 Thank you for agreeing to release M/S CPG Facilities Management Pte Ltd and Secretary Jeffrey Chua from our obligations under the Managing Agent contract on 1 August (emphasis added) 83. After considering the draft Deed attached to the , I exchanged s with CPG on 18 July 2011 and 20 July 2011 on the terms of the Deed of Mutual Release. For example, I pointed out that clause 2(b) of the draft Deed was unduly wide as it released CPG from all liability incurred in the course of its work. The s between Seng Joo How and me sent on 18 July 2011 and 20 July 2011 can be found at S/Nos. 258 and 263 of the CB. 84. On 21 July 2011, I had a meeting with Jeffrey and Ms How. This was one of my weekly Chairman s meetings held with the MA to discuss TC operations. A copy of the aforesaid Chairman s Meeting Minutes can be found at S/No. 877 of the CB. The Minutes recorded that: On the Deed of Mutual Release, Mr Seng [Joo How] said that Clause 2(b) should be fair and reasonable to both parties. It was agreed to get the lawyer to redraft the Clause accordingly Chairman commented that there is no need to rush through the Deed of Mutual Release as it has already been agreed in principle. The formal document could be signed in August together with the new agreement for the parallel run and project management. She further highlighted that the new Project Management contract terms and conditions must be consistent with the existing Ms How handed a list of the projects which the new MA will not be taking over and those which they will be taking over. The number of projects which CPGFM will continue is three (one having been completed already). (words in square brackets added) 85. On 1 August 2011 at 2:42 pm, I received an from a reporter Mr Kor Kian Beng ( Kian Beng ) of the Straits Times with various queries. I quote the salient queries below: - We were told that a new company FM Solutions and Services has been appointed the new managing agent for the Aljunied-Hougang Town Council (AHTC). Could you kindly confirm this please? - An ACRA search on FM Solutions and Services showed that Hougang Town Council s secretary How Weng Fan is listed as one of its officers and shareholders. Could you confirm that the new AHTC management was involved in the setting up of FM Solutions? - The search showed that the company was registered on May 15, about a week after the May 7 General Election. A check with several key industry players such as CPG, EM Services and Emasco showed that they were not approached by the new AHTC management. Why did the new management decide to appoint a new company as its managing agent, instead of appointing CPG or other experienced industry players?

29 I replied on the same day at 3:00pm on 1 August 2011 to inform Kian Beng that I would deal with the queries at the end of the week as AHTC had certain important things to sort out in the interim. I was subsequently interviewed by Kian Beng some time later in August The correspondence with Kian Beng as described above can be found at S/No. 278 of the CB. 87. I sent an to Jeffrey at 5:34 pm on 1 August 2011 to inform him of the media query and I copied the elected members in the The media have been asking me questions about why we did not get CPG to continue. It is not my intention to make this an issue. But I will probably have to tell them that CPG requested to be released without saying more. OK? 88. Jeffrey responded to my on 1 August 2011 at 5:33pm to say Mutually agreed release better. The exchange of s between myself and Jeffrey sent on 1 August 2011 can be found at S/No. 279 of the CB. 89. It is again clear from the abovementioned exchange that CPG did not dispute that they wished to be released but they did not want this to go on public record. My impression of this was that CPG was concerned about adverse public reaction if it was made known that CPG did not wish to continue because the WP had taken over the TC. 90. In preparation for the 2nd AHTC Meeting that was eventually fixed for 4 August 2011, I e- mailed Mr Loh on 1 August 2011 to request for a softcopy of the presentation slides that were used at the meeting on or around 2 June 2011 where FMSS gave a presentation on its proposal for appointment as MA. In addition to sending me the slides as requested, Mr Loh sent me another that day attaching a document which he described as a draft report on the appointment of MA from our [i.e. FMSS ] perspective. 91. I reviewed Mr Loh s draft and made my own amendments before sending the revised draft to Mr Low and Shin Leong on 3 August 2011 at 11:18am (copying Mr Loh and Ms How) as a copy of the report was to be given to the Town Councillors at the meeting the next day together with the recommendation for FMSS appointment as MA. I wanted to make sure that all the points made in the report were correct and they justified the decision to waive the need for a tender because I would be leading the discussion after Mr Loh had delivered his presentation on FMSS. An extract of my read as follows:

30 Dear Mr Low and Shin Leong, Pls see attached draft report and recommendations to be presented at tomorrow s AHTC meeting for decision, based on input from Danny. Please let us know if you have any comments or amendments to suggest. cc Danny and Ms How fyi and any comments on whether it will pass the auditors eyes esp re waiver of tender. The exact MA fees, based on the adjusted electoral boundaries, would need to be told to Council as soon as you have worked it out perhaps by the following meeting? 92. Shin Leong replied in his of 3 August 2011 at 11:47am to query whether there was any need to disclose the fact of Mr Loh s and Ms How s marriage. Mr Low responded shortly at 2.01pm to say that it is not necessary as most of the Town Councillors knew the both of them though there was no harm in mentioning it at the meeting. Shin Leong agreed with Mr Low s views and went further to ask in his next sent at 4.02pm whether there was a need to reveal the exact stakeholdership(s) of FMSS in the TC minutes/report? *Not key personnel, which is already indicated in FMSU [sic] proposal to us. I believe that FMSU was a typographical error and should read FMSS. I replied to Shin Leong s query at 4.05pm by saying that we can/ should enclose the ACRA search let me arrange (or we can get it from Kor Kian Beng!). Although this was not eventually specifically referenced in the minutes of any TC meetings, I understand that the Straits Times had published an article on 2 August 2011 wherein Ms How s shareholding in FMSS was reported and a copy of the article can be found at S/No of the CB. A copy of the chain between Shin Leong, Mr Low, and myself on 3 August 2011 can also be found at S/Nos. 282 to 284 of the CB. 93. The 2nd AHTC Meeting took place the next day on 4 August Save for Faisal and David, all the other Town Councillors were present at this meeting. 94. At this meeting, the Town Councillors unanimously appointed Mr Loh as Secretary of AHTC on 1 August 2011 as the TC could not function without a Secretary after Jeffrey left on 31 July The Town Councillors also ratified my decision to appoint FMSS as MA of AHTC for a period of 1 year. I set out below the salient aspects of the meeting as recorded in the Minutes recorded by Mr Loh and confirmed by me: 3. Appointment of Managing Agent and Waiver of Tender Mr Danny Loh of M/s FM Solutions & Services Pte Ltd presented their managing agent proposal to all present. In essence, the Managing Agent fee structure shall be as follows:-

31 a) The Managing Agent shall takeover all the existing staff of Hougang Town Council at their existing salary and terms of appointment. The total staff costs for financial year ended 31 March 2011 shall form the basis to compute the monthly Managing Agent s fee (Reimbursement basis with no profit element); b) The Managing Agent shall takeover the management of Aljunied-Hougang Town Council at the prevailing Managing Agent s fee for Aljunied Town Council (2nd year fee structure), with due adjustments for electoral boundary changes in 2011; and c) The Managing Agent s scope of work shall follow closely to the specifications stipulated under the Managing Agent s contract of the Aljunied Town Council. (Manpower deployment will differ slightly due to different mode of operation and some specifications cannot be fully complied e.g. attendance at Residents Committee meetings). After the presentation, both Mr Danny Loh and Ms How Weng Fan were excused from the Meeting to facilitate discussions by the Members. (Note: For the discussion which followed, please refer to Annex 1.) Mr Danny Loh and Ms How Weng Fan were later invited back into the Meeting and informed of AHTC s decisions. Mr Danny Loh accorded his appreciation for the award. 4.1 Appointment of Secretary The Chairman informed the Meeting that she had appointed Mr Danny Loh as the Secretary of the Town Council with effect from 1 August 2011 and wish to seek the Council s ratification on the appointment. Mr Danny Loh declared to the Meeting that by virtue of his earlier presentation on the appointment of Managing Agent, he had declared that he is the Managing Director and Ms How Weng Fan is a Director/General Manager of M/s FM Solutions & Services Pte Ltd. The Meeting noted the above declaration of interest and agreed to ratify the appointment of Mr Danny Loh as the Secretary. Ms How Weng Fan, who had been appointed earlier as Deputy Secretary, shall remain in the same appointment. 95. Copies of the abovementioned report on the appointment of MA that I had prepared was circulated at this meeting. The version that was circulated at this meeting was essentially a printed copy of the finalized draft which I had sent to Shin Leong and Mr Low as abovementioned. What is clear in this report is the full context and reasons for why FMSS had to be appointed as MA and that CPG had requested to be released as MA following the change in political leadership from PAP to WP. I set out the report in full: REPORT ON APPOINTMENT OF MANAGING AGENT FOR ALJUNIED-HOUGANG TOWN COUNCIL Context of Managing Agent appointment The following factors are to be taken into account when considering the appointment of the Managing Agent (MA):-

32 The incumbent MA, CPG Facilities Management Pte Ltd, though appointed MA for Aljunied Town Council from Aug 2010 to July 2013, had requested to be released as MA following the change in political leadership. 2. It was mandated by the Ministry of Development (vide letter dated 9 May 2011) that the reconstituted Town Councils would assume responsibility for the new areas under their charge with effect from 1 August The service provider for the accounting system in Aljunied Town Council gave written notice that the service would be totally withdrawn within one month, due to the change in management of the Town Council as provided for in the service agreement. This meant that AHTC would have to set up a replacement accounting system, with sufficient time to conduct parallel testing to ensure integrity of the system and data. 4. The short timeframe, the critical nature and magnitude of the works, and the overriding concern that the welfare of the residents should not be disrupted, precluded the possibility of conducting a tender exercise for the appointment of Managing Agent. It was also imperative that the Managing Agent should be appointed as early as possible to enable recruitment and preparation. 5. FM Solutions & Services Pte Ltd (FMSS), incorporated in May 2011, was identified as a suitable MA for appointment. Its key management and staff were qualified and experienced in estate management, some of whom had worked with Hougang Town Council with proven track records. FM Solutions & Services Pte Ltd (FMSS) presented their MA proposal in the presence of Ms Sylvia Lim, Mr Low Thia Khiang and Mr Muhamad Faisal in early June. The presentation covered the following areas:- Company set-up and organization structure Proposed Organization structure for managing Aljunied-Hougang Town Council (AHTC) Proposed Action Plan for the taking over of AHTC Proposed Managing Agent fee structure. Subsequent to the presentation, a copy of the proposal was extended to other elected Members who were not present. FMSS was prepared to be appointed as the Managing Agent for a period of one (1) year with effect from 15 July 2011, after which AHTC would call a tender for MA services. The one year appointment would be following preliminary terms and conditions:- 1. Former Aljunied Town Council a) FMSS shall take-over the management of the former Aljunied Town Council Town Council on 15 July 2011 at the prevailing Managing Agent s fees and fees structure as per the existing MA contract between Aljunied Town Council and M/s CPG Facilities Management Pte Ltd made on 8 June b) In view of the electoral boundary changes, FMSS will adjust the Managing Agent fees based on the revised quantum of residential dwelling units, commercial units, market/hawker stalls and motorcar/motorcycle/lorry parking lots.

33 Former Hougang Town Council a) FMSS shall take-over all the existing staff of the former Hougang Town Council at their existing salary and terms of appointment on 15 June 2011 for preparation of takeover. FMSS s Managing Agent fees shall be based on the annual staff cost as per audited accounts as at 31 March 2011 which is $1,114, Reimbursement of New Staff a) FMSS shall engage new staff as necessary for the preparation of handing and taking over and shall claim such staff costs on a full reimbursement basis. 4. Scope of Work a) FMSS s scope of work for Aljunied-Hougang Town Council shall follow the specifications stipulated under the Managing Agent s contract of the former Aljunied Town Council. Consensus was obtained among the elected Members to proceed with FMSS on the above terms. To facilitate the necessary preparation work in the interest of the residents, a Letter of Intent dated 15 June 2011 based on the abovementioned terms and conditions was signed by Chairman to affirm the appointment of FM Solutions & Services Pte Ltd as the Managing Agent of Aljunied-Hougang Town Council with effect from 15 July Decision Sought Council s approval is sought to: a) waive the calling of a tender for MA services from 15 July 2011 to 14 July 2012 in view of the urgency of the services and the manifest necessity in the public interest; b) appoint FM Solutions and Services Pte Ltd as the Managing Agent for Aljunied Hougang Town Council from 15 July 2011 to 14 July Prepared by: Sylvia Lim, Chairman, 3 July 2011 (emphasis added) Whilst I had referred to the date of 3 July 2011 in this draft which I ed to Shin Leong and Mr Low on 3 August 2011, this was a typographical error and should have been dated 3 August The issue of FMSS appointment as MA was specifically recorded in Annex 1 of the Minutes of the 2nd AHTC Meeting. This segment of the meeting took place in the absence of Mr Loh and Ms How as they were excused from the meeting for the rest to discuss this issue. Annex 1 of the Minutes records the following: a) The incumbent MA, CPG Facilities Mgt Pte Ltd, had indicated their desire to be released from the agreement as soon as practicable.

34 b) The computer and accounting systems needed to be replaced with the upscaled version of the one used by Hougang TC, as the owner/service provider of the existing systems used by Aljunied TC had given notice to withdraw them by end July. c) MND s deadline for handover of the TC management was 1 Aug. d) There was every likelihood that if a new Managing Agent was not appointed to prepare the systems and processes as soon as possible, there would be serious disruption to residents services on 1 Aug. e) Given the tight time frame and urgency, there was no time to call any tender for Managing Agent services which would take several weeks away from critical preparation time. f) It was in the public interest that the calling of a tender be waived. g) FM Solutions and Services comprised of key staff familiar with estate and township management with proven track records. The terms offered by the company did not put the Town Council worse off than under the previous MA. 97. I wish to point out that the above statements in relation to the appointment of FMSS were made to the meeting by me and not Mr Low. All he had stated in the course of the meeting on this issue was that AHTC was fortunate to have the Hougang SMC computer system as a platform to build on so that the TCMS could be replaced. 98. Accordingly, the 2nd AHTC meeting on 4 August 2011 unanimously approved, firstly, the waiver for the calling of a tender for MA Services for one year; and secondly, the appointing of FMSS as MA for AHTC for a period of one year from 15 July The Plaintiff in Suit 668 alleges at paragraph of the Statement of Claim that I had procured the waiver of tender and appointment of FMSS as a fait accompli as the decision to appoint FMSS had already been made. I do not agree with this allegation as authority was delegated to me at the 1st AHTC Meeting on 9 June 2011 for the very purpose of better facilitating the handover of ATC to the WP. Deed of Mutual Release between AHTC and CPG 100. After the 2nd AHTC Meeting on 4 August 2011 and between the period of 5 August 2011 and 11 August 2011, I was focused on finalising the Deed of Mutual Release and other related agreements with CPG and releasing the media statement on the appointment of FMSS.

35 I prepared a draft media statement concerning the change in TC management from CPG to FMSS which I sent to Show Mao on 5 August 2011 for his comments. Show Mao gave his comments and proposed amendments to the draft media statement which were essentially to clarify the emergency that AHTC was facing thereby justifying the waiver of tender and appointment of FMSS as the MA of AHTC. A copy of my exchange with Show Mao can be found at S/No. 287 of the CB. I agreed with Show Mao s proposed amendments and finalized the draft media statement before sending it to the media representatives on 5 August 2011 at 8:21 pm. My to the media representatives read as follows: Dear Media Reps, The statement below is for your attention and publication. Thank you. Sylvia Lim Aljunied-Hougang Town Council ========== ALJUNIED-HOUGANG TOWN COUNCIL MEDIA STATEMENT Aljunied-Hougang Town Council (AHTC) has appointed FM Solutions and Services Pte Ltd (FMSS) as its Managing Agent (MA), for a period of one year from 15 July After the General Elections in May 2011, AHTC was legally constituted on 27 May. Under the timeline drawn up by the Ministry of National Development, the handover of management to new Town Councils was to be done by 1 August Sometime in early June, following discussions initiated by the incumbent MA for Aljunied Town Council, it was mutually agreed that AHTC would in due course release the incumbent MA from further performance of the existing MA agreement. AHTC also had the task of putting in place new computer and accounting systems, and time was needed for hardware procurement and software development. Given the urgency of the timelines above, and the overriding concern that Town Council services should not be disrupted to the detriment of the Aljunied-Hougang residents, AHTC determined that the best course of action was not to call a tender for MA services for the transitional period, as there was insufficient time. Instead, AHTC decided to identify a service provider who was qualified and in a position to commence work immediately on taking over all aspects of MA services. FMSS is a company incorporated in Singapore in May Its key management and staff are qualified and experienced in estate and township management, with proven track records. Its key directors have been in the field for an average of 20 years. FMSS has reemployed all 22 staff formerly working at Hougang Town Council and expanded to cater for the increased scope of works at AHTC. In that connection, it was made known to the incumbent MA that all employees who worked at the former Aljunied Town Council were welcome to apply for positions relating to AHTC. FMSS currently has 73 staff. No Workers' Party member has any interest in FMSS. AHTC does not incur additional MA fees from appointing FMSS, as FMSS has agreed to assume the scope of works and pricing of the former MA for Aljunied Town

36 Council, with only necessary adjustments made due to the electoral boundary changes from the inclusion of Kaki Bukit Division (formerly under the charge of Marine Parade Town Council) and the handing over of flats in Hougang Avenue 8 to Ang Mo Kio Town Council and Pasir Ris-Punggol Town Council. FMSS has also agreed to take over the Hougang Town Council staff only at reimbursement costs, without any profit element. In addition, at the request of AHTC, FMSS has agreed to undertake the MA appointment for one year only, which AHTC believes is a shorter than usual term for an MA, given the outlay required by the MA. AHTC expects that the operations in AHTC should be stable within one year, after which the MA contract would be up for tender. AHTC has proceeded on this course as it is of the view that the above transitional arrangement is necessary and in the best interests of residents in Aljunied- Hougang. Sylvia Lim Chairman, AHTC 5 Aug 2011 Queries on the above statement should be sent to media@ahtc.org.sg (emphasis added) Copies of my exchange with Show Mao and the that I sent to the media representatives can be found at S/Nos. 287 and 288 of the CB respectively It was therefore AHTC s publicly stated position which was well known to all concerned from at least 5 August 2011 that: (a) (b) (c) (d) (e) (f) (g) (h) AHTC and CPG had agreed to terminate their MA Agreement. For lack of time, AHTC had decided not to call for a tender for MA services for the transitional period AHTC had engaged FMSS to provide MA services in place of CPG. CPG were informed that all employees of ATC were welcome to apply for positions in AHTC. No WP member has any interest in FMSS. AHTC does not incur any additional MA fees from appointing FMSS. AHTC expected the transitional period to be one year after which the MA contract would be up for tender. It was AHTC s view that the transitional arrangement is necessary and in the best interests of the residents of Aljunied-Hougang.

37 On 6 August 2011 at 12:37pm, I forwarded a copy of the said media release to Jeffrey and Seng Joo How with a comment that the press had reported CPG s name wrongly as CPF. Jeffrey s only comment was Good. Confuse everyone whilst Seng Joo How did not reply. I wish to point out that both Jeffrey and Seng Joo How did not deny or dispute the fact that the media statement had stated that there were discussions initiated by the incumbent MA following which it was agreed that AHTC would then release CPG from the CPG MA Contract. A copy of the correspondence with Jeffrey can be found at S/No. 290 of the CB On 10 August 2011, I had received a further query from the Straits Times as to why AHTC did not retain CPG. I explained to Jeffrey over mobile phone text messaging that I had to tell the Straits Times that CPG requested release. Jeffrey did not disagree with me. His response was that the media were attempting to sensationalise the news. A copy of my conversation with Jeffrey over mobile phone messages sent on 10 August 2011 can be found at S/No. 293 of the CB On 11 August 2011, I executed the CPG Project Management Contract and also the Deed of Mutual Release. Faisal signed as a witness and the AHTC seal was affixed. Copies of the CPG PM Contract and the Deed of Mutual Release can be found at S/Nos. 28 and 29 of the CB. Alleged Price Difference between the CPG MA Contract and the 1st MA Contract 106. Although it was self-evident from the above paragraphs that there was no real option that CPG would continue acting as MA, I note that KPMG nevertheless went on to make comparisons between the costs of CPG s MA services and that of FMSS MA services and concluded with its allegation that FMSS was 10% more expensive than CPG, i.e. by $515,773. The basis on which KPMG derives such computations is flawed. To illustrate, I reproduce the table set out at paragraph of the KPMG Report for reference:

38

39 This computation by KPMG is based on incorrect assumptions and is therefore misconceived. It assumes that CPG would be willing to take over Hougang SMC at the same rates that were charged for Aljuned GRC. However, under the CPG MA contract, CPG is not obliged to take over Hougang at the same rate and neither does the TC have the right to insist upon this. Even if CPG were willing to take over the SMC, CPG could have negotiated for a significantly higher contract sum if they had to take over Hougang SMC. In this regard, KPMG s assumptions are an oversimplification. Withdrawal of TCMS by AIM 110. As mentioned, TCMS is owned by AIM, which was in turn owned by the PAP It bears highlighting that the MA does not provide computer systems under its MA Contract and is only obligated to provide staff to operate these computer systems. It is the TC s responsibility to provide these computer systems. A copy of the CPG MA Contract dated 8 June 2010 is found at S/No. 20 of the CB and an extract of S/No. 2 of Annex 5F of the CPG MA Contract which provides for the MA s obligation to provide staff to operate the computer systems is set out: The following services are provided by Town Council s direct vendors. The Managing Agent shall provide sufficient staff to administer these services and to liaise with the vendors to train their staff to operate the said services. All staff costs and other costs and expenses required in the training and administrating the services and in operating the computer systems as stated in item 2 below shall be included in the Managing Agent s Contract Price. 2. Computer Applications The Managing Agent staff shall be trained to operate the following computer systems:- (1) Arrears Management System; (2) Customer Information System Integrated Resident Information System; (3) Corporate Service System; (4) Property Information System; (5) Service and Conservancy Charges System; (6) Works Order System Integrated Estate Management System; (7) Accounts Payable System; (8) By-Law Enforcement System; (9) Fixed Asset System; (10) Front End Receipting System; (11) General Ledger; (12) Giro System; (13) Any other services provided by the Town Council s computer contractor.

40 The reference to computer systems under sub-paragraphs (1) to (13) in the above extract is to the TCMS. This is indicative of the importance of the TCMS to the functioning of the MA. All that the MA is obliged to do is to train its staff to operate the computer systems. Without the computer systems, the MA would simply not be able to perform its functions as it relies on the TCMS On 3 January 2011, AIM entered into a contract with all the PAP TCs (including ATC) called the Contract for the Purchase of the Developed Application Software (the AIM Contract ). A copy of the AIM Contract and the tender documents that were submitted by AIM for this contract can be found at S/No. 21 of the CB. The history of TCMS and AIM is set out in the MND Report: AIM was set up by the PAP in 1991, to provide IT related services to support PAP MPs in the running of their TCs and estates. For instance, TCs had to individually deal with and contract the services of a vendor, even if common to all. AIM was to help coordinate such IT services and projects common to all the PAP TCs, so that the TCs did not have to do it separately and individually In 1994, the Housing & Development Board (HDB) informed the TCs that it would cease HDB s IT system support used by all TCs. This was to be effected by 1996 as part of HDB s handover of responsibilities and functions to the TCs. The PAP TCs decided to aggregate their demand and called an open tender in 1994 for the development, installation and maintenance of a Town Council Management System (TCMS) software. AIM participated in the tender and was awarded the contract to develop this first generation TCMS. In 2003, the TCs [i.e. the PAP TCs] called an open tender to develop and maintain the second generation TCMS. This was awarded to National Computer Systems Pte Ltd (NCS). AIM did not participate in the tender., the TCs [i.e. the PAP TCs] called an open tender to sell the TCMS software, subject to the provision of a leaseback facility for a fixed monthly fee, until the software was changed (i.e. when the third generation TCMS was developed) The tender was an open tender advertised in the Straits Times on 30 June It attracted expression of interest by five vendors. However, eventually there was only one bid, which came from AIM. The PAP TCs decided to award the tender to AIM In the contract, AIM could terminate its services by giving three months prior notice in writing to the TCs. However, AIM could also terminate the contract by giving a shorter notice period of one month in the event of material changes to the membership, or to the scope and duties, such as changes to the boundaries, of the TC (emphasis in bold and words in square brackets added)

41 As stated in the above extract, the AIM Contract permitted AIM to cease providing the TCMS to a particular TC in the event of material changes to the TC s membership. Clearly, the intention was that AIM would not support opposition TCs. Clause 9.3 of the Conditions of Contract of the AIM Contract provides as follows: The Contractor may in its absolute discretion terminate his services during the contract period by giving three (3) months prior notice in writing to the Town Council. However, in the event that there are material changes to the membership of the Town Council or there are material changes to the scope and duties of the Town Council, including but not limited to changes to its present boundaries the Contractor may give a month s notice in writing if he wishes to terminate the services during the contract period. (emphasis added) It bears highlighting that the termination clause could only be exercised by AIM in its absolute discretion and not by the TC As mentioned earlier, Jeffrey had informed Ms How and myself in early June 2011 that AIM would withdraw the TCMS. What I understood from Jeffrey at the time was that he was in contact with AIM and that AIM had told him that they would be terminating the contract. My sense was that Jeffrey gave us this heads up so that we could make the necessary preparations. In the circumstances, AHTC started urgent preparations for the withdrawal of the TCMS by upscaling the Hougang SMC computer software On 10 June 2011, I was informed by Ms How by that she had spoken to Mr Sasidharan, the Co-ordinating Secretary for AIM (who was also the General Manager of East Coast Town Council) and requested to use the Financial Module of TCMS until 31 August Ms How said in her that Mr Sasidharan had suggested that Jeffrey write a letter to AIM as AHTC s Secretary putting forward this suggestion and that she had spoken to Jeffrey about this suggestion. Ms How also stated that Mr Sasidharan informed [her] that AIMS [sic] will definitely give the notice of termination and had even asked if we [i.e. AHTC] have received it At first he suggested that [AHTC] wait for the notice and then write in for extension but was agreeable later that we should just put in the request before that happens. It is clear form this exchange that AIM wanted to terminate the provision of TCMS to AHTC. A copy of Ms How s to me can be found at S/No. 198 of the CB.

42 As suggested by Mr Sasidharan, Jeffrey wrote on behalf of AHTC to AIM on 10 June Whilst AHTC were already taking preparatory steps to upscale Hougang SMC s computer system, in light of Jeffrey s early warning with a target date of 1 August 2011 for the upgraded system to run live, Jeffrey had requested in the letter of 10 June 2011 for a onemonth extension until 31 August 2011 in respect of the AIMS-TCMS (Financial Module) which serves a critical front-end function of recording residents payments of their S&CC. This is so that parallel runs could be conducted to ascertain the reliability of the new system. A copy of AHTC s letter of 10 June 2011 can be found at S/No. 202 of the CB Notwithstanding our request for an extension on 10 June 2011, AIM exercised its rights under the aforesaid Clause 9.3 of the AIM Contract by writing to AHTC on 22 June 2011 terminating the AIM Contract and the provision of TCMS with effect from 1 August This was just as Jeffrey had said to us in early June There was no indication in AIM s letter of 22 June 2011 that the letter was written with reference to our letter of 10 June 2011 or that AIM was prepared to extend the usage of the AIMS-TCMS (Financial Module) until 31 August 2011 as requested by AHTC in Jeffrey s letter of 10 June A copy of AIM s letter of 22 June 2011 together with the envelope and courier consignment note is exhibited at TAB 3 of SL However, on 24 June 2011, AIM wrote to AHTC and confirmed their agreement to AHTC s request for extension to 31 August 2011 subject to AHTC s payment of fees. On 28 June 2011, AHTC wrote to AIM to confirm that it agreed to do so. Copies of the letter of 24 June 2011 can be found at S/No. 220 of the CB and the letter of 28 June 2011 can be found at S/No. 229 of the CB During this interim period prior to TCMS being terminated, I worked with Ms How intensively to do our best to set up an alternative to the TCMS using the computer software used by Hougang SMC. Ms How oversaw this process by engaging the IT personnel who were upscaling the existing computer software of Hougang SMC to transfer the relevant data and documents to the upscaled computer software. Ms How also took steps to procure the necessary hardware such as making a request on 15 June 2011 to loan a server from S & I Systems Pte Ltd and requesting for my approval to waive the need for quotations to procure computer software, equipment and peripherals on 23 June I authorised the waiver for obtaining quotations for a Financial and Collection System

43 costing S$488,680 and a Network System costing S$35,315. Copies of the correspondence exchanged in relation to the foregoing can be found at S/Nos. 26 and 27 of the CB On 21 July 2011, I approved the request of Ms Serene Chua ( Serene ), CPG s Senior Manager (Township Finance), to conduct a parallel run of AHTC s new computer system that was to replace TCMS. This was for a short period of time, the whole month of August A copy of the proposal paper from Serene dated 21 July 2011 which I had approved can be found at S/No. 264 of the CB. CPG would have to be retained for this part of the job. It is important to note the following that was set out in the said proposal paper: (a) Not all the functions of the TCMS could be replicated by AHTC s system. The modules in the TCMS which could not be replicated were the (1) Property Information System; (2) By-Law Enforcement System; (3) Fixed Assets System; (4) Work Order System; (5) Accounts Payable System and (6) Facilities Booking System; (b) (c) During the one month period, The finance team had to do the following manually: (1) Daily Front End Reporting System collection including reconciliation of physical cash collected with the day end report; (2) Generating and reconciling all related reports; and (3) Assisting to answer residents queries relating to finance issues; and, CPG had to provide manpower for the month long parallel run and they were appointed to do so at a cost of $59, This was necessary because FMSS as the incoming administration was not allowed to use TCMS as only staff of CPG were allowed to do so On 29 August 2011, AHTC wrote to AIM to request for a further extension for the TCMS to be made available until 9 September On 31 August 2011, AIM wrote to AHTC to accede to the further request for extension subject to AHTC s payment of the requisite fees and AHTC responded on 2 September 2011 to confirm that its agreement. AHTC ceased to have the use of the TCMS from 10 September Copies of the letter of 29

44 August 2011, 31 August 2011 and 2 September 2011 can be found at S/Nos. 302, 304 and 306 of the CB respectively Whilst I was not aware of this request for this further extension at the material time, Ms How belatedly updated me of the same later in December 2012 when the AIM transaction became a subject a public discussion. What I understood from Ms How was that the further extension was asked for by CPG to facilitate their being able to finalise the audit of AHTC from April to July 2011 which CPG had to see through AIM s termination of TCMS and AHTC s requests for extension were a subject of discussion in various forums. In an article published in the Straits Times on 18 December 2012 entitled WP, computer firm argue over lease, AIM s Chairman, Mr S. Chandra Das, was reported to have said that if AHTC had asked for a longer extension, AIM would have similarly agreed. But it was never AIM s position that they would not have terminated the AIM Contract for AHTC s use of the TCMS. Similarly, the then Minister for National Development Mr Khaw Boon Wan stated in Parliament on 13 May 2013 that AIM did not initiate the termination and that it was AHTC which give notice of its intention to use its own software. However, this position taken by AIM goes against the conversation that Ms How had with Mr Sasidharan. Copies of the Straits Times article dated 18 December 2012 can be found at S/No of the CB and the Parliamentary Report dated 13 May 2013 can be found at S/No of the CB. Difficulties faced by AHTC during the 90-day handover period 124. The turnover time of 90 days for handover of ATC s management from the PAP to the WP presented great difficulties to AHTC given the overarching need to ensure continuity of services are maintained such that the residents are not adversely affected by the changeover of MPs. The difficulties faced by TCs in such situations were recognized by the MND in the MND Report, an extract of which taken from the executive summary is set out: 6. The review of the AIM transaction and the inputs obtained from the TCs on other major contracts and the changeover process, have surfaced a broader issue of how to ensure continuity of services to residents in the event of a change of MPs. As entities led by elected MPs, TCs changeovers of MPs, whether from

45 the same party but especially when from different political parties, can have a direct impact on the continuity of services to residents. 7. Currently, under the Town Councils Act, where an area within one Town is being transferred to another Town, the Minister for National Development may specify that the Town Council of the first Town continue to maintain and manage the area for a period not exceeding 90 days. There are no other provisions in the Town Councils Act for transition when there is a changeover of MPs. It is quite understandable that an in-coming MP and an out-going MP would want to take over or hand over the reins of administration of the TC as soon as possible. However, it is arguable whether this time provision of 90 days is sufficient in all circumstances, given the need to transfer operating systems and settle other ancillary issues. The main issue is how to ensure continuity of the services to residents, while allowing the newly elected MPs full authority and accountability immediately after an election. 8. While the elected MPs should continue to be given full authority and autonomy after an election, there is value to consider placing safeguards to minimise the risk of disruption of critical services during a change in leadership. The interests of residents should be the paramount priority for all political parties and MPs in such situations. One option is for TCs to have in place contractual provisions for automatic one-off extensions following an election when there is a change of political party in charge of the TC, and to impose a minimum notice period for termination initiated by the contractor or key appointment holders (e.g. General Managers). The length of such extensions or notice period would depend on the nature of services provided, and should be fair to all parties. 9. The Review Team observed that TCs have largely fulfilled the original objectives for which they were set up. However, there is also the fundamental tension between the TCs dual objectives of delivering good public service and the political accountability of MPs in the context of a political competition. The current arrangement inherently bears the constant risk of politicisation of Town Council administration. Going forward, we propose that the Government consider a strategic review of TCs in their current form. How our public housing estates are managed is a very significant subject as it impacts the value of the homes and the experience of day-to-day life for the vast majority of Singaporeans living in our HDB estates (emphasis added) A copy of the MND Report can be found at S/No.1075 of the CB AHTC was not alone in facing difficulties arising from a changeover process. In the context of discussing this issue, Mr Khaw the then Minister of National Development mentioned during the Parliamentary Debates on 13 May 2015 that there are clearly some lacunae in the rules dealing with handovers of Town Councils in the course of mentioning that when PAP MP Mr Sitoh Yih Pin was elected in Potong Pasir in 2011 and had to take over the TC from the Singapore Democratic Party ( SDP ), Mr Sitoh mentioned to Mr Khaw that it was a trying time for him and his team. An extract of Mr Khaw s statements made in Parliament on 13 May 2015 is set out:

46 The Review Team made observations on the process of handover of Town Councils from one party to another. After an election, a new team is required to take over almost immediately. And when there is a change in political party, it is not just the MPs who change because the other Town Councillors and even the Town Council employees may change too, as it is common for MPs to tap on the support of those who share their political cause to deliver their electoral promises for the estate. However, at present, the Town Councils Act does not contain adequate provisions to deal with such transitions. For example, when the Singapore Democratic Party, and subsequently the Singapore People's Party ran Potong Pasir Town Council (PPTC), it self-managed the Town Council, without any Managing Agent. When PAP MP Sitoh Yih Pin was elected in Potong Pasir in 2011, he had to appoint a Managing Agent quickly to ensure continuity of services for residents. He persuaded EM Services to step in to provide the service at short notice and managed to achieve a successful handover. But he told me that it was a trying time for him and his team. More recently, after the Punggol East by-election, Pasir Ris-Punggol Town Council (PRPTC) had to hand over the management of Punggol East SMC to Aljunied-Hougang-Punggol East Town Council (AHPETC). Both Town Councils agreed to an official hand-over on 30 April 2013 but they needed to share the office space from 1 May as Pasir Ris-Ponggol Town Council needed more time to prepare its alternative office before it could move out. "How to share office space" from 1 May became a point of discussion. There was initial frustration when both parties could not agree to the proposed layout for the shared office. Differences also arose over several other issues. MND officers stepped in to facilitate the handover and broker an arrangement acceptable to both parties. Eventually both sides came to a compromise on the various issues. There are clearly some lacunae in the rules dealing with handovers of Town Councils. We need to look into this. The Review Team has made some useful recommendations to institutionalise some change-over rules to minimise disruptions to critical services during a change in leadership. One is for Town Councils to have in place contractual provisions for automatic one-off extensions following an election when there is a change of party in charge of the Town Council. Another is to set a minimum notice period for termination initiated by the contractor or key appointment holders such as General Managers. The Town Councils themselves have suggested that MND should consider extending the period of handover and play a greater role in the process. These are all useful suggestions and MND will take them in when it updates the Town Councils' rules. Another manifestation of the autonomy exercised by MPs is the uneven way MPs manage their respective Towns. Some Town Councils are stricter in enforcing and recovering Service and Conservancy Charges (S&CC) arrears. But others take a less stringent, shall we say, more populist approach towards such collections but at the expense of the Town Councils' long term financial health and also, of the interest of the majority of residents who do pay on time. (emphasis added) 126. In addition to having to deal with a situation of the incumbent MA not wanting to continue providing such services, the difficulties faced by the WP in taking over the TC were compounded by the loss of the use of the TCMS. This had the effect of severely handicapping the WP s management of AHTC in the initial period. The obstacles faced by AHTC in not having the use of the TCMS were addressed in AHTC s responses of 8

47 February 2013 and 4 March 2013 to MND s inquiry on the AIM transaction and in Part 3 of the AHTC s Response to the IP. I set out below an extract from AHTC s response of 8 February 2013: While it was agreed to extend the TCMS till 31 August 2011 for the parallel run, the incoming administration was not allowed to access the TCMS. Only staff of M/s CPG was allowed to use the TCMS. Hence, the Town Council had to incur additional costs to retain the services of M/s CPG to conduct the parallel run. While it would have been prudent to conduct the parallel run over a longer period, our understanding was that any request for further extensions would be heavily scrutinised. In any case, given the lack of access to the TCMS, a further extension would also be of limited value. Hence, no further extension was sought It is clear from the above that the TCMS was a comprehensive system for the management of the Town Council. To develop an equivalent of the TCMS would require 18 to 24 months or even longer. Hence, the inclusion of Clause 9.3 would cripple the Town Council to the detriment of its residents as it would be impossible to put in place an equivalent system within 1 month. The termination by AIM would have left us in a lurch if not for our blessing that we had another system that had been in use in Hougang Town Council for many years. Our obvious choice was to develop this system further to cater for the operations of the GRC Notwithstanding that this system was not new, it was not developed to cater for a GRC. Even the basic hardwares such as its servers could not cater to the demands of a GRC. While it had a simple FER, it needed to be customized to accommodate some of the features of the GRC such as recurring credit card system, internet kiosks, etc. Much work and time was required to put in place this alternative system. Concurrently, the operation of the Town Council was ongoing but we did not have a complete system to work on. For example, the Works Order system was not ready till April 2012 so we had to resort to manual Works Order for the period 1 August 2011 to 31 March Logically, using a manual system in the context of a GRC was tedious, time consuming and resulted in slow payment to contractors. This exemplified the problems which we had to deal with after the termination by AIM In summary, if the TCMS, which was developed with funds from the former Aljunied Town Council, was handed over to us, continuity would have been ensured and we would not have to waste time and money to replicate systems and information. With the absence of a fully functional system suitable for a GRC and the short timeframe to take over on 1 August 2011, the new system was developed in an unconventional manner including putting it to live without the benefits of proper UATs being conducted. Under this context, the new system would require longer than the normal 18 to 24 months and the development process difficult to manage... Clause 3(4) of the Town Councils Act stipulates a period of not exceeding 90 days for the handing over. From our experience, this was grossly inadequate when a critical system like the TCMS was terminated when there was a change in political party... (emphasis added) Copies of AHTC s response of 8 February 2013 and Part 3 of the AHTC s Response to the IP can be found at S/No. 613 and S/No of the CB respectively.

48 The Appointment of FMSS for EMSU Services (the 1st EMSU Contract ) 127. At the 3rd AHTC Meeting on 8 September 2011, the Town Councillors present were reminded that the contracts with the incumbent EMSU service providers (i.e. CPG and EM Services) were expiring on 30 September This issue was first mentioned by CPG at the 1st AHTC Meeting on 9 June By the time of the 8 September 2011 AHTC Meeting, requests had already been made to CPG and EM Services, the existing EMSU services providers, to extend their services beyond 30 September Whilst EM Services had declined our request, CPG had not yet formally replied then although some verbal indication had been given that they were willing to extend for 6 months until March As such, the Meeting recorded that in view of the short time frame, the Meeting decided to appoint a Committee required under Rule 76(4) of the Town Councils Financial Rules in order that the Council could consider proposal from the next Managing Agent to provide the EMSU services in case M/s CPG FM decided not to extend. A copy of the Minutes of the 8 September 2011 Meeting can be found at S/No. 879 of the CB On 18 September 2011 at 11:55pm, I ed the elected members and members of the T&C Committee regarding the issue of EMSU Services. In this , I had stated: Dear All, As you know, the existing EMSU providers CPG (Aljunied GRC except Kaki Bukit Div) and EM Services (Kaki Bukit Div) confirmed just this last week that they are not willing to extend their services beyond 30 Sep. In CPG s case, this came as a surprise on 14 Sep and was contrary to the verbal agreement that they were willing to extend for 6 months till March It is now only 12 days more to 30 Sep. There is no time to call a tender for a new contract to commence on 1 Oct. EMSU is clearly a critical service to residents of our town. A waiver of tender for EMSU services is needed under TC Financial Rule 74(17) due to the urgency of the requirement and public interest necessity. However, it is recommended that an interim contract only be awarded, and a tender be called after this interim period. Our interim MA, FM Solutions and Services Pte Ltd, has offered to supply the EMSU services in accordance with the scope of works (in the below) approved by the specially appointed committee under the Town Council Financial Rule 76(4). FMSS has also agreed to provide these services in the interim from Oct 2011 till June 2012; an open tender will decide the EMSU contractor after June Council s approval is sought to:

49 (a) waive a tender for the provision of EMSU services from Oct 2011 to June 2012 for the HDB estates within Aljunied GRC; (b) to award the contract for EMSU services for the period to FM Solutions and Services Pte Ltd, based on the scope of works determined by the Committee appointed under TC Financial Rule 76(4). Please reply ASAP in this format: (a) Yes/No; (b) Yes/No. If you have questions, pls do ask. Committee members can help add / clarify On 19 September 2011, Swee Bee, Show Mao, Shin Leong, Teo Xiang Ping Anthony, Pritam, Phua Kuan Tee Elaine, David, Kenneth, Mr Low, John Chua and Faisal, who including myself make 12 out of AHTC s 12 Town Councillors, gave their approval by way of their respective s to me. I sent an to Mr Loh and Ms How on 20 September 2011 to inform them of the decision and Mr Loh acknowledged by his dated 20 September FMSS was subsequently awarded the 1st EMSU Contract. Copies of the said s showing the respective approvals of the Town Councillors and my correspondence with Mr Loh and Ms How in this regard can be found at S/Nos. 320 to 330 of the CB. The Award of the 2nd MA Contract and the 2nd EMSU Contract to FMSS 130. It is alleged that in awarding the 2nd MA Contract (Contract No. OT/0264/12) and the 2nd EMSU Contract (Contract No. OT/0263/12) to FMSS, Mr Low and myself had set up and/or allowed a system at AHTC which effectively enabled Mr Loh and Ms How to be responsible for certifying work done, approving payments and/or sign cheques to FMSS/FMSI to benefit themselves from the very same payments. This is denied. Copies of the 2nd MA Contract and 2nd EMSU Contract can be found at S/Nos. 32 and 33 of the CB FMSS was the sole tenderer for both the 2nd MA Contract and the 2nd EMSU Contract. The 2nd MA contract had been advertised in Straits Times (with a 3 weeks tender notice period) as an open tender and three companies had collected the tender documents. One of the companies was EM Services, an established MA working for many PAP TCs. However, none of the companies including EM Services submitted tenders for the 2nd MA Contract. At the end of the tender exercise, AHTC only had a sole bidder FMSS. This was reflected in a handwritten note by Jennifer, a staff of the Contracts Department, which records that EM Services would not be submitting a quote for the tender for the 2nd MA

50 Contract. In another handwritten note, Mr Ong Thiam Lee of EM Services also recorded that EM Services will not be submitting a quote for the 2nd MA Contract. I understand that EM Services did this on the basis of their understanding that companies declining to make a bid must return the tender documents to AHTC with a no quote. As such, when Mr Ong had come to AHTC to return the tender documents earlier collected, the AHTC officer that received him requested for Mr Ong to make such a note to state reasons for why EM Services was returning the documents. Copies of the 2 handwritten notes can be found at S/No. 464 of the CB Despite only having FMSS as the sole bidder, a special Committee was appointed to evaluate the MA and EMSU tenders. The s that were exchanged between the special Committee that was appointed to evaluate the MA and EMSU tenders and Mr Loh and Ms How in relation to the review of FMSS tender for the 2nd MA and 2nd EMSU Contracts can be found at S/Nos. 32, 33, 43 and 44 of the CB I also the following as part of my due diligence in relation to the award of the 2nd MA and 2nd EMSU Contract to FMSS: (a) I believed, as Chairman, that it was vital for AHTC to ensure that the tender evaluation and award process was in accordance with all applicable TC regulations and good corporate governance. As such, in order to have an added measure of such assurance for this particular tender for MA services, I suggested to AHTC that we should appoint an external audit firm to review the tender evaluation and award of the 2nd MA Contract. The appointment of RSM Ethos was recorded in the minutes of the 11th TC Meeting of 10 May 2012, a copy of which can be found at S/No. 888 of the CB. Accordingly, RSM Ethos was appointed for this purpose and a copy of the AHTC Proposal for Provision of Audit Services to RSM Ethos (Proposal Reference: PP/2012/057) which sets out RSM Ethos Terms of Reference can be found at S/No. 36 of the CB. (b) I sent an on 19 June 2012 at 7:07pm asking Mr Loh and Ms How for further information regarding FMSS s staff such as a list of staff and whether the said list was exhaustive or not;

51 (c) I prepared a list of questions to ask Mr Loh and Ms How during the tender interview on 21 June These questions related to the justification for the increase in FMSS s rates and the impact on AHTC s bottom line; (d) I asked Mr Loh and Ms How about FMSS increase in rates for project management service fees in my sent on 22 June 2012 at 10:14am and had even asked them to re-consider the said increase; (e) I updated Anthony Teo, Pritam, Faisal and David about the FMSS tender through my sent on 5 July 2012 at 12:33am in which I also said that we need to ask FMSS more questions on their staffing model and project management rates. I also mentioned getting a human resources expert to give input on the salaries of FMSS staff; (f) I asked Mr Loh and Ms How through my sent on 11 July 2012 at 8:11am for a detailed headcount of their staff that was used in relation to the calculation of the average salaries that were paid to the Executives and Officers of FMSS. He later responded by way of his on the same day at 1:51 pm with a detailed breakdown of the headcount; (g) I asked Mr Loh and Ms How through my sent on 17 July 2012 at 3:55pm for a list of projects FMSS expects to manage during the 3-year period of the MA Contract to assist the T&C Committee to look at the reasonableness of FMSS s proposals for project management services. I had also informed Anthony Teo, Faisal Manap, Pritam and David by sending an to them on 17 July 2012 at 4:57pm and suggested that we schedule another interview with FMSS to query them on their rates for project management services; (h) By way of my sent on 17 July 2012 at 5:30pm, I informed Anthony Teo, Pritam, David and Faisal of 2 main questions for FMSS to prepare to answer in relation to the tender interview and asked them for their views for other questions to ask FMSS;

52 (i) I consulted Kelly Services, a multinational Human Resources company, to review the salaries and corresponding job descriptions of FMSS staff to see if it was in line with the market rates at the time. In an sent on 26 July 2012 at 10:57am from Patricia Wee-Windsor, the Corporate Affairs Director of Kelly Services to me, she said: We refer to your request to review the salaries & corresponding job descriptions provided by your vendor to determine if it is in line with the market. Based on the job descriptions provided, the salaries indicated in the proposal to Aljunied-Hougang Town Council are generally acceptable and within range of market norms. However to be market competitive and be effective in retaining qualified talent, we would recommend a year end performance related bonus on top of AWS (Emphasis added) (j) I informed Anthony Teo, Pritam, Faisal and David of the response from Kelly Services through my sent on 1 August 2012 at 1:39pm and also said that we would be using the said response from Kelly Services as additional support for the recommendation to AHTC to award the tender to FMSS at the rates FMSS had asked for. (k) In the course of this entire tender review process, I had also made comparisons of the MA rates charged by FMSS (for the first year of the 3 year contract) with the range charged by MAs in other TCs through informal verbal inquiries, and found FMSS rates to be within the range, though at the higher end In light of all the measures taken by AHTC in relation to the tender and award of the 2nd MA and 2nd EMSU as above described, I believe that FMSS had satisfied the tender requirements and evaluation criteria for the 2nd MA and 2nd EMSU contracts such that AHTC was not in breach of any TCA or TCFR rules in the appointment of FMSS for the same On conclusion of the review conducted by RSM Ethos' representatives during which they perused documents, asked questions and even sat in on one of the tender interviews with FMSS, RSM Ethos published an Internal Audit Report dated 6 March 2013 (the RSM Internal Audit Review ) in which an overall assessment of the process of the appointment

53 of FMSS as MA was A. According to the risk rating matrix in the RSM Internal Audit Review, this meant that on an overall basis, an appropriate control environment was in place that gave reasonable assurance that internal controls are adequate in addressing the inherent business risks. RSM Ethos made the following observations on its review of the tender process: Our overall assessment of the review was A. The tender and award process for the appointment of the Managing Agent services for AHTC was generally in compliance with the tender procedures as specified under Paras 76 to 87 of the Town Council Financial Rules. Although only a single tender was received, AHTC has engaged external consultants to review through their tendering process and the reasonableness of the rates quoted by the sole tender to ensure that tender was transparent, open & fair as well as represented value for money... A copy of the RSM Ethos Internal Audit Review can be found at S/No of the CB I note that the KPMG had acknowledged the RSM Ethos Internal Audit Review at paragraph of its Report although it was of the view that the findings in RSM Ethos s report were limited to the procedural propriety of the tender process, and did not extend to the substantive issue of whether the prices proposed by FMSS were appropriate and reasonable. I disagree. In this regard, I refer to paragraphs 98 to 108 of Part 3 of AHTC s Response to the IP wherein the reasons for disagreeing with this statement were set out and particular reference was made to the substantive issue of whether the prices proposed by FMSS were appropriate and reasonable On 23 April 2012, AHTC had invited quotations from 3 audit firms, namely BDO Raffles, Foo Kon Tan Grant Thornton and RSM Ethos for the purposes of conducting an audit of the tender process and award of the 2nd MA contract. AHTC received quotations from BDO Raffles and RSM Ethos and chose to engage RSM Ethos as their proposal best suited AHTC s requirements and they also submitted the lowest quote. The scope of work to be covered by the auditors were described as follows: (a) To review the tender procedures and procurement practices in place relating to the calling of the tender for MA services for the period of 2012 to 2015 for AHTC to assess its compliance with the tender procedures in the tender exercise; (b) To consider whether the current procedures and practices were adequate to ensure that the procurement was in the ordinary course of business and that there were

54 adequate controls to ensure that the award of the 2nd MA contract was conducted in an unbiased, objective, fair and transparent manner; and, (c) To assess whether the tender evaluation and award of tender was conducted in accordance with the existing requirements and practices of good corporate governance In view of the above, it is clear that RSM Ethos mandate was to audit both the procedural and substantive aspects of the tender process and award of the 2nd MA contract. This is set out in section C of the RSM Ethos Internal Audit Report found at S/No of the CB As part of the audit process, RSM Ethos examined the tender procedure and evaluation process. RSM Ethos also attended the T&C Committee s meeting with FMSS on 21 July After considering the applicable legislation (e.g. the TCFR), policies and procedures, RSM concluded the following in its Internal Audit Report dated 6 March 2013: Our overall assessment of the review was A. The tender and award process for the appointment of Managing Agent services for AHTC was generally in compliance with tender procedures as specified under Paras 76 to 87 of the Town Council Financial Rules. Although only a single tender was received, AHTC has engaged external consultants to review their tendering process and the reasonableness of the rates quoted by the sole tender to ensure that the tender was transparent, open & fair as well as represented value for money (emphasis added) 140. In relation to FMSS rates, it is clear that the T&C Committee was aware of the need to ascertain the reasonableness of the tender rates notwithstanding that FMSS was the sole tenderer. FMSS was queried on the increase in the tender rates and their justification for the same FMSS justification (which AHTC accepted) for the increase in tender rates, amongst others, is set out in brief as follows:

55 (a) Hiring of additional staff FMSS proposed hiring additional technical staff. AHTC consulted with Kelly Services to determine the market rate of the salaries proposed by FMSS; (b) Lift testing fees FMSS had to bear the lift testing fees and there was a drastic increase in the number of lifts in AHTC due to the Lift Upgrading Programme in Hougang SMC at the time; (c) Creation of more offices FMSS required more administrative staff to cater to the additional offices to see to the needs of residents; (d) Lack of economies of scale FMSS could not leverage on economies of scale since other MA Companies had a larger pool of corporate resources and were proving MA services to more than 1 TC; (e) Inflationary pressure and wage growth the annual percentage increase of 6% for the MA fees is similar to the annual increase priced into the CPG Contract Whilst AHTC was able to negotiate with FMSS to reduce its project management fees to 3.5% for all 3 years, AHTC was of the view that the reasons for the increase in rates of MA fees raised by FMSS were justified It is clear from the tender evaluation report dated 2 August 2012 prepared by the T&C Committee and the copies of the Minutes of the 2 tender evaluation meetings of 21 June 2012 and 21 July 2012 attached thereto that notwithstanding FMSS was the sole tenderer, the T&C Committee had looked into whether the tender rates were reasonable and had concluded that they were. The said tender evaluation report states: The Committee noted with some concern the increase in the monthly MA fee, being 17.3% higher than the price tendered by the former Managing Agent of Aljunied Town Council in 2010, after adjusting for equivalent dwelling units. In addition, based on information about market rates charged by MAs for other Town Councils, the rate appeared to be at the higher end of the scale. The tenderer was asked to provide detailed justifications of why the price tendered was value for money for AHTC. The factors were examined in detail as set out in Appendix B, relying on the price breakdown in Appendix D and the additional information from the tender on its pricing basis at Appendix E (emphasis added)

56 A copy of the tender evaluation report enclosing the Minutes of the 2 tender evaluation meetings of 21 June 2012 and 21 July 2012 can be found at S/Nos. 39 and 40 of the CB On this issue of FMSS making the only tender bid, I wish to highlight and draw a parallel comparison from an observation made in the MND Report in relation to PAP TCs which faced a similar situation of only having a sole bidder, viz. AIM: 34. Based on the statements and inputs obtained from the PAP TCs, the Review Team found that the PAP TCs complied with the open tender process under the TCs Act and the TCFR: a) The tender was published in the Straits Times; b) The PAP TCs met the requirements of a minimum 3-week tender notice period. The TCs obtained the necessary approvals for the initial shorter notice period of 2 weeks and subsequent extension by one week (to 21 July 2010); c) The PAP TCs complied with the proper tender approval process under the TCFR; d) While there was only one bid, it is permissible under the TCFR for the TCs to accept the bid as long as it satisfies the tender requirements and evaluation criteria (emphasis added) 146. In view of the above, it can be said that this was the standard to which PAP-held TCs were held to in terms of the tender process. The same standard should therefore be applied to WP-held TCs. KPMG s Observations on the alleged amounts that ought to be recovered 147. The KPMG Report contains a table at paragraph setting out the amount of the various alleged improper payments made by the TC to FMSS. These amounts total $1,518,286 of which KPMG has determined $624,621 as being recoverable in respect of all these payments. The table setting out the alleged improper payments, the impropriety of which is denied, is reproduced from the KPMG Report and summaries of AHTC s responses to the IP, are set out below:

57 Improper Payments Overpayment to FMSS in respect of overtime claims and CPF contributions Amount (SGD) Amount that ought to be recovered (SGD) 8,990 8,990 Overpayment to FMSS for electrical parts 3,720 3,720 Payment to FMSS for electrical parts Payments to FMSS that are purportedly for project management fees, but which are actually covered by managing agent fees paid by the Town Council Payments to FMSS that are purportedly for project management fees, but which are actually in respect of matters that involve a combination of managing agent services as well as project management services Payments to FMSS or FMSI that are unsupported by certifications of services received or contracts Payments to FMSS made in breach of financial authority (namely, without the requisite cosignature of the Chairman or Vice Chairman of the Town Council) Unclaimed liquidated damages under EMSU contract 6,130 Not determinable 608, , ,786 Not determinable 194,759 Not determinable 80,990 Not determinable 3,000 3,000 Total amount determinable 1,518,286 >=624,621 Settlement of breaches with FMSS 250,000 Not determinable Payment to FMSS in respect of overtime claims and CPF contributions of $8, This is addressed in Part 2 of AHTC s Response to the IP from paragraphs 11 to 25, a copy of which can be found at S/No of the CB. Briefly, these alleged overpayments consist of overtime payments and payments made for inspections conducted by FMSS employees during the Chinese New Year ( CNY ) The 2nd MA contract provides that the managing agent shall provide overtime and all direct and indirect costs as required by the performance of the Services The CNY payments relate to services provided by FMSS that required their employees to work during a public holiday. The CNY inspections were specifically requested by the TC due to the high volume of bulky items disposed by the residents and commercial tenants

58 during the festive period. This is reflected in the Chairman s Minutes of Meeting on 5 February 2015 at S/No. 974 of the CB It should be noted that KPMG does not alleged any wrongdoing on the part of AHTC or its Town Councillors in making these payments. I believe that these payments were properly incurred and paid for the reasons as set out in Part 2 of AHTC s Response to the IP. Payment to FMSS for electrical parts of $3, This is addressed in Part 2 of AHTC s Response to the IP from paragraphs 7 to 8, a copy of which can be found at S/No of the CB. Briefly, the TC accepts that there was an overpayment of $3,720 to FMSS due to an oversight. It is not alleged by KPMG that there was any wrongdoing in respect of this payment on the part of AHTC or any of its Town Councillors. Payment to FMSS for electrical parts of $6, This is addressed in Part 2 of AHTC s Response to the IP from paragraphs 26 to 28, found at S/No of the CB. Briefly, AHTC does not dispute KPMG s findings at paragraph of the KPMG Report. There is no dispute that the electrical parts were provided. What appears to be in issue is how much the TC should have paid for these electrical parts. KPMG has not provided AHTC with details as to how it arrived at the amount of $6,130 as set out in the table at of the KPMG Report. It should be noted that KPMG does not allege that the payments were excessive In this regard, AHTC had reviewed numerous payments in this category and found that the amounts as charged by FMSS for the electrical parts were reasonable as most of the payments relate to items of low value such as fluorescent light tubes. It should also be noted again it is not alleged nor do the Town Councillors admit that there was any wrongdoing in respect of this payment. Payments to FMSS for project management fees of $608, This is addressed in Part 1 of AHTC s Response to the IP from paragraphs 12 to 28, found at S/No of the CB. Briefly, KPMG alleges that there is an overlap between the scope

59 of Basic Services and Project Management Services that are provided by the MA based on the Specifications in Clauses 2.2 and 2.3 of the 2nd MA Contract. This is set out at of the KPMG Report. These allegations are denied AHTC does not agree that the payments made to FMSS under this category of payments were covered under the scope of Basic Services under the 2nd MA Contract. KPMG has set out 99 invoices in Appendix H.1 of the KPMG Report which it concludes should be covered under Basic Services under the 2nd MA Contract instead of being additionally paid for as part of Project Management Services. These 99 invoices relate to 6 projects which are set out at paragraph 18 of Part 1 of AHTC s Response to the IP. The TC is of the view that these 6 projects fall under the scope of Project Management Services as described in Clause 2.3 of the 2nd MA Contract. This is elaborated in greater detail at paragraph 19 of Part 1 of AHTC s Response to the IP Hence, the Town Councillors disagree with KPMG s drawing a distinction between Routine Maintenance and Ad-Hoc Maintenance whilst ignoring the overlap between the scope of Basic Services and Project Management Services. The TC regards this distinction between the 2 forms of services as too simplistic and its constrained interpretation of the Specifications of the 2nd MA Contract The 2nd MA Contract does provide that certain categories of work can fall under the scope of either Basic Services or Project Management Services. Hence, the TC took the view that a reasonable interpretation of the overlap of the 2 forms of services was intended to give the TC the flexibility to decide which type of the 2 services (i.e. either Basic Services or Project Management Services) would be engaged Further, it is clear that the abovementioned 6 projects involved work that was either structural or technical in nature or were of a larger scale based on the number of residential and commercial units involved. It was not possible for AHTC or FMSS to factor the cost of such projects into the lump sum price for providing Basic Services as there was no means to determine at the material time if such projects were going to be commenced during the term of the MA contract. In these circumstances, the TC is of the view that it was entitled to categorise the work of FMSS in relation to these projects as part of Project Management

60 Services. As such, this category of payments made to FMSS is proper and no issue of the payments being recoverable should arise for this category of payments. Payments to FMSS for project management fees of $611, This is addressed in Part 1 of AHTC s Response to the IP from paragraphs 29 to 34 found at S/No of the CB. Briefly, KPMG from paragraphs to of the KPMG Report, alleges that there were 83 occasions where AHTC was invoiced for project management fees where the subject matter of these invoices was in fact a combination of Project Management Services as well as Managing Agent Services. KPMG then alleges that since the Managing Agent Services were misclassified as Project Management Services, there is an element of overpayment by the TC to FMSS. However, KPMG could not ascertain the specific amount that is allegedly recoverable The invoices in question are set out in Appendix H2 of the KPMG Report (found at S/No of the CB) and relate to 4 projects of high value. Similar to the 99 invoices in relation to the projects in category of payments in the previous category above, AHTC is of the view that these 83 invoices are within the scope of Project Management Services as determined by the description and scale of the works involved Additionally, it is worth noting that 2 of the 4 projects were projects entered into by ATC under the PAP and taken over by AHTC after the 2011 GE. It is clear that ATC did not consider these 2 projects to be part of Basic Services that were provided by the MA. ATC had classified the MA s work on these 2 projects as part of additional Project Management Services and had paid for them separately apart from Basic Services. Copies of the relevant documentation such as letters and invoices exchanged between ATC / AHTC and CPG can be found at Tab D of the Bundle found at S/No of the CB In view of the above, this category of payments made to FMSS are proper. Payments to FMSS or FMSI of $194, This is addressed in Part 1 of AHTC s Response to the IP from paragraphs 35 to 44 found at S/No of the CB. KPMG, from paragraphs to of the KPMG Report, alleges that 4 invoices were issued by FMSS for MA services in June 2011 and by FMSI

61 for EMSU services from May 2011 to June 2011 and that payments on these invoices were made by AHTC even though there was no certification that the services had been satisfactorily delivered in conformity with the applicable contracts. Copies of the 4 invoices can be found at Tab E of the Bundle at S/No of the CB It should be noted that KPMG does not allege that there has been any overpayment or a repeat payment to FMSS or FMSI in relation to these 4 invoices. In relation to invoice no. FMSS/0601, the crux of KPMG s finding is that there was no supporting contract to cover the provision of MA services by FMSS in June However, KPMG does not deny that the MA services were provided by FMSS in June The 4 invoices were incurred during the transition period between May to July 2011 after the 2011 GE when ATC was being handed over to the WP to form AHTC. This is reflected in the FMSS Letter of Intent dated 15 June In respect of the invoice no. FMSS/0601, it is clear that this was payment for MA services provided by FMSS to HTC as set out in paragraph 2(a) of the FMSS Letter of Intent dated 15 June In relation to the 3 invoices relating to payment for EMSU services, AHTC had provided KPMG with a log of complaints attended to by FMSI as the EMSU service provider for the period of May 2011 to July 2011 to show that EMSU services were provided. This log of complaints can be found at Tab G of the Bundle found at S/No of the CB. KPMG does not say that the EMSU services were not provided or that AHTC has suffered loss. The log of complaints will show the status of the complaint. If the status of the complaint is marked closed, it indicates that the complaint was adequately and satisfactorily addressed by FMSI Hence, based on the log of complaints and the signatures of acknowledgment found on the 4 invoices, it cannot be said that there was no supporting documentation to show that the services or work was satisfactorily provided or done or that the terms of the relevant contracts were complied with. In view of the above, this category of payments was not improper and no issue of the payments being recoverable should arise.

62 Payments to FMSS of $80, I note that KPMG had identified 5 payments for the total sum of $80,990 at paragraph of the KPMG Report as alleged improper payments to FMSS that are recoverable as the relevant cheque(s) and bank transfers were made to FMSS without the cosignatures of the Chairman or Vice-Chairman of the TC. I also further note that despite having identified these 5 transactions, KPMG nevertheless concluded at paragraph that the extent to which any of the $80,990 is recoverable is not determinable for the reason that there are insufficient records to verify whether the services were satisfactorily delivered in conformance with the relevant contracts. I disagree with KPMG s observations Notwithstanding the standing instruction for all payment to FMSS were to be co-signed by the Chairman or Vice-Chairman, the said five transactions above were not improper payments made to FMSS even though they were not co-signed by the Chairman or Vice- Chairman. My reasons for saying so are set out in Part 2 of AHTC s Response to the IP and I make particular reference to paragraphs 29 to 41 therein and provide a summary in the following paragraphs. A copy of Part 2 of AHTC s Response to the IP can be found at S/No of the CB I do not agree that these payments to FMSS without the co-signature of either the Chairman or Vice-Chairman were improper payments. It should be noted that the rationale for the standing instruction was to mitigate the potential conflict of interest which could arise when the directors of FMSS (i.e. Mr Loh and Ms How) approved and signed off on payments to FMSS. Further, Rule 33 of the TCFR effectively says that the Chairman or Vice-Chairman only has to sign off on transactions above $50,000. I believe that the standing instruction was going one step further by making it compulsory that the Chairman or Vice-Chairman had to sign off on all transactions with FMSS regardless of the amount KPMG s claims are wholly misconceived. The 2nd MA contract was for the period of 15 July 2012 to 14 July 2015 but the five transactions in question were made between 14 July 2015 and 21 October Therefore, the said five transactions were made when FMSS was no longer the MA of AHTC. FMSS s directors were therefore no longer cheque signatories for AHTC.

63 Mr Loh had relinquished his role as the secretary of AHTC with effect from 1 June Vincent had taken over the role of Secretary of AHTC from Mr Loh and replaced him as an authorised signatory for the purposes of Rule 33 of the TCFR. A copy of the said to MND informing MND of the same can be found at Tab P in the Bundle at S/No of the CB The five transactions were signed by Vincent and Ms Winnie Tan, who was the Deputy Finance Manager at that time. Both of them were authorised bank signatories of AHTC. They were also not directors or shareholders of FMSS. As each of the said five transactions is below the sum of $50,000, Vincent and Winnie Tan were authorised to sign off on these transactions under Rule 33 of the TCFR as Vincent was the Secretary of the AHTC and Winnie Tan was an officer authorised by the TC to sign off on cheques that did not exceed the sum of $50, The KPMG Report does not dispute that the five transactions were executed in accordance with Rule 33 of the TCFR. Instead, KPMG takes issue that these transactions were executed in breach of the standing instruction that all payments to FMSS were to be co-signed by the Chairman of Vice-Chairman of AHTC (see paragraph of the KPMG Report) The purpose of the Standing Instruction being put into place by AHTC was to address the potential conflict of interest which could arise if the directors of FMSS (i.e. Mr Loh and Ms How) who were also managing AHTC, were to approve payments to FMSS. In any event, the five transactions occurred at the time when the said potential conflict of interest no longer existed as FMSS ceased to be AHTC s MA with effect from 14 July It is significant to note that KPMG did not find any transactions that were in breach of Rule 33 of the TCFR or the Standing Instruction before 14 July 2015 when FMSS was the MA of AHTC. Alleged Unclaimed liquidated damages under EMSU contract of $3, This is addressed in Part 2 of AHTC s Response to the IP in paragraph 9 can be found at S/No of the CB. In brief, AHTC accepts that AHTC is entitled to claim liquidated damages amounting to $3,000 under the EMSU Contracts for the 3 cases where the time

64 for the lift rescue exceeded 25 minutes. However, it is not alleged nor do the Town Councillors accept that there was any wrongdoing in respect of this payment. Settlement with FMSS 178. This is addressed in Part 2 of AHTC s Response to the IP from paragraphs 42 to 55. This category of payments relates to FMSS agreement to pay the sum of $250,000 to AHTC as liquidated damages for lapses in relation to corporate governance and compliance with the TCA and TCFR that surfaced during the audit of AHPETC by the AGO in In view of the AGO s findings as set out in the AGO Report of 6 February 2015, AHTC was of the view that FMSS, as its MA, should bear some measure of responsibility for these lapses. As such, discussions were held between Mr Loh and myself to discuss how FMSS should bear some measure of responsibility for the aforesaid lapses. On 17 March 2015 after several discussions, Mr Loh, on behalf of FMSS, agreed to pay the sum of $250,000 as liquidated damages to AHTC. This agreement is recorded in AHTC s letter to FMSS dated 17 March 2015, found at page 69 of the Bundle of Documents at S/No of the CB FMSS did not issue a credit note or adjusted the billings to take into account the liquidated damages agreed upon. Sometime in May 2015, FMSS had put in a claim for the lump sum fee for Basic Services under the MA contract and presented a cheque for my signature. I ed Mr Loh and Mr Yeo Soon Fei of FMSS on 10 June 2015 at 11:24 am to inform them that the claim should be amended to reflect the $250,000 payable to AHTC as liquidated damages as agreed on 17 March A copy of this can be found at page 71 of the Bundle of Documents at S/No of the CB Before this matter could be resolved, Mr Loh suddenly passed away on 27 June AHTC subsequently issued an invoice to FMSS dated 16 July 2015 for the sum of $250,000 being liquidated damages imposed for lapses noted in the AGO Report dated 6 February AHTC also paid FMSS the lump sum fee under the 2nd MA Contract for the month of March 2015 after deducting the $250,000. A copy of the invoice to FMSS dated 16 July 2015 and the cheque payment voucher dated 22 July 2015 can be found at

65 pages 74 to 76 of the bundle at S/No of the CB. AHTC took the view that FMSS was bound by the agreement on 17 March AHTC took the view that the settlement sum of $250,000 is reasonable and justified for the following reasons: (a) There is no provision in the 2nd MA Contract for liquidated damages for shortfall in the MA services provided. AHTC therefore has no contractual claim against FMSS for losses which it can prove. (b) AHTC had not suffered any specific loss arising from FMSS shortfall in the MA services provided as found by the AGO It should also be noted that AHTC did not waive its rights to make any further claim against FMSS for any shortfall of MA services that were not identified in the AGO Report. In this regard, there was no improper waiver of AHTC s rights to recover damages from FMSS. The alleged conflict of interest in relation to FMSS appointment as MA 184. The KPMG Report alleges that AHTC did not adequately address the conflicts of interest in the appointment of FMSS. KPMG s allegation is set out below: (a) The appointment of FMSS would involve Mr Loh and Ms How taking key management positions in AHTC; (b) There was no record of any meaningful discussion amongst the Town Councillors of the conflicts of interest or the necessary safeguards in respect of the same; (c) The fact that FMSS comprised of key staff familiar with estate and township management with proven track records was a weak basis for claiming FMSS s competency and suitability for running the larger AHTC; and, (d) AHTC did not go through a process to independently or objectively assess the ability of FMSS to provide the necessary service levels.

66 My response to KPMG s allegation is set out in the following paragraphs The key personnel of FMSS had proven track in the area of township management. As can be seen in the handouts that the MPs were provided at our meeting with FMSS in early June 2011 where a presentation was given of their proposal to be appointed as MA (see paragraph 58 above), the handouts set out FMSS organisation chart, company profile, and key personnel which included each personnel s areas of expertise, awards, and membership with the respective accreditation boards in their fields. This material would show that FMSS key personnel had decades worth of experience in their respective fields. A copy of the handouts which I received during this meeting can be found at S/No of the CB. Further, they had proven track records in their ability to run an oppositionheld TC which is of a totally different character from that of a PAP-held TC. Mr Low and myself personally observed this ourselves in working with people like Ms How in their years of managing HTC AHTC had provided Quarterly Reports to MND on the MA contracts during the time WP managed AHTC. The significance of making such reports to the MND is appreciated when one considers context in which this practice was first instituted by MND. On 19 April 1999, MND sent a letter to the Secretaries of all TCs. As is apparent from this letter which is set out in full below, the purpose of requiring TCs to make such quarterly declarations was to ameliorate problems that may arise from any possible conflicts of interests by having the TCs make full disclosure to the MND of projects or works that are awarded by the TC to the MA: 19 Apr 99 Secretaries, Town Councils (see distribution list) MANAGING AGENTS PARTICIPATION IN THE TENDER FOR TOWN COUNCILS PROJECTS In Sep 95, the Town Councils Financial Rules (TCFR) were amended to address the possible conflicts of interest when a Town Council (TC) s Managing Agent (MAs) participates in a tender exercise for projects by the same TC. 2 To ensure there is full transparency in such projects/works awarded to the MAs, my Ministry would like the TCs to submit quarterly reports on the details of tenders awarded in the format attached in Annex A. Please submit your returns by the end of Apr, Jul, Oct and Jan every year.

67 Yours faithfully Lau Tze Wei (Miss) 2 Planning and Development Executive/Housing For Permanent Secretary (National Development) 188. The following details that are salient to this matter were declared in some of AHTC s Quarterly Reports to MND, copies of which can be found at S/No of the CB: (a) In the Quarterly Report on Award of Tenders to Town Council s Managing Agent for the Period from 1 Jul 2011 to 30 Sep 2011, it was declared that FMSS had been awarded the MA Contract on 15 July 2011 for a tender price of $432, and that the contract was appointed due to urgency of time ; and, (b) In the Quarterly Report on Award of Tenders to Town Council s Managing Agent for the Period from 1 July 2012 to 30 Sep 2012, it was declared that FMSS was awarded a contract to provide MA services on 3 August 2012 for a tender price of $16,752, and a contract to provide EMSU services also on 3 August 2012 for a tender price of $110,356 per month MND did not raise any objections in relation to the abovementioned contracts being awarded to FMSS as declared in the Quarterly Reports Further, I note the following comments made in Parliament on 13 May 2013 by Mr Khaw, the then Minister of National Development that the TCA was crafted by the MND to recognise the political nature of TCs and that in the same spirit, when administering the Act [i.e. the TCA], MND has given latitude to MPs to exercise autonomy in judging how best to achieve their agenda and advance their residents interests. Mr Khaw even went further to give an example that Town Councils may, as they see fit, engage those who share their political cause or are affiliated to their parties. In particular, the Town Councils are able to transact with persons or entities associated with political parties. Over the years, many Town Councils have exercised this flexibility. I set out the relevant extract of Mr Khaw s speech as follows: Second, the party political nature of Town Councils. Paragraphs 3 to 7 of the main Review Report provide useful background on why Parliament originally set up Town Councils in 1989, and on the strategic intent behind the Town Councils Act. Then MND

68 Minister, Mr S Dhanabalan took the Bill through the House in June Then 1 DPM Goh Chok Tong set out clearly the purpose of forming Town Councils. I advise Members to read the Hansard records for a thorough understanding of this piece of legislation. Prior to 1989, all the common areas of HDB estates were maintained centrally by HDB, a Government statutory board. However, Parliament decided to give MPs more authority and responsibility over the HDB estates in their constituencies, in order to strengthen the nexus between the residents and their elected MPs. The strategic intent was to bring home to the MPs that how they manage and run their Town Council would affect their electoral fortunes at the next election. This would enhance accountability, push MPs to focus on what mattered to the residents, and in turn, encourage voters to scrutinise more closely the capabilities and the track record of election candidates. This would ultimately benefit both the voters and the residents. In line with this objective, the MND crafted the legislation to recognise the political nature of Town Councils. As the Review Team noted, and I quote, "The intent is to give the elected MPs as much latitude as possible to run the Town Councils within broad and general rules laid down to ensure proper governance and safeguard public interest." In the same spirit, when administering the Act, MND has given latitude to MPs to exercise autonomy in judging how best to achieve their agenda and advance their residents' interests. For example, Town Councils may, as they see fit, engage those who share their political cause or are affiliated to their parties. In particular, the Town Councils are able to transact with persons or entities associated with political parties. Over the years, many Town Councils have exercised this flexibility. A copy of the abovementioned Parliamentary Report can be found at S/No of the CB As such, I find it difficult to understand why KPMG would consider this an issue that should merit legal action being commenced against the 1st to 5th Defendants, especially given the above remarks made by the then Minister of National Development and that MND had not raised any objections to AHTC despite the Quarterly Reports that AHTC had made. The fact of the matter is that the 2nd MA contract was published by way of an open tender and ultimately, AHTC received only one bidder from that of FMSS. It was only later, sometime in or around 2015 that the issue of the FMSS MA rates was raised in Parliament by Law Minister Mr K. Shanmugam. The relevant Parliamentary Reports can be found at S/Nos. 1076, 1092 and 1093 of the CB In relation to the alleged conflict of issue raised by KPMG as a problem, the KPMG Report also takes issue with alleged control failures in AHTC that have created a flawed system of payment to FMSS and FMSI. These conclusions in the KPMG Report are denied Paragraphs to of the KPMG Report alleges that the payment process was undermined by alleged conflicted persons like Ms How or Mr Loh being the other co-

69 signatory because it is unlikely that the Chairman or Vice Chairman of the Town Council would have been independently informed (other than by Conflicted Persons) as to whether the earlier certifications in respect of FMSS invoices were appropriate or justified. A further reason was also given at paragraph of the KPMG Report that the continued involvement of conflicted persons in the payment process as co-signatory gives rise to the potential for influence being exercised by such individuals over the decisions and judgments of the Chairman or Vice-Chairman of the Town Council to perform meaningful review of the documentation presented to them being compromised when such documentation was prepared and approved by the Conflicted Persons The abovementioned concerns raised in the KPMG Report are speculative and without basis. The fact that one such conflicted person (to borrow the term used in the KPMG Report) is involved in one stage of the payment process does not render the entire process ineffective. This is not sensible because the converse means that a payment process that only involved non-conflicted persons would certainly lead one to the conclusion that all work was done for which payment should be made. Assessing an MA who has a wide range of work and responsibilities go beyond documentary proof of its work. Reliance on reviewing the supporting documentation prepared by the MA without more in assessing whether the MA has carried out its work is simplistic and will only be a paper exercise Additionally, the abovementioned concerns raised by KPMG are also based on an inadequate understanding of how an MA model works: (a) When a TC engages a MA, all of the TC s operational works are essentially outsourced to the MA. This is evident in Clause 1.3 of the 1st MA contract which provides that the MA is for the Provision of Professional and Technical Persons. A copy of the contract can be found at S/No. 20 of the CB. (b) As such, the MA s employees, who would include senior management staff such as the conflicted persons, will inevitably be involved at some stages of processing the payments made by the TC to the MA itself. It is misconceived for KPMG to attack this arrangement at paragraphs of the KPMG Report by saying that the Conflicted Persons [which] held key functions in respect of the Town Council s payment approval processes [ ] were in many respects given the power in effect to approve payments to themselves because this arrangement is simply a by-

70 product of the MA model which AHTC adopted as guided by the industry practice of TCs. (c) It was reasonable for the TC to rely on such a system because having outsourced its work to the MA, it was the MA who would be in a position to confirm and justify whether the works for which payment is due were indeed carried out. In fact, it is part of their job to do so. The MPs could also assess the quality of the MA s employees working for AHTC as we were often working and interact with them on a regular basis. The MPs also kept in close touch with their residents and community leaders and would know from their feedback if the MA was doing a good job or not as far as the residents were concerned Further, where the 1st and 2nd MA Contracts are concerned, AHTC had a contractual obligation to make fixed monthly payments under these contracts which did not have a clause for liquidated damages or variable payment depending on their performance. As such, it is difficult to see how the officers of AHTC who are approving payments to FMSS may exercise any preference towards FMSS in so doing given that AHTC has a fixed contractual obligation to make these monthly payments. The MA Contracts with FMSS were based on the same contractual terms adopted by ATC with CPG. FMSS simply adopted the same contractual document used by CPG in its MA Contract with ATC. Similarly, for the 2nd MA Contract, KPMG observed at its report at paragraph that the Town Council did use the CPG Contract terms more or less verbatim for the Second Managing Agent Contract I note that it was observed at paragraph of the KPMG Report that the approval of payments does not relate only to the calculation of the contractual sum but also matters such as the satisfactory rendering of services in accordance with the contract as required by TCFR Rule 61(1) and the timing of the payments. Such approval from the TC was indeed given on procuring the necessary certification that services were rendered satisfactorily before payment is made through AHTC s system of payment processes. I understand that this payment process is dealt with in greater detail in the AEIC of AHTC s current General Manager, Mr Vincent Koh ( Vincent ).

71 In any case, there were sufficient safeguards put into place in relation to the manner in which AHTC made payments to FMSS as its MA. Firstly, it is an industry practice of TCs that employees of the MA would approve payments to the MA on behalf of the TC. To illustrate, copies of documents where Jeffrey (who was both the Managing Director of CPG and Secretary/General Manager of ATC) put up CPG s claims to ATC and then approved them as Secretary of the TC can be found at S/No of the CB (Tab 27 of the Bundle of Response) In this regard, AHTC adopted this same process but went above and beyond by requiring an additional step that all cheque payments to the MA regardless of amount to be signed by the Chairman or Vice-Chairman together with the Secretary of Deputy Secretary or 1 Appointed Officer. This step was formalized in the standing instruction given at the 3rd AHTC Meeting on 8 September I set out the relevant portion of the Minutes of this Meeting, a copy of which can be found at S/No. 879 of the CB, where the authorized signatories and their respective authority were set out: 3.3. Change of Bank Signatories As Mr Jeffrey Chuan [sic] Leong Chuan was no longer the Secretary of the Town Council, the Meeting resolved to remove Mr Jeffrey Chua as the bank signatory and approved the authorized bank signatories under the Town Council Financial Rules 33 with immediate effect as follows: Authorized Signatories Financial Limits Amount not exceeding $50,000 (Group A) Any Amount (1 from Group A and 1 from Group B) Group A Secretary Mr Loh Chong Meng Deputy Secretary Ms How Weng Fan Appointed Officers Mr Chng Jong Ling Mr Koh Weng Kong Group B Chairman Ms Lim Swee Lian Sylvia Vice-Chairman Mr Low Thia Khiang Mr Yaw Shin Leong Authorized Bank Signatories Secretary+ 1 Appointed Officer Chairman or 1 Vice-Chairman + Secretary or Dy Secretary or 1Appointed Officer Since those in Group A were all Directors of the Managing Agent, the Meeting resolved that all cheque payments to the MA must be signed by the Chairman or Vice-Chairman together with the Secretary or Dy Secretary or 1 Appointed Officer. (emphasis added)

72 AHTC s Supervision of the MA 200. The MPs had conducted checks on the MA s work from time to time. I had also presented to Parliament previously on 12 February 2015 a table summarily describing the various scopes of work in which the elected Councillors worked in accordance with and satisfied themselves as to the MA s performance. The aforesaid table can be found Annex C of at serial no of the CB. Copies of documents showing that MPs and other Town Councillors instructing, checking, questioning or monitoring the MA s work can also be found at S/No of the CB (see Tab 29 of Bundle of Response). These documents specifically demonstrate that: (a) Instructions were given to FMSS (i.e. the finance team) to focus on the work required for the AGO Audit during the TC Meeting on 8 May This is recorded in the Minutes of the 8 May 2014 TC Meeting; (b) I queried and disapproved of the budget for lift cyclical works sought by FMSS by way of my sent on 20 June 2015 at 11:08am; (c) Pritam had sought clarification from FMSS on tender specifications in his of 17 September 2014 sent at 10:14am; and, (d) In an sent on 15 September 2014 at 4:52pm to Mr Loh, I asked him for more information in relation to the signing of a cheque for FMSS s overtime claims for July Where estate management is concerned, AHTC also had the Integrated Maintenance Management System ( IMMS ), which was a centralised computer system that was operated by AHTC s Property Managers and Property Officers. This system allowed AHTC MPs as well as AHTC staff to record feedback, complaints or requests from residents received via telephone or through the MPs during their walkabout sessions around their respective estates. There were occasions where I would make my own entries into the IMMS to record any estate matters that required to be followed-up. In the IMMS system, there is a column that reflects the status of a particular matter by showing whether it is pending or closed or resolved. Matters that had been closed or

73 resolved would mean that the MA has dealt with the matter and no further action is required. A copy of a printout from the IMMS system can be found at S/Nos to 1424 of the CB In view of the above, it is difficult to understand how the KPMG Report could find that there was no meaningful oversight as to the payments made to third party contractors for work done and/or services rendered. In fact, the KPMG Report observes at paragraph in relation to the payments made to third parties (other than FMSS) that in most instances, it is clear that services have been rendered or goods supplied I also do not agree with AHTC s claim (at paragraph of the Statement of Claim in Suit 668) that I had failed to conduct proper checks before signing off on the cheques in favour of FMSS. I disagree. I understand that Vincent deals with the payment processes of AHTC in greater detail in his AEIC. I will summarily set out my understanding of AHTC s general payment process briefly as follows: (a) At the material time, the Finance Department used a J.D. Edwards ( JDE ) Accounting System which maintains periodic budgets for various types of work. For example, the amount payable for cleaning or maintenance services as Routine Works for a particular year will be fixed and entered into the system such that excessive payments would not be approved. This served as an internal check that no further payments could be made to third parties for Routine Works and thus prevented overpayments from occurring. (b) A Work Order is a document used for routine works pursuant to existing term contracts. Where non-routine works are concerned or the work required is outside the scope of existing contracts, Written Instructions are needed to commence such works. Upon the contractor s proper performance of work, the relevant Property Officer would verify that the works are completed before certifying the same by signing the Work Order which will later be checked by a Property Manager. Thereafter, the contractor would issue an invoice to AHTC with all supporting documents to make a claim for payment. The documents submitted by the contractors will then be processed for payment by the Admin/Finance Department who will check that the invoice matches the Work Order before the

74 necessary documents such as the voucher journal report, payment vouchers and cheques are prepared. These supporting documents will then be presented to the relevant signatories, which include myself as Chairman, for signing. Such signatories would review the documents given before signing on the cheques. (c) At this stage when the cheques are presented to me for signing, they would come with the supporting documents as abovementioned which show the certification by staff that goods and/or services were satisfactorily received and certifications by the finance staff that the claims were in order. In some instances, photographs of work done were attached. Generally, I would check whether the sums tallied with the cheque amount. For the large projects, the external architect and quantity surveyor would certify that the amounts were payable. On certain occasions where I was not satisfied with the claims, I would not sign the cheque until my queries were answered. Payments to LST Architects 204. It is alleged by KPMG at paragraph of the KPMG Report that AHTC had breached Rule 74 of the TCFR by appointing LST over DM for 7 out of 10 constructions projects which resulted in AHTC having to pay more than it should for the same. This is denied. I refer to and adopt paragraphs 45 to 56 of Part 1 of the AHTC Response to the Independent Panel which can be found at S/No of the CB. I set out below a summary of the points set out in Part 1 of AHTC s Response Sometime in September 2012, AHTC invited tenders for the appointment of consultants to a panel for a period of 3 years for the provision of consultancy services at pre-agreed rates based on the value of the awarded project. This decision to call a tender to appoint consultants to a panel was on the MA s recommendation to the TC which I approved. Appointing a panel of consultants was a system used by ATC when it was under the management of the PAP. It had appointed DM and 3 other consultants to a panel for the period of 1 April 2009 to 31 March This past practice of ATC had not been questioned. The various letters of appointment and awards of projects to DM by the ATC can be found at S/Nos. 106, 109 to 112 of the CB.

75 LST and DM were the only 2 consultants to submit tender bids for appointment to the panel. The evaluation of the 2 tender bids were thereafter subject to the T&C Committee for evaluation. After the tender process, AHTC decided to appoint LST and DM to the said panel of consultants for a period of 3 years. Upon being appointed to the Panel of Consultants, AHTC thereafter engaged either LST or DM to provide consultancy services for various projects. Such decisions on whether to award LST or DM from the panel were recommended by the MA and approved by me as Chairman. Copies of the Tender Evaluation Report dated 7 November 2012, the Appointment Agreements for LST and DM respectively (the Appointment Agreements ) and the Minutes of the 14th TC Meeting ratifying the appointment of LST and DM to the Panel of Consultants can be found at S/No. 51 and 907 of the CB By entering into the Appointment Agreements with consultants selected pursuant to a tender, the requisition of such consultants services at the pre-agreed rates from time to time under the Appointment Agreements was akin to instructing work under a contract that is already in effect. The appointment of consultants pursuant to a tender is in compliance with the TCA and TCFR which do not prohibit the use of a panel. KPMG s conclusions on this issue are misconceived. Why LST was chosen over DM 208. LST was chosen over DM for 7 out of 10 Projects due to AHTC s poor experience with DM at that time. AHTC found DM to be inefficient and passive, thus causing delays in projects to the detriment of the residents For example, at the 15th TC Meeting on 14 February 2013, Pritam had requested the MA to give DM an ultimatum to expedite the plan submission and preparation of tender. Copies of the Minutes of the 15th TC Meeting and the aforesaid various minutes of meetings as recorded by DM can be found at S/Nos. 913, 950, 961, 964, 969, 972, 976 of the CB In a similar vein, I note based on the records of ATC that ATC had awarded a contract to a contractor even though it is not the lowest bid. I refer to the Minutes of the 4th Meeting of ATC for the term 1 July 2006 to 30 June In the Minutes at page 6, it states that a contract was awarded for construction of elderly and senior citizens corner and

76 upgrading of existing children playground to a contractor who was the 3rd lowest tenderer but with the highest play value per equipment for Block 622/623 Bedok Reservoir Road. ATC had therefore awarded the contract for reasons other than the price. This is similar to AHTC s reasons for awarding the 7 projects to LST. I see no difference in the approach taken. A copy of the Minutes of the 4th Meeting of ATC is exhibited as TAB 4 of SL-1. Issues in Suit I note that PRPTC had made several claims in Suit 716 arising out of contracts that concerned decisions made by the T&C Committee. I understand that this is dealt with in greater detail in Pritam s AEIC and I refer to his AEIC in this regard Significantly, I wish to highlight that PRPTC has made a number of claims which it is not entitled to as they arise from a time period when PE was not a part of AHTC. My solicitors will submit on this further I set out below 2 specific instances where PRPTC has no basis to make a claim. PRPTC s Claim in relation to payments made to LST 214. PRPTC s claim under this head is without basis. The architects fees for the bulk of the projects were paid using AHTC s Sinking Funds which were separately accounted for from PE s Sinking Funds. A table of the LST Projects and the source of funds used to pay for these projects is set out below: Source of Funds used for Alleged Additional Payment Contract S/No. Cost of Appointing Routine Number AHTC Sinking LST over DM Funds of Funds AHPETC 1 OT/285(A)/12 $299,087 $299,087-2 OT/285(B)/12 $463,767 $463,707-3 OT/307/13 $183,750 $183,750-4 OT/316/13 $374,745 $374,745-5 OT/322/14 $14,500-14,500 6 OT/303/13 7 OT/331/14 $1,458,711 1,458,711 - Total $2,794,560-14,500

77 As seen from the table which sets out a total of $2,794, as the alleged additional costs of appointing LST over DM, $2,780, was paid from AHTC s Sinking Funds In any event, I am puzzled as to how PRPTC is laying a claim to $2,794,560 paid to LST Architects when it is aware that $2,780,060 of this amount was paid solely out of the Sinking Funds of Aljunied GRC and Hougang SMC and not a cent from the Sinking Funds of Punggol East SMC. For S/Nos. 5 and 6 in the table above which amount to $14,500, the funds used for payment came from AHPETC s Routine Funds. However, LST s fees were wholly charged to Aljunied GRC s Paya Lebar division and not charged to Punggol East SMC. This is illustrated in the document in AHTC s records which show that this amount was not charged to Punggol East s Sinking Fund and a copy is exhibited as TAB 5 of SL-1. PRPTC s Claim for Payments made for EMSU Services provided by FMSS 217. PRPTC cannot make this claim against AHTC as FMSS was never appointed as the EMSU contractor for PE. PE had its own EMSU contractor, namely EM Services, who continued as PE s EMSU contractor even under AHPETC. PE was never charged for the EMSU services provided by FMSS. Auditor-General s Office ( AGO ) Audit Report of AHPETC dated 6 February The Minister of Finance had on 19 February 2014 directed the AGO to audit AHPETC. The AGO Audit Report of AHPETC dated 6 February 2015 concluded, at paragraph 3.14, that taken in totality, AHPETC did not adequately manage the conflicts of interests involved in related party transactions However, I wish to point out that in other AGO Reports between the Financial Years of 2011/2012 to 2017/2018, similar lapses by government agencies or entities were also recorded. For example: AGO Report for FY2011/2012 (the 2011/2012 AGO Report ) (a) A copy of the 2011/2012 AGO Report can be found at serial no of the CB;

78 (b) A recruitment centre related to the Ministry of Defence ( MINDEF ) rejected lowest bidders in quotations for the purchase of customised pens on the basis that the bidders were not able to meet the specified delivery dates for the pens which were urgently needed (see page 11 of the 2011/2012 AGO Report). The amount involved was $5,600; (c) The Ministry of Foreign Affairs ( MFA ) failed to adhere to government procurement procedures and continued to engage the incumbent consultant even when it did not participate in a tender exercise. The mission s actions were perceived as not being fair or transparent (see page 18 of the 2011/2012 AGO Report). The total amount involved was $152,460; (d) The Singapore Prison Service ( SPS ) had irregularities in its procurement and contract management which included inappropriate use of a term contract, questionable quotation practices, overpayment for works and lapses in project management (see page 30 of the 2011/2012 AGO Report). The amount involved was $36,000; (e) The Ministry of Manpower ( MOM ) had awarded a tender to the highest bidder without showing any cost-effectiveness consideration before the award of tender was done (see page 32 of the 2011/2012 AGO Report). The amounts involved ranged from $44,550 to $258,750; (f) The Singapore Sports Council ( SSC ) had weak grounds for waiving competition in a procurement process such as the supplier being the incumbent or having a good working relationship with the SSC (see page 39 of the 2011/2012 AGO Report). The amount involved was $2.96 million; AGO Report for FY2012/2013 (the 2012/2013 AGO Report ) (g) The 2012/2013 AGO Report can be found at 1077 of the CB; (h) MINDEF failed to have adequate oversight over a tender as it was still awarded even though it did not meet the tender specifications. Also, in principle approval

79 was given to one of the tenderers which effectively excluded other tenderers from further consideration (see page 10 of the 2012/2013 AGO Report). The amount involved was $2.03 million; (i) The Ministry of Environment and Water Resources was found to have lapses in controls over payments where invoices were certified for payment when the services billed for had not been fully performed or where payment for goods and services were made before they were due (see page 22 of the 2012/2013 AGO Report). The amount involved was $156,251; AGO Report for FY2014/2015 (the 2014/2015 AGO Report ) (j) The 2014/2015 AGO Report can be found at serial no of the CB. (k) A Citizens Consultative Committee ( CCC ) (which is part of Grassroots and People s Association) had irregularities in procurement and payment processes where related party transactions were involved. CCC members were found to approving awards of 2 contracts to companies while holding senior positions in the said companies. They did not declare their conflict of interest (see page 28 of the 2014/2015 AGO Report). The total amount involved was $148,267; (l) The National Parks Board ( N Parks ) was found to have lapses in management by allowing a consultant to commence services before approval was obtained to call a for a limited tender inviting only the said consultant to bid. There was no assurance that a competitive bid for the tender was obtained (see page 51 of the 2014/2015 AGO Report). The amount involved was $30.18 million; AGO Report for FY2015/2016 (the 2015/2016 AGO Report ) (m) The 2015/2016 AGO Report can be found at serial no of the CB; (n) MINDEF had invested in a United States Real Estate Investment Trust ( US REIT ) exchange-traded fund ( ETF ) without the approval of the SAVER-Premium Fund Board of Trustees ( BOT ) and also failed to obtain approval of the BOT for the

80 appointment of the investment manager who provided the service. The AGO stated that MINDEF has a fiduciary duty to ensure that the SAVER-Premium Fund is properly managed and invested. It has to ensure that investments are evaluated and approved by the appropriate authority as they have a direct impact on the quantum of retirement benefits payable to the members. (see page 14 of the 2015/2016 AGO Report). The amount involved was $50.26 million; (o) The MFA had made overpayments totalling $109,868 as they failed to properly verify invoices to ensure that the rates and amounts billed and paid were correct. The lapses showed that MFA did not have a satisfactory system in place for the management of telecommunication services and the associated expenditure (see page 21 and 22 of the 2015/2016 AGO Report). The total amount involved was $190,612; (p) The Singapore Police Force ( SPF ) under the Ministry of Home Affairs ( MHA ) had overpaid its Volunteer Special Constabulary ( VSC ) officers allowance from 1 April 2008 to 31 December The AGO stated that the Deputy Commissioner of Police and Permanent Secretary (Home Affairs) who approved the revised rate were not authorised under legislation to do so (see page 22 of the 2015/2016 AGO Report). The amount involved was $2.63 million; (q) National Arts Council ( NAC ) had directly engaged consultants to provide additional consultancy services for a construction of a bin centre without first conducting a cost assessment to ascertain the reasonableness of the fee. AGO is of the view that the consultancy fee at 87.2% of the construction costs was exceptionally high (see page 30 of the 2015/2016 AGO Report). The amount involved was $0.41 million; (r) Nanyang Polytechnic ( NYP ) under the Ministry of Education ( MOE ) did not have proper governance framework to manage transactions with its subsidiary. Some of the Board of Governors had vested interests in the subsidiary and were involved in the evaluation and decision-making processes on matters relating to the subsidiary. Its practices reflected a disregard for financial controls and proper governance to manage conflicts of interests since the Board members had placed

81 themselves in positions of actual or perceived conflict of interests and failed to abstain from transactions in which they had a vested interest in (see page 33 of the 2015/2016 AGO Report). The amount involved was $8.38 million; (s) The Intellectual Property Office of Singapore ( IPOS ) under the Ministry of Law ( MINLAW ) was found to have not adhered to procurement guidelines and also awarded tenders to vendors which did not meet the mandatory tender requirements for 2 contracts with a total value of $717,906 (see pages 41 and 42 of the 2015/2016 AGO Report). The total amount involved was $1.57 million; AGO Report for FY2016/2017 (the 2016/2017 AGO Report ) (t) The 2016/2017 AGO Report can be found at serial no of the CB; (u) The Ministry of Health ( MOH ) was found to have inadequate oversight in contract management of a hospital development project and incurred expenditure for site supervisory staff without verifying the need for and reasonableness of the expenditure and also failed to seek approval from its approving authority to incur this expenditure. There was no assurance that MOH had exercised financial prudence in the use of public funds for the expenditure on site supervisory staff (see page 14 of the 2016/2017 AGO Report). The amount involved was $4.08 million; (v) The Singapore Corporation of Rehabilitative Enterprises ( SCORE ) under the MHA was found to have lapses in their financial controls for procurement and payment processes. The AGO found that 10 contracts were not signed by authorised signatories. Additionally, payments totalling $0.71million had been made even though 63 invoices for these payments were not certified by authorised officers. The controls put in place to safeguard SCORE s interests were bypassed. Other lapses include over-specifying requirements, using wrong contractual rates resulting in overpayment to contractors and not using a system that had been available for over 2 years. this caused public funds to be wasted on unnecessary services and overpayments (see pages 31 to 34 of the 2016/2017 AGO Report). The total amount involved was $49.57 million;

82 AGO Report for FY2017/2018 (the 2017/2018 AGO Report ) (w) The 2017/2018 AGO Report can be found at serial no of the CB; (x) MINDEF had made overpayments for grass-cutting services on a monthly basis over a period of 6 years. The errors were not detected by MINDEF s Facilities Management Agent ( FMA ) and Contract Manager, the Defence Science Technology Agency ( DSTA ). The FMA was responsible for checking and certifying that the services had been duly performed and the amounts claimed were correctly computed. DSTA was to check the certified reports submitted by the FMA before paying the contractor. The repeated failures to detect the errors made by the contractor cast doubts on whether the FMA and DSTA had carried out their duties diligently. It was also noted that DSTA did not carry out any checks for the 6-year period as it had never been alerted to such issues by the FMA and was therefore unaware of the overpayments until the AGO s query (see page 18 of the 2017/2018 AGO Report). The amount involved was $0.2 million; (y) The Immigration and Checkpoints Authority ( ICA ) under the MHA had failed to select an operator for photo booths through any competitive process and did not charge the operator rental for using ICA s premises for operating the photo booths. The right to use ICA premises to provide photography services at a charge to members of the public was given to a recreation club via direct allocation (see page 26 of the 2017/2018 AGO Report). The amount involved was $6.10 million; and (z) The AGO had conducted checks on welfare schemes administered by grassroots organisations and found that cash gifts and assistance in-kind given to needy residents were not properly managed. There was no assurance that the welfare assistance was given only to eligible applicants and that the vouchers and groceries were properly accounted for. It was found that there was not documentary evidence of assessment to substantiate the eligibility of the recipients for the assistance in-kind and the cash gifts given out. This was not in compliance with the rules of the CCC Central Development Welfare Fund. Hence, there was no assurance that welfare assistance was given only to eligible applicants (see

83 page 39 of the 2017/2018 AGO Report). The total amount involved was $1,059, I wish to also highlight that the previous management of ATC before 2011 had been in breach of Section 33(9) of the TCA in that they had used $7.5m of its Commercial Properties Sinking Fund for residential purposes instead of from the Residential Properties Sinking Fund. Surprisingly, MND in a letter dated 19 March 2007 to Jeffrey describing the breach as a technical breach and gave the TC 2 or 3 years to rectify the breach: 19 Mar 2007 Mr Jeffrey Chua General Manager Aljunied Town Council [MND Letterhead] Dear Mr Chua ALJUNIED TOWN COUNCIL S FY2005/2006 AUDITED FINANCIAL STATEMENTS I refer to your letter of 19 Jan The rationale for Town Councils to maintain separate accounts for residential and commercial properties is to ensure accountability to residents and shopkeepers respectively for the Service and Conservancy Charges (S&CC) collected from them. As a principle, Town Councils should only implement improvement projects if there is a surplus in the respective fund. 3. We would like to seek the Town Council s co-operation to rectify the technical breach of Section 33(9) of Town Councils Act and to undertake not to repeat it in future. If your Town Council does not have sufficient funds to rectify the technical breach in its F06/07 accounts, we could allow the Town Council to schedule the rectification over the next 2 to 3 years say by FY2009/2010. Yours sincerely, (signed) Tang Tuck Weng Director/Housing For Permanent Secretary (National Development) cc Secretary (Town Council) HDB

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