Questions are being raised over how computer and financial systems of an opposition-run town council were placed under the control of a little-known firm linked to the ruling party.
In a post in his blog Yawning Bread on Friday, Alex Au said the issue “has the potential to be a big story, causing enormous damage to the People’s Action Party (PAP)”.
Controversy first erupted earlier this month when the Ministry of National Development (MND) released its latest town councilmanagement report, singling out the Aljunied-Hougang Town Council (AHTC) with a “red” rating for its handling of service and conservancy charge (S&CC) arrears.
The council was not rated for its corporate governance due to its lateness in submitting its auditor’s management letter “material to the banding of the corporate governance indicator”, the ministry said.
WP’s response
Responding to the report, AHTC chair Sylvia Lim, who is also chairman of the Workers’ Party, noted the fact that the town council’s audit took longer than expected because of its need to develop a new computer and financial system from scratch.
In a statement released on 14 December, the same day the town council management review was published, she explained that as her party was taking over the town council in the wake of the their success at last year’s election, it was informed that its existing computer and financial systems would be terminated from 1 August 2011, “due to material changes to the membership of the Town Council”.
She pointed out also that the systems, having been developed collectively by the 14 PAP town councils over a period of more than 15 months, were in January last year sold to a company called M/s Action Information Management Pte Ltd (AIM).
The town councils then leased the systems back from AIM, paying the company fees every month for the usage of the computer systems — and a report from online socio-political site TR Emeritus said these payments would have to come from the S&CC paid by residents.
When the sale and lease-back occurred, AIM was empowered by its prevailing service agreement to terminate the systems contract with any of the town councils within a single month’s notice in the event of a “material change” to its composition, which is what happened with AHTC.
Given the circumstances, Lim said in comparison to the “more than 15 months” that the 14 town councils spent collectively developing a finance and computer system, the AHTC was left with a two-month timeframe to develop its own equivalent systems.
Describing it as a “near-impossible task”, Lim said her town council had to prioritise the development of its financial system into phases, resulting in a delay for its audit.
Firm's directors
Details about AIM and its make-up then came to the fore. Lim noted in her statement that the company was in fact a dormant one. TR Emeritus reported that AIM had been operating out of an office which allegedly shares its address with more than 1,000 other businesses, apart from the actual company that operates from that address — one KCS Corporate Services Pte Ltd.
Further, a second report from the alternative news website noted its discovery that AIM consisted of just three people, all of whom were former PAP Members of Parliament — its chairman, S Chandra Das, and directors Lau Ping Sum and Chew Heng Ching.
The company had a total paid-up capital of just $2, with $1 held in shares by Chandra Das, and the other $1 owned by Lau, according to the report showing the firm's business filing with the Accounting and Corporate Regulatory Authority.
“As (Lim) pointed out, the questions have to be: Why did the PAP Town Councils relinquish ownership of the computer and financial system, and how much did they sell it to AIM for?” asked Au. “It was probably developed with taxpayer money by the 14 town councils, with much input and support from taxpayer-paid town council staff, unless — and it is hard to believe — the PAP paid for the development of the system.”
Terms used in contract
Another issue that was raised involved the nature of the contract signed when the town councils collectively sold the computer systems to AIM, allowing the firm to terminate the contract with just a month’s notice “should there be a material change to the composition of the town council”.
Chandra Das later responded a few days later in a letter saying that if the AHTC had sought a longer extension of the contract (beyond 9 September 2011), AIM would have agreed to it, but pointed out that the town council had not sought a further extension.
In reply, Lim said the first extension was obtained through a party who “fought for” it on their behalf.
“We were certainly not given to understand that there could be any extension after this,” she said. The second extension was given to the previous town council’s managing agent, which needed time to audit some of its processes, Lim added.
“As (Lim) asked: ‘How is it in the public interest to have such a thing (the contract terms)?’” wrote Au.
“What price was it sold to AIM for? How was that price arrived at? Was there competitive tendering?” he asked in succession.
Au added further the questions of how acting for partisan advantage is in the best interest of the residents of the constituency, as well as whether or not the priority should be to ensure that the systems in the town councils continue accordingly.
He also argued that if the Corrupt Practices Investigation Bureau and Attorney-General’s Chambers are independent institutions, “we should expect them to mount an investigation immediately”.
[Source Yahoo News]
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