MND's media statement highlighted the auditors' observations that project management fees to a related party had not been separately disclosed in the accounts. It is standard practice for TCs which engage MAs, including PAP TCs, to include project management as part of the MA services awarded. As far as we know, TC financial statements do not specify separate reporting for project management fees paid, as these are reported as construction costs for the project or Sinking Fund expenditure. In any event, AHPETC submits quarterly returns to MND on any new contracts awarded to MAs. We are thus puzzled by the auditors' observation as to why this leads to a qualification of the accounts, but more puzzled by why MND sees this as an issue.
It is useful to set out, again, the circumstances leading to the appointment of FMSS as MA for AHTC. Post General Election in May 2011, there was an urgent need to put in place a new MA for Aljunied GRC, as the incumbent MA had indicated its wish to be released from the MA contract. At the same time, the Town Council Management System (TCMS) had been sold to Action Information Management Pte Ltd (AIM), a company wholly-owned by the People's Action Party, and could be terminated anytime with one month's notice.
The TC determined that there was no time to call a tender under these circumstances, and the most prudent course of action was to plan for a tender in a year's time after the proper completion of handing over was better assured. The TC then decided to appoint FMSS, which comprised key staff from the former Hougang TC, to manage the newly gazetted Aljunied-Hougang Town.
FMSS was appointed without tender for only ONE year, a transitional period, principally to oversee key tasks of the handover, using the same rates as the former MA appointed by the PAP for Aljunied TC. An open tender was then called in 2012 for a customary 3-year contract.
Although three companies picked up the tender documents, only FMSS submitted a tender. The tender was rigorously evaluated and subject to a special audit. Accordingly, any allegation of impropriety is utterly rejected. Nevertheless, as indicated previously, any authority or anyone believing there was wrongdoing should report the matter to the Corrupt Practices Investigation Bureau with whom the TC will fully co-operate.
At this point, we continue to fine-tune the town management accounting systems as we operate live on a daily basis. As MND has expressed its concerns over our accounts, we seek its assistance in resolving the issues raised by our auditor, by helping us verify and confirm the various opening figures handed over from the former Aljunied TC. We also welcome any audit by MND which it deems necessary.