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Town council suit: Low defends FMSS appointment

In News Reports on October 16, 2018 at 11:52 am

I knew there would be fireworks but I didn’t think the trial would start with a bang, with Senior Counsel Davinder Singh accusing Mr Low Thia Kiang of attempting to reduce his cross-examination time by insisting on having a Chinese interpreter on board. He called the request a “stunt”, a term which Mr Low’s lawyer, SC Chelva Rajah objected to. In any case, it was quickly resolved with a pledge by the defence that the interpreter would be used only when Mr Low found it easier to express his thoughts in Mandarin.

This beginning, however, set the tone for the rest of the exchange between the veteran Workers’ Party politician and the former People’s Action Party MP, who is acting for the independent entity that is Aljunied-Hougang town council. It got testy at times with Mr Singh chiding Mr Low for laughing on the stand. Mr Low once shot back at the end of an exchange: “I am not that stupid, Mr Singh”.

With the two auditors out of the way, the court yesterday turned its attention to the defendants, which include two other WP MPs, Ms Sylvia Lim and Mr Pritam Singh. Mr Davinder Singh opened his cross-examination by getting Mr Low to agree that the role of a town councillor was above party politics, and dedicated to serving the interests of residents who pay service and conservancy fees. The words “honest town councillor” would pepper most of Mr Singh’s questions.

For the next three hours, the focus was on the circumstances leading to the appointment of FM Solutions and Services as the town council’s managing agent, which is a key plank of the plaintiffs’ suit to get the defendants to account for $33million they had paid out. The defence had always contended that it had little choice but to appoint the company led by the husband-and-wife team, Ms How Weng Fan and the late Danny Loh, because the former managing agent, CPG Facilities, did not want to continue with its job at Aljunied Town Council.

Mr Singh took Mr Low through emails and correspondence in the first week of WP’s takeover of Aljunied GRC in May 2011 to make the point that contrary to the WP’s assertions, it was never its intention to retain CPG.  Rather, it was “crystal clear”, said Mr Singh, that the party wanted CPG “out right from the start and at all cost” for the benefit of Ms How and the staffers at WP-run Hougang TC. That was why Mr Low suggested that a company be set up, and this accomplished before the week was out.

“You’ve come to this court to talk about politics but instead what you were doing was putting politics above the residents,” he said. Mr Low denied the charge repeatedly and claimed that FMSS’ establishment was a “contingency plan” put in place to ensure that residents had a smooth transition from one party to another.

It wasn’t a good day for Mr Low.

He was forced to admit that he did not look at the contract between CPG and the former PAP town council, whether to ascertain its terms and conditions or see if  any penalties would be incurred for breaches such as a sudden pull-out. Yet, FMSS was allowed to levy the same rates as CPG. Mr Singh deemed his attitude  “reckless”, which got Mr Low’s hackles up.

Mr Singh claimed that a series of communications between Ms How and CPG in the first week on the transfer of town council documents, including its financials, also indicated that CPG would not be retained as managing agent. Mr Low, however, contended that the transfer was merely to effect a change of management from the PAP to WP.

Mr Singh also alleged that the communication was carefully crafted so that CPG would think that its estate management work would be done “in-house”, that is, directly by the town council. He said this was done so that the WP would not be pressured into calling for a tender, leaving the field open to only FMSS.

There were quite a few issues regarding FMSS, which was suggested by Mr Low and incorporated within a few days after the 2011 general election, such as:

a. Why pick people who didn’t have the experience of running a town with 40,000 units to manage the estate instead trying to retain a tried and tested one like CPG? Mr Low reiterated that FMSS was an alternative fallback plan because he was uncertain if CPG would stay on. He acknowledged later that he didn’t ask CPG, nor did CPG indicate, if it wanted to pull out  to continue. Not until May 30.

b. Why didn’t WP simply employ Ms How and have salaried employees as was the case with the Hougang TC which had been under direct management of the MPs? Mr Low’s case was that direct management took up too much of an MP’s time and would not offer staff a career path. It was best to outsource the job to a reliable and trustworthy managing agent, which Ms How had proven herself to be in Hougang TC.

c. But why set up a company which would have as profit as one of its objectives? Mr Low  said he didn’t consider this as a factor. Mr Singh then claimed that it was to persuade an initially reluctant Ms How and Mr Loh to continue working for the town council.

Mr Singh also noted that Mr Low had said in his affidavit that he thought the introduction of a new company would inject competition into the estate management  business and would be an attractive option to for other opposition parties which managed to win wards in elections. “You wanted a start-up to boost the work of opposition parties,” said Mr Singh. Mr Low replied that he was talking about the positive outcomes that a start-up in the market could bring.

As I said, it wasn’t a good day for Mr Low. Mr Singh kept his questioning tight, requiring   yes or no answers. His key message was that Mr Low did not exercise “due diligence” in the running of the town council, and wasn’t behaving like an “honest town councillor”.

The cross examination continues tomorrow and we might hear more about the pullout of Action Integrated Management (AIM), which the defendants claim had left the town council stripped of software. All we got today was how, even in the initial week, WP had asked CPG for the financial records and a meeting with its  computer vendor, because it wanted to upgrade its in-house system to incorporate Aljunied’s data.

Mr Low corrected Mr Singh: “Upscale, not upgrade”.

Mr Singh thanked Mr Low for correcting his English.

In reply, Mr Low thanked the lawyer for having a higher regard for his command of the English language than the late Mr Lee Kuan Yew had.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Town Council trial: An accounting or political issue?

In News Reports on October 13, 2018 at 3:24 am

First, an admission. I was in court only for a day, and not even the full day, to hear the lawsuits involving the Workers’ Party town council. I caught the final part of KPMG’s Owen Hawkes testimony in court and the beginning of Price Waterhouse Coopers’ Goh Thien Pong’s cross-examination on Thursday.

It was, to put it plainly, tedious listening. Files were piled high around the lawyers and the witnesses and plenty of references made to this or that page, file, email, correspondence, invoice, serial number, payment voucher, work order and other terms that bean counters would be more familiar with. This meant that there were frequent spans of silence as lawyer and witness – as well as judge – try to, literally, get on the same page.

If there was anything to be gleaned from the six days of proceedings reported in The Straits Times, Channel NewsAsia and TODAY, it is that every single thing discussed, ordered and paid for in a town council had to be nailed down in black-and-white. Not only that. They must be filed in the relevant column, relevant document and signed off by the relevant people. Which means that the different parties must know about standard operating procedures of the town council which, again, has to be put down somewhere in black-and-white, and not merely in the form of instructions or guidelines via email. And all this must fit in with the Town Council Financial Regulations that govern all town councils. Phew.

Yup, it’s a bureaucracy that’s bound with red tape. I guess a layman, including me, would either yawn or gasp at the incredible amount of verification and cross-checking that has to take place and wonder about the necessity of some steps. Signing off on something, for example, doesn’t mean you’ve read it or checked it – but it must be assumed that you’ve done your due diligence. And does it matter if you’ve missed a step when you are sure others have done their part?

Rules are rules, the two auditors made clear. They must be uniformly and consistently applied.

So what are the lawsuits about? Here’s a quick re-cap:

  1. It isn’t just one, but two lawsuits. They were filed by Aljunied-Hougang town council (via an independent panel) and Pasir Ris-Punggol town council, which belongs to the People’s Action Party.
  2. The two lawsuits are filed against the same people though: three WP MPs who held/still hold positions in the town council, and five others including the managing agents who run FM Solutions and Services. In addition, the plaintiffs want WP MPs Sylvia Lim and Pritam Singh to pay more than $2m in damages because a higher-priced architect was hired for seven of 10 contracts.
  3. The lawsuits are about a sum of some $33.7m which the auditors calculate and contend were improper payments for various reasons: like paying more than the town council should have, not having proper documents or no documentation, missing signatures, all while there is a conflict of interest as the managing agents also hold town council positions.

Some new information that wasn’t available to the auditors at that time emerged during the trial, such as how some documents were already delivered to the PRPTC when it took over Punggol East from the WP in the last General Election and some emails giving reasons for hiring one contractor over another. Both auditors, however, stuck to their positions that as far as they were concerned, payments were improper, policies were inconsistent  and that whatever controls that were said to be in place were simply insufficient.

If you go by the book, it looks like the plaintiffs have a strong case because most of point c is accurate. But this is a court case, which means the defendents have a lot to say about why things are what they are and it doesn’t mean that they have neglected their duty to serve the residents or didn’t exercise enough oversight.

So the defence lawyers  Chelva Rajah and Leslie Netto, beyond contending that some of the auditors’ sums were wrong, have raised other issues that are more “accessible’’ to the laymen. This includes how the opposition had been stymied by the PAP machinery right from the beginning and how the auditors did not take into account “human’’, “social’’ or “emotional’’ factors involved.

“I am an accountant,’’ said KPMG’s Mr Hawkes at one point when pressed about whether he took into account possible job losses in the town council should the original managing agent, CPG Facilities, be retained by the WP to run Aljunied-Hougang TC.

He added: “While I do understand these are employees of an organisation and there is a potential they would lose their jobs … What we’ve been asked to do is to account for the cost of AHTC in taking on one of two managing agents.”

Nor was “trust’’ an element that accountants considered when doing its work, when Senior Counsel Rajah suggested to him that the FMSS husband-and-wife owners Danny Loh and How Weng Fan were “reliable and trustworthy” individuals known to the elected town councillors for “many years”.

“Trust is not the control, but is in fact the enemy of control,” he replied adding later that he didn’t think there was total trust between the MPs and the managing agent because the MPs were kept out of the loop on some conversations because the agents wanted to be in “self-protection’’ mode.

“Notwithstanding that you know somebody and trust them, you can’t forgo control,” Mr Hawkes added. He also contested the point that the MPs were happy with the work of FMSS, or they wouldn’t have held back some $250,000 in payments in February 2015 to make up for its deficiencies.

Lawyer Mr Netto, however, was positive that theMPs would have a different view: “I think we’ll have to listen to the MPs when they come on the stand. I think you’ll see that they are happy.”

At another juncture, Mr Rajah asked PwC’s Mr Goh: “Did your report deal with the factors, the compulsions that caused the defendants to seek the assistance of (FMSS early on) to prevent the intended tripping of (AHTC)?”

Mr Goh replied: “We don’t consider emotional factors.”

“That is a factor of political life,” Mr Rajah said.

The hiring of FMSS is a major plank of the plaintiffs’ case, as the managing agent was also signing off on payments to itself.

Here’s where the defence is making much hay of what happened in 2011: That it was CPG, the PAP’s former managing agent, who wanted out of the contract and yesterday, it transpired that it could only continue to work if it used a certain computer system which had been pulled out of use. That system is the much-touted system run by Action Integrated Management, a PAP-owned company.

The auditors stuck to their guns on how CPG should have been persuaded to stay on to serve out the rest of its contract – or put out a tender.  Retaning CPG would have saved the town council costs. Instead it resorted to the expedient option of using agents who were not familiar with running a far bigger place than they are used to.

The two auditors took every blow as they came, sticking to the script on the need for proper financial controls and oversight.

There were two points when KPMG’s Mr Hawkes was caught flat-footed. He couldn’t give a direct answer when asked how to account for why the G had openly said it had no problems with WP waiving a tender for a managing agent at that time and hiring FMSS. He also said he did not know that the secretary of the previous PAP town council, Mr Jeffrey Chua, was also managing director of CPG and had shares in CPG’s holding company. Still, he said:  “The question is not whether there is a conflict of interest. The question is how severe is it and what are the steps taken to manage it.’’

Mr Hawkes recovered considerably when the argument turned to whether the town council could even have worked effectively as it was “stripped’’ of its computer system. He conceded that even though the town council had a hard time initially trying to introduce and scale up a new computer system, everything should have been in place after five years.

PWC’s Mr Goh, however, drew some laughter in the courtroom when he insisted that processes must be followed to the letter, like attaching photographic evidence that polling stations for the last general election had been set up according to specifications before paying the contractor, even though Mr Rajah noted that the GE has “come and gone’’.

I don’t have the list of witnesses but it appears to me that CPG should be called to the stand to expound on its side of the story. It also seems that more information should be available on the practices of other town councils, such as whether they too parked similar contracts under project management services that had to be paid for, rather as part of the managing agent’s duties.

For example, Mr Rajah told Mr Hawkes that the former managing agent, CPG, had also charged the PAP town council similar fees, adding: “But you reviewing the project documentation thought otherwise?”

Mr Hawkes replied: “That is correct, and it wouldn’t be the first case (where a client has disagreed with an accountant’s definitions)… Our view was that this fell under basic services, at least in part.”

I wonder if other auditors agree.

It shouldn’t surprise anyone that the defence keeps referring to the elephant in the room, the residents under the WP’s charge, in the cross-examination. Mr Netto kept asserting that the residents are happy, something which the auditors should have considered as services that have been “satisfactorily delivered”. Those who are flummoxed by the complexity of this case will probably have the same question.

Mr Hawkes’ retort: “The suggestion isn’t that the lifts didn’t work and the streets are dirty,” he said. “Having been to Hougang on many occasions, it’s not some kind of ‘Mad Max’ or wasteland…

“It’s the management of the town council’s affairs itself, rather than the maintenance that concerned us.”

In other words, this is an accounting problem, nothing to do with politics as far as the auditors were concerned. It is about financial propriety and controls which is probably an arcane subject to most residents.

It must be noted that the case so far has only involved the defence lawyers and auditors. The plaintiff’s lawyers have yet to make their case nor have the politicians taken the stand. That’s when we can expect fireworks.

CNA and ST episodes: About trust and transparency in the media

In News Reports on October 12, 2018 at 2:16 am

I have been waiting to see if MediaCorp would do an ST, that is, be compelled to reveal more details of what looks like a scandal which had erupted in its organisation. But it seems that MCS has decided to hold its tongue. I am talking about online reports which have surfaced regarding the termination/sacking/resignation of senior journalist Bharati Jagdish.

I am not in the habit of sharing posts from online news sites, but I gather that The Online Citizen’s post on her departure was, in the main, accurate: That she had left the company in the wake of a parliamentary exchange that had mentioned her reporting.

If you haven’t been following the debate on ministerial salaries and Deputy Prime Minister Teo Chee Hean’s defence of the salary framework in Parliament on Oct 1, here’s a run-down.

DPM Teo referred to a reported published on Channel NewsAsia’s website on an interview with Banyan Tree Holdings chairman Ho Kwon Ping. Among other things, Mr Ho talked about ministerial salaries.

This is the part which DPM Teo referred to, when the report appeared on Sept 30:

At one point during our interview, he includes Singapore ministers in this group. 

“My salary is decided by the board and my salary is lower than the ministers so I probably belong to the group of people who might be considered mediocre, unfortunately.”

His salary, including benefits and a bonus, according to Banyan Tree Holdings’ 2017 Annual Report was over S$2.5 million, so it’s certainly not lower than ministers’ salaries.

“Lower than ministers? Really? I’m shocked,” I say.

“Well, but I don’t know about everything. All I can say is that we are still every year winning corporate awards for transparency and disclosure, so whatever those  guidelines are, we are definitely one of the best. I try, But that doesn’t mean you may find me in every way, walking the talk.

This is what DPM Teo said in Parliament about how well-meaning people with a deep interest in politics have misconceptions about ministerial salaries.

I read Mr Ho Kwon Ping’s extensive interview with CNA, which was published yesterday.

Among other things, he suggested pegging Ministerial salaries to the median salary of Singaporeans. He also suggested an independent Commission to decide the actual quantum. And Mr Louis Ng, in an earlier similar interview, also suggested that there should be public consultations…

…But even Mr Ho, who is well-informed and has a deep interest in politics, has some serious misconceptions. He claimed, for example, that his salary is lower than the Ministers.

Sir, fortunately, the interviewer had checked, done the homework, and pointed out to Mr Ho that his salary, including benefits and bonus – I would not mention the figure, but it is significantly higher than that of Ministers and certainly not lower than Minister’s salaries.

Sir, otherwise the misrepresentation could have been carried widely and spread more disinformation.

The only news media which contacted Mr Ho for a response to DPM Teo’s remarks was TODAY. :

Mr Ho said it was unfortunate that the Channel NewsAsia interview had given an impression “which not only made me seem quite ignorant or untruthful about my own remuneration, but also critical of the amount of ministerial salaries”. 

“I was not ‘corrected’ by the interviewer — I was referring to basic salaries and she used my total compensation instead. Anyone in the corporate world will realise the two are quite different,” he explained.

Mr Ho stressed that he had never criticised the “absolute level of ministerial salaries” and “fully agree that their work is more important to the nation than my own business enterprise”.

“I have reservations about how they are computed and pegged,” he said.

In an interview with news site Mothership a few days later, he reiterated his position:

 “I have absolutely no reservations about their absolute amount, which I have always publicly argued is more than justified not only because of their contributions, but in order to ensure that the entire public sector… will never need to succumb to the open or hidden corruption in both developing or even very developed countries.”Ho said that he could imagine that the way the interview was structured, “it would seem as if that actually I was not entirely truthful, that I was trying to make a dig at ministerial pay”.

That’s far from the truth, he said emphatically.

Ho clarified that he was in fact referring to the process of basic remuneration rather than the absolute amounts, adding that he was not “corrected” by the interviewer.

He was referring to basic salaries and she used his total compensation instead, before concluding that “anyone in the corporate world will realise the two are quite different”.

This is all so intriguing.

So what did he say and what did the reporter do? At this point, editors would have to get into the picture to find out if the reporter made an error, misinterpreted comments and, worse, fabricated quotes. If editors stood by the story, they would have not amended the report – but they did.

Mr Ho’s answer on how his company won corporate awards for transparency was deleted. Instead, the new quote is this: “Well, but I don’t do much you know, ministers care for the country and I belong to the mediocre class.”

Then there was this paragraph inserted, as well as an Editor’s note.

(When asked for his comments by TODAY a day after this interview was published, Mr Ho said that “I was referring to basic salaries and she used my total compensation instead. Anyone in the corporate world will realise the two are quite different. In his clarification, Mr Ho stressed that he had never criticised the “absolute level of ministerial salaries” and “fully agree that their work is more important to the nation than my own business enterprise”.)

Editor’s Note: An earlier version of this article suggested that the interviewer had highlighted Mr Ho’s total compensation during the interview. This point was in fact not made during the interview. We apologise for the error.

The next thing we know, the reporter in question was no longer in the organization. I have no idea what happened in the interim, but I can see several issues worth examining, especially in this era when so much is said about “trust’’ in media.

First, you don’t need to put out fake news to stir the pot. You can put out the facts – but in the wrong places.

Second, DPM Teo trusted the mainstream media so much that he actually commended the reporter for doing her homework in “correcting’’ Mr Ho. Mr Ho contests this point. If you have been in the business long enough, (and DPM Teo is not a journalist) you will see that the paragraph on Mr Ho’s total salary look like it had been inserted into the story and he looks like an idiot who tried to rescue himself by saying he doesn’t know everything including, presumably, his salary. A tenacious reporter, as  Ms Bharati is known to be, wouldn’t have let something go like that in the course of the interview.

Third, it could be that Ms Bharati found out later, after the interview, that Mr Ho isn’t a “mediocre’’ salaryman and thought it was  important to make the point to provide “balance’’. If so, she should have contacted Mr Ho with the information during which he would probably have corrected her assumptions about total compensation package or basic pay.

Fourth,  did Mr Ho say those things about his company being among the best or not? Is this a fabrication or just an editor exercising judgment that the point was not worth the space used? Deleting a quote and replacing it with another is easy to do in the online space. But it’s not professional unless an explanation was provided to those who had noticed the change.

Fifth, I can’t imagine how a senior journalist like Ms Bharati could even think that it was right to insert that paragraph on his pay and make it look like she had tackled him on it. A rookie reporter could have made the mistake, because he or she doesn’t have the skills to navigate a difficult story. Even so, it would have been caught by a sharp-eyed editor who would have asked: “Wow. Ho Kwon Ping doesn’t know how much he’s paid? Really?’’

Some people have asked whether Ms Bharati deserved the sack or whatever euphemism that MCS wants to come up with. My position is yes. And this is despite knowing that Ms Bharati is a far better interviewer than most in the profession. Why? I am going to get up on a high horse now and say “journalistic ethics”. Her report had led to a misconception about Mr Ho being raised in no less august a place than Parliament, and by a personage no less than the DPM. It casts a pall over her previous work, as legitimate questions will be raised about whether due diligence was exercised over her past reports. DPM Teo actually owes Mr Ho an apology for, ironically, relying on his faith in MSM. That seems to me grounds enough for a dismissal.

I suppose I will be criticized for being harsh. But severe disciplinary action is the standard editorial policy for mistakes that don’t seem to be a result of carelessness, bad language use or lack of expertise. I don’t know if MCS did so, but it should have a disciplinary inquiry to get to the bottom of the matter, at least as a cautionary tale to its own staff on what not to do.

What is troubling is how readers are more interested in the scandal that engulfed The Straits Times earlier this month, rather than this more pertinent lapse in professional ethical standards. Most people are (still) all agog about who did what when TOC broke the story on the demotion and deployment of two editors over their respective relationship with a subordinate. Sex sells, I suppose.

For readers, what should matter is whether these illegitimate relationships affected the quality of ST, and therefore, the readers’ interest. It doesn’t seem to have had that effect.  What’s worse is ST’s response, It was paltry and unsatisfactory to say the least.  If it had decided to take the heat, then it should have reported the case like it would any scandal.

In the case of CNA, however, there is no excuse for silence given the very public nature of the issue: DPM, ministerial salaries, Parliament and a prominent Singaporean. It is interesting that rival MCS didn’t touch the ST scandal, nor did the Singapore Press Holdings stable of newsrooms report on Ms Bharati’s departure. I hope MSM realises that this omission merely confirms the need for media that is outside the duopoly.

What the ST and CNA episodes also show is how the two media organisations have very different standards when it comes to reporting their own shortcomings, compared to other people’s shortcomings.  It used to be that news media come down much harder on their own than on others, because it must have the credibility to demand transparency and openness. This is how trust is built up, when the public knows that the media holds itself to higher standards than the rest.

Because what can a journalist say to a newsmaker who responds with: “Why should I tell you anything when you don’t tell me everything?’’