FMSS issues legal letter to AHPETC, says it is owed $3.5m
FMSS issues legal letter to AHPETC over monies owed for services
The former managing agent of Aljunied-Hougang-Punggol East Town Council (AHPETC) has sent a letter of demand, saying the town council owes it more than $3.5 million.
The New Paper has learnt that the managing agent, FM Solutions & Services (FMSS), sent the letter, dated July 20, through its lawyers, Netto & Magin.
This comes at a time when the Ministry of National Development is asking AHPETC whether it overpaid FMSS and, if so, how it plans to claim back public monies that allowed FMSS to make huge profits. (See report on facing page.)
FMSS was incorporated in 2011 soon after the Workers' Party (WP) won the Aljunied group representation constituency in the 2011 General Election. (See report on page 4.)
The company was the managing agent for the town council between July 15, 2011, and July 14 this year.
The relationship between the two parties soured following the Auditor-General's Office (AGO) report in March.
Six days after WP did not renew FMSS's contract, the company demanded to be paid monies owed between April and July 14.
Town council staff said AHPETC and FMSS had been locked in talks over financial matters for several months.
AHPETC had initially tried to claw back $250,000, which was later raised to $450,000, from monies paid to FMSS.
FMSS, in turn, is claiming not to have been paid for services provided between April and July 14, when its contract with the town council was not renewed.
The talks broke down when one of the four FMSS directors, Mr Danny Loh, died on June 27 while holidaying in Japan.
The letter of demand, which TNP saw last week, said: "Our clients instruct us that despite repeated requests and demands, you have neglected, failed and/or refused to pay the amounts due fully, in time, as and when invoices and statements of accounts were sent to you from time to time, particulars of which you are fully aware of.
WITHIN SEVEN DAYS
"Take notice that if the sum of $3,520,722.13 together with further interests as aforesaid, are not paid by you directly to our clients or to us as solicitors for our clients within SEVEN (7) days from the date hereof, we have firm instructions to commence proceedings against you without further reference to you.
"In that event you shall also be liable for legal costs incurred by our client."
TNP understands that AHPETC is trying for a mediation session with FMSS over the letter of demand.
The AGO report in March had found accounting and governance lapses in the town council when FMSS was the managing agent.
AHPETC had also submitted its accounts to its own auditors, Audit Alliance, who highlighted several areas of concern in its report, including that of related-party transactions to do with FMSS.
All four directors behind FMSS also held key positions in AHPETC. (See report on page 4.)
Following a separate ad-hoc review of FMSS auditor Teo Liang Chye & Co, the Accounting and Corporate Regulatory Authority found that FMSS had made a handsome profit.
The WP has been running AHPETC on its own since last month when it failed to find a managing agent in its three-week tender last November.
The tender did not attract a single bid, not even from FMSS.
Would AHPETC continue to work with FMSS, TNP asked AHPETC vice-chairman Png Eng Huat.
He said: "Ah, no, no. I think we are on self-management, so we will give self-management a run."
TNP approached the three remaining directors of FMSS but they declined comment.
AHPETC also declined comment when asked about the letter of demand.
"In addition, MND notes that AHPETC had an operating deficit of $1.5 million in financial year 2012/2013 and a further deficit of $2 million in financial year 2013/2014."
— Ministry of National Development in its statement on Saturday
BY THE numbers
$3,520,722.13 - Amount of money that FMSS is asking for in its letter of demand to AHPETC