MND accuses FMSS of 'grossly profiteering' from town council, Sylvia Lim replies
The Ministry of National Development (MND) has accused FM Solutions & Services (FMSS) of grossly profiteering at the expense of the Aljunied-Hougang-Punggol East Town Council (AHPETC).
The town council is run by the Workers' Party (WP) and was FMSS' sole client.
A statement released on Saturday (Aug 29) highlighted that for the financial year (FY) of 2013/2014, AHPETC suffered an operating deficit of $2 million, while FMSS made a net after-tax profit of $2 million.
This was after paying its directors/shareholders fees and salaries amounting to $1.14 million.
The total payments by AHPETC to FMSS owners and directors amounted to 22 per cent of FMSS’ revenue in FY 2012/2013.
It grew further to 36 per cent in FY 2013/2014.
"Such levels of profit margin are abnormal," the MND said.
"As AHPETC was FMSS’ only client, these findings support MND’s earlier concern that the TC had overpaid FMSS excessively."
The statement also notes that AHPETC had an operating deficit of $1.5 million in FY 2012/2013, and a further deficit of $2 million in the following financial year.
"Had the town council not overpaid FMSS, it might well have had been able to break-even".
The status of FMSS as the sole client of AHPETC has prompted MND to write to Workers' Party chairman Sylvia Lim to ask if she was aware of the extent of profiteering in FMSS, and if so, what she had done about it.
MND is also asking if Ms Lim had examined past transaction with FMSS and how she plans to recover monies lost due to overpayment.
Because FMSS was paid using Service & Conservancy Charges collections and operating grants from MND, public monies are at stake, said the MND.
"What happened between AHPETC and FMSS is not a private matter, but one which MND needs to look into."
Sylvia Lim issued a reply to MND, posted to the AHPETC website.
In the letter says she is "appalled" at the Ministry's "careless accusations", later asking what is meant by an "abnormal profit margin". She adds that other managing operator's profit levels are not known.
We are appalled at the series of careless accusations made by your Ministry against Aljunied Hougang Punggol East Town Council (AHPETC). It is shocking that despite our clarifications on your allegations relating to lost monies and overpayment, your Ministry continues to make spurious statements to distract the public and aimed at politically discrediting AHPETC."
We reiterate that FM Solutions & Services Pte Ltd (FMSS) was appointed the Managing Agent (MA) of the AHPETC for FY 12/13 and FY 13/14 pursuant to a contract awarded through a public tender. Similarly, FMSS bid for, and was awarded, a contract to provide Essential Maintenance Services Unit (EMSU) services, after an open tender. Payments made by AHPETC to FMSS were made pursuant to these contracts. Payment in accordance with contracts cannot be overpayment.
With regard to paragraphs 3 to 5 of your letter, we wish to highlight that arrangements between FMSS and its employees are entirely commercial and not within the control of AHPETC. I am not aware of the matters you have highlighted therein, as AHPETC does not ask its contractors about their profitability or internal arrangements. We emphasise that AHPETC has ensured that payments made to FMSS are in line with and within the budget provided under the tender awarded.
In any case, it is misleading and unfair to compare MA rates charged by FMSS with MAs of other town councils under the People’s Action Party (PAP), since their MAs did not submit a single bid for our public tender for MA services in 2012. FMSS’ bid for MA services in 2012 was assessed, using the former rates charged by CPG Facilities Management for the PAP-managed Aljunied TC as a baseline. It is also ambiguous as to what the Ministry means by an “abnormal” profit margin, when it is not clear what the other MAs’ levels of profit are in other town councils.
It is unfortunate that the political environment has put non-PAP town councils at a financial disadvantage due to the lack of competitive bidders. Your Ministry ought to recognise the existence of an imbalanced system and take into consideration the political reality of the situation.
Lastly, our stand remains that there is no basis for your Ministry to apply to the Court to appoint Independent Accountants. We also question your Ministry’s political motivation for issuing a public release on this matter at such a premature stage, when you say that your Ministry has not even completed a review of the findings by ACRA.