Sylvia Lim: $3.5m debt is 'old news overtaken by events'
WP has paid 'substantial' part of $3.5 million claimed by FMSS, rest of disputed amount to be settled by mediation in October, says Sylvia Lim
Questions about a letter of demand to pay up a $3.5 million debt to a former managing agent (MA) came hard and fast during a Workers' Party (WP) press conference yesterday.
This came on the same day when WP filed a healthier annual report for the financial year (FY) 2014/2015, showing that the town council was in surplus.
WP had received a letter of demand from FM Solutions & Services (FMSS) in late July, the party chairman Ms Sylvia Lim confirmed to The New Paper.
On the letter of demand, Ms Lim said: "This is quite old news because it has been overtaken by events."
The letter came a month after the contract between Aljunied-Hougang-Punggol East Town Council (AHPETC) and FMSS expired.
Since then, the party has paid "a substantial amount" of the disputed claims, while the rest of the claims will be set for an "amicable" mediation before the Singapore Mediation Centre in October.
AHPETC withheld the remaining payment as "it will exercise due diligence to check and verify whether those claims are accurate and valid".
Ms Lim did not disclose how much of the $3.5 million debt was paid to FMSS or whether it did so before the one-week deadline stated in the July 20 letter.
She said: "I don't think it is helpful (to disclose the information) because mediation is a private process.
"I hope you all can understand why, because mediation is supposed to be a conciliatory process so we don't want to jeopardise that."
She explained that if mediation fails, the MA agreement between AHPETC and FMSS further provides for the matter to be solved via arbitration.
"There will not be any litigation concerning this case," she said.
The public only caught wind of the letter or the existence of the debt for the first time yesterday, when TNP broke the story.
When asked by a reporter why AHPETC did not publicly declare the existence of the debt, Ms Lim said there was no need as the issue was between the two parties and doing so might breach agreements.
Explained Ms Lim: "If you ask the People's Action Party (PAP) town councils for their MA agreements, you will probably see similar clauses, where disputes are meant to be resolved via mediation... which I think is a good provision."
She also rubbished the notion that this would affect WP's moral authority in calling for more transparency in the PAP.
"Why? It is just a letter of demand. People can demand things but whether they are actually legitimate or not, or to what extent, that is another question altogether," she said.
A large number of the claims concerns "project funds" as FMSS was authorised as a project manager under its MA agreement with AHPETC.
Ms Lim revealed that these funds are claimed by FMSS as a percentage of the project value, and consists of sinking fund expenditures.
The debt "will not affect the bottom line" of AHPETC's finances for FY 2014/2015 as most of it concerns the next financial year, she said.
'All town councils will go into deficit without grant'
"We are in surplus."
Immediate past vice-chairman of AHPETC Png Eng Huat said this yesterday, hours before the town council released its annual report, detailing the finances for FY2014/15.
This, as long as the $7.2 million in the Service and Conservancy Charge operating grant that the Ministry of National Development (MND) withheld, is given out.
According to the balance sheets, the surplus would amount to about $1.7 million.
In a second open letter to residents yesterday evening, party chairman Ms Sylvia Lim said the town council took steps, including "lowering its utilities costs by using contestable energy, reducing its general and administrative expenditure, and increasing its revenue".
But MND previously said that it withheld the service and conservancy charge operating grants from AHPETC as it has no guarantee the money would be used properly.
Asked if the party has reached an agreement with MND over when the money will be released, Ms Lim said: "There has not been a final agreement, but I would say that there's only a very narrow field of disagreement."
Added Mr Png: "All town councils will go into deficit without the grant."
The opposition party has been in the hot seat since Saturday when MND released a letter accusing former managing agent (MA) FMSS of "grossly profiteering" at the expense of AHPETC.
Calling the levels of profit margin abnormal, MND said: "Had the town council not overpaid FMSS, it might well have had been able to break even."
Ms Lim had earlier said MND's "series of careless accusations" were aimed at discrediting WP.
"MND is the one that came up with this term 'grossly profiteering', so I think they should tell us what is an acceptable level of profit in their view, and perhaps also tell us how much money has been made by the MAs managing the PAP town councils," said Ms Lim.
Mr Png said the party will give self-management a try and will no longer depend on managing agents if it retains its constituencies.
In last evening's letter to residents, Ms Lim also said that there never was a conflict of interest between AHPETC and FMSS.
She also clarified that AHPETC has improved its financial position this year.
This was a follow up to her first open letter to residents in June, which addressed PAP MPs concerns about the overpayment to the former MA.
WP will reveal where its candidates will be fielded today.