Managing agents in key positions in town councils – a common practice

The Auditor General’s Office (AGO) report on its audit of the Workers’ Party-led Aljunied-Hougang-Punggol East Town Council (AHPETC) has raised the issue of a conflict of interest in the management of the town council.

The AGO said AHPETC “did not adequately manage the conflicts of interests of related parties arising from ownership interests of its key officers.”

Essentially, the AGO pointed to the two companies engaged by AHPETC to provide managing agent services and essential maintenance and lift rescue services.

The two companies were FM Solutions and Integrated Services (FMSI) and FM Solutions and Services Pte Ltd (FMSS).

“The Secretary of AHPETC was the owner of FMSI, a sole proprietorship. The Secretary, General Manager and Deputy General Manager of AHPETC were directors and shareholders of FMSS,” the AGO report said.

While the AGO took issue with how such a relationship was managed by AHPETC, the engagement of the two companies itself is not unusual.

In its response to the AGO, the AHPETC said the relationship was not improper and that in fact this is quite a “common practice” among town councils, including PAP-run ones.

“The TC had no intention to hide any material information, as it had specifically made a disclosure under the heading Related Party Transaction that had not been made by other TCs,” AHPETC said.

It added: “It is the norm/common practice to have management personnel of Managing Agents hold key positions in the TCs they manage.”

AHPETC’s views are confirmed by news reports in 2011, following the WP’s victory in Aljunied in the 2011 elections.

A report in the TODAY newspaper on 30 May 2011 said:

“They are general managers accountable for the day-to-day administrative functions of town councils. Some of them are also employees of managing agents who win contracts from the town councils to service the estate.

“This arrangement – known to occur in at least four town councils in Singapore – has raised the issue of conflict of interest in town council management.

“At Aljunied [then under the PAP] and Jurong town councils, the respective GMs, Mr Jeffrey Chua and Mr Ho Thian Poh, in fact also hold the position of managing directors at CPG Facilities Management and UGL Premas.

“CPG is currently the managing agent of Aljunied Town Council [under the PAP], although it is not clear if the agreement will continue following the Workers’ Party taking over of Aljunied and the subsequent merger to form Aljunied-Hougang Town Council.

“UGL Premas, meanwhile, is the parent company of Emasco Township management, the managing agent of Jurong Town Council.”

“At Holland-Bukit Panjang Town Council, its secretary Albert Teng is also an employee of its managing agent, EM Services.”

The Straits Times also carried the following report in 2013, during the debate which had erupted over the saga following revelations that the PAP-run town councils had sold off the computer system used by the town councils to a PAP-owned company, Action Information Management (AIM).

“Mr Ho Thian Poh, secretary of Jurong Town Council, is also a PAP member. Mr Ho is also the managing director of the town council’s managing agent (MA), Esmaco Township Management.” (Straits Times, May 2013.)

And incidentally, the Minister of National Development, Khaw Boon Wan, explained in Parliament in 2013 that even party members are not prohibited from providing services to the town councils, when he defended the relationship between AIM and the PAP town councils.

“The [Town Councils] Act by design does not prohibit transactions between the TC and party-related entities or persons… TCs run by MPs from all political parties have at one time or another appointed party supporters or former candidates to provide services to the TCs they run.” – Khaw Boon Wan, 13 May 2013.

Such relationships, however, have been called into question even before the current AHPETC issue was raised.

In 2013, when the AIM controversy surfaced, many expressed concerns about the link between AIM and the PAP.

A Straits Times report then said, of the review conducted by the MND into the sale of the computer system to AIM:

“It gave the all-clear, but some remain unconvinced by the finding that the deal is above board, MPs and experts said.

“One point of contention is why the company, Action Information Management (AIM), would take on a loss-making venture in 2010.

“AIM had said it was to help the PAP town councils, which had no takers for a near-obsolete software programme.

“But some think “this is too good to be true”, said MP Baey Yam Keng of Tampines GRC.

“While many were not surprised by the findings, most of the 50 polled felt that having the MND do the review affected public perception of the report’s finding, even if it was wholly objective.”

The government has since taken on a review of the role of town councils. It is unclear when the review will be completed.

Read this very good write-up on the issue: “Town Councils – conflict of interest?”