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Were PAP town councils overpaying their managing agents by up to 100%?

By Andrew Loh

Some interesting information has emerged from a reply by the Minister of National Development (MND) to a question by Workers’ Party (WP) Member of Parliament (MP), Sylvia Lim, last week.

Ms Lim, who is also the chairman of the WP-run Aljunied-Hougang-Punggol East Town Council (AHPETC), had asked Minister Khaw Boon Wan for the managing agents (MA) for each town council from 2011 to 2013, as well as the rates charged per residential and commercial unit by these MAs.

Mr Khaw responded by providing the following two charts to Parliament – one for the residential unit rates, and the other for commercial unit rates.

MA rates for TC 1

MA rates for TC 2

Mr Khaw’s reply is interesting for certain facts:

  1. That AHPETC was not the only town council which had purportedly charged the highest MA rates. In fact, in 2012 and 2013, the PAP-run Potong Pasir Town Council charged almost similar rates to that of AHPETC. In 2013, Potong Pasir Town Council paid the highest fees among all town councils, including AHPETC, to its MA for residential units.
  2. Two PAP-run town councils had paid more than double the MA fees which other PAP town councils were paying. East Coast Town Council (ECTC) and Pasir Ris-Punggol Town Council (PPTC) had paid their MAs $11.50 from 2011 to 2013 for each commercial unit. This was double what other PAP town councils were paying their MAs.
  3. After at least three years of paying $11.50 to their MAs, the rates for both ECTC and PPTC were suddenly reduced by more than half in February 2014, to $5.10 and $5.50 respectively.
  4. That the former PAP-run Aljunied Town Council (ATC) had paid its MA $12.80 for commercial units. This appears to be the highest rate among all town councils in 2010/2011.
  5. Neither Mr Khaw’s explanation of the figures nor his two charts themselves indicate or claim that the figures are “weighted average” figures. This is an important omission which we will return to later.

Read TREmeritus’ report on this: “Call to audit AHPETC made right after PAP TCs’ MA rates were lowered”.

The accuracy of the figures in Mr Khaw’s chart is also in doubt.

What is also curious and puzzling is how Mr Khaw’s two charts compare to that which was presented to Parliament by Law Minister K Shanmugam, during his attacks on AHPETC.

Chart from Mr Shanmugam:

Chart by K Shanmugam

Mr Shanmugam had claimed that the figures in his chart were “weighted average” figures, and that it was MND which had provided the figures.

Mr Shanmugam returned the next day and confirmed that the figures were correct, after Ms Lim had cast doubt on their accuracy.

The figures for 2014 in Mr Khaw’s chart are similar to Mr Shanmugam’s.

Thus, they must be weighted average figures – as claimed by Mr Shanmugam.

If the figures in Mr Khaw’s chart are “weighted average” figures, then it is puzzling why ECTC and PPTC figures are so high - $11.50 – for pre-2014 years.

So, the obvious questions are:

  1. Are the figures presented by Mr Shanmugam really “weighted average”figures, as he had claimed? Or are they “fixed rate” figures, as Mr Shanmugam had described them when he returned to confirm the figures in Parliament?
  2. Are the figures in Mr Khaw’s chart also “weighted average” figures?
  3. If Mr Khaw’s figures are also “weighted average” figures, then why are the figures for ECTC and PPTC so high – at $11.50?

But as this leaked letter from EM Services to PPTC shows, the figures are not “weighted average” figures, but are in fact actual rates set by the MA:

EM services quotation

It is important to ascertain if the figures are “weighted average” figures because these figures are being used by the PAP to claim that AHPETC’s figures are highly inflated – even though Mr Khaw himself has now confirmed that the former PAP-run Aljunied Town Council (ATC) had also paid a rather high MA rate of $12.80.

In fact, it looks like the ATC’s rate of $12.80 was the highest among all town councils in 2010/2011 – way more than double what other town councils were paying.

Why were no alarm raised then?

And here is another question which some have raised: why are the managing agent rates for residential units and commercial units the same for PAP town councils? Shouldn’t residential unit rates be lower?

And why was there a sudden decrease in MA rates for ECTC and PPTC in February 2014 – a decrease of more than half?

Were ECTC and PPTC overpaying their MAs for 3 years, and overpaying by more than 100%?

In the past several months, PAP ministers and MPs have been making a song and dance about how the WP-run town council had been involved in “unlawful” contracts or actions. And a big hooha was made, including in Parliament, by PAP actors who charged that AHPETC had “overpaid” their MA and called for AHPETC to “recover” this supposed money that has been “lost”.

A minister even described AHPETC’s action as “taking money from the man in the street and giving it to your friend.”

What now, then, that at least two of the PAP’s own town councils have been revealed to have potentially overpaid – by as much as double what its other town councils were paying their MAs?

And wasn’t the PAP-run ATC itself paying the highest MA rates to its MA before AHPETC took over the town council?

And just as importantly, the PAP should once and for all explain what the figures are – whether they are “weighted average” figures, or not, and if they are, what exactly this mean.

Failure to explain and answer these questions will only cast doubts on the credibility of the PAP’s claims, and show them up as nothing more than cheap politicking to score cheap political points, at the expense of the public and Parliament.

It is also worth noting that the above information about ECTC and PPTC were not voluntarily given by Mr Khaw during the PAP’s attacks on AHPETC two weeks ago, and that it only came to light after Ms Lim had filed a parliamentary question about them last week.