PAP mis-AIMed, faces blowback, part 2

pic_201212_18I am glad my instincts count for something. When I wrote in Part 1 that “the story about town council computer and financial systems is not getting as much traction as I think it deserves”, I had only a vague feeling that a possible scandal lies there. But after seeing the obfuscatory statements by Teo Ho Pin, I became even more concerned.

There are plenty of questions; even more now after his statement and after I looked at a few town council financial reports. But I have to be realistic. Getting full disclosure from this government is going to be like pulling teeth. We may not succeed, but I hope it causes them excruciating pain, so they learn never to take citizens for fools again.

What we know

First, let’s take stock of what we know at this point, because I am beginning to see some people plant contradictory and unfounded claims in order to confuse the public.

From Teo Ho Pin and Chandra Das, director of AIM, as reported in Straits Times 25 December 2012 and Today online 24 Dec 2012:

1. The 14 PAP town councils had jointly developed a computer and financial system prior to the end of 2010, with the aid of National Computer Systems Pte Ltd — which a check with their website indicates is a subsidiary of Singtel.

2. The 14 town councils decided to sell the software in 2010; a tender was called. Five parties took up tender forms but only Action Information Management Pte Ltd (AIM) submitted a bid.

3. AIM is fully owned by the People’s Action Party (PAP). The two shareholders must be holding the shares in trust for the party.

4. “AIM offered to buy the developed application software for S$140,000″, Teo said, but didn’t disclose whether $140,000 was eventually what it paid — a strange way of phrasing the statement.

5. AIM’s successful bid was to “manage the system for a monthly fee of S$785 per town council, for an initial term ending 31 October 2011″ (ibid). However, Teo was silent on what the monthly fee was after 31 October 2011 — again a very strange omission.

6. After getting the deal, “AIM engaged NCS to further maintain and develop the system” (Straits Times, 25 Dec 2012).

We also know from Sylvia Lim, chair of Aljunied-Hougang Town Council (AHTC), that:

7. AIM issued a termination letter to AHTC effective 1 August 2011, citing the clause in the contract about “material change” in the composition of the town council.  We know this from AHTC’s statement of 28 Dec 2012: “AIM had issued notice of termination of the systems, effective 1 Aug 2011.  The new management at AHTC had requested an additional month, from 1 to 31 Aug 2011.”

Teo Ho Pin confirmed that it was AIM which decided to terminate. In his media statement 26 Dec 2012 (but published by Straits Times 25 December) he wrote: “After GE2011, the software contract with AIM remained in place for the PAP TCs. However, AIM decided to end the contract with the Aljunied-Hougang Town Council (AHTC).” Chandra Das, in his statement to the media did not deny that it was AIM which initiated the formal termination, though he made as much as he could about AIM being very helpful with extensions of time.

[Addendum 4 Jan 2013: The link to the media statement by Teo Ho Pin is dead. As you can see for yourself, it originally linked to the PAP website, where the statement was put up. Inexplicably, PAP has taken it down. I didn't keep a copy of it, but I have the Straits Times press reports of 25 December 2012, from where you'll see much of the same substance as Teo's and Chandra Das' press statements.]

The critical question

Sylvia Lim, in AHTC’s statement of 28 December, highlighted the attempt by both Teo and Chandra Das to side-step the key issue:

It is regrettable that both Dr Teo’s and Mr Das’ statements have been calculated to side-step the most critical question of how the public interest was served when the PAP-managed Town Councils, which developed the computing and financial systems at significant cost and co-owned them, sold them off to a third party which could exercise rights of termination if there was a “material change” in the composition of a Town Council.  What justification was there for the Town Councils to relinquish ownership and leave the continuity of Town Council operations at the mercy of a third party?  Residents all over Singapore have a right to know.

Dr Teo has now confirmed that this third party, AIM, is “fully-owned” by the PAP.  In other words, the PAP-managed Town Councils saw it fit to sell away their ownership of the systems, developed with public funds, to a political party, which presumably could act in its own interests when exercising its rights to terminate the contracts.  Was that the very reason why there was such a termination clause in the first place?  And what arrangement, if any, is now in place at the PAP-managed Town Councils to cater for any subsequent “material change”?

– Media release by Aljuied-Hougang Town Council, 28 Dec 2012. Link.

We shall wait and see what response AHTC gets.

Nonetheless, the “critical  question of how the public interest was served” by selling off the computer system to a PAP-owned company is not the only question. A quick look at a few town councils’ financial reports raise some very troubling questions too about costs.

How much is spent annually on ‘computer services’?

A glance at four town councils’ annual financial reports reveals large sums of money spent on computer services. The four town councils were chosen at random.

pic_201212_20

You can see Ang Mo Kio’s 2011 report here; Jurong’s 2012 and 2011 reports here; Marine Parade’s 2012 report here and 2011 report here; and Tanjong Pagar’s 2012 report here. As at the time of writing, Ang Mo Kio has not put its 2012 annual report up on its website. Tanjong Pagar only has its latest annual report on its website, not earlier ones.

I also looked for annual reports of the previous PAP-run Aljunied Town Council, but couldn’t find them. It seems to me that the current AHTC is a separate entity from the PAP’s Aljunied Town Council, whose website has been taken down. But its take-down also means its historical information has been removed from public eyes. Is this good accountability?

The most striking thing about the figures in the above table is how they appear to contradict claims that the computer system was sold to AIM in January 2011, who then charged merely $785 per month per town council for its use, at least up till 31 October 2011. This rate translates to an annual fee of $9,420. Yet, each of the town councils continued to spend over $300,000 in FY 2012 (ending 31 March 2012) on computer services.

This cries out for explanation — but I’ll share with you what I think the explanation is, below.

The annual reports also indicate what each town council projects as its commitments to lease payments in the 12 months ahead.

pic_201212_21

As you can see, there is considerable variation from one town council to another, but Tanjong Pagar continues to project that in the 12 months from April 2012 to March 2013, it expects to spend $380,196 on ‘rental of computer hardware and software’. This seems to conflict with Teo Ho Pin’s 24 Dec 2012 statement in which he reportedly said that “all computer hardware belong to the respective TCs” (Today online, 24 Dec 2012).

Here’s the relevant fragment from Tanjong Pagar’s Annual Report for the year ending 31 March 2012:

pic_201212_22

Marine Parade’s annual report is silent on lease commitments for computers/software, while Jurong, after deducting its probable office lease commitment, seems to be projecting about $43,000 for computers/software.

Ang Mo Kio has not yet published its annual report for year ending 31 March 2012, but its 2011 report contains yet another strange statement. At the bottom of page 29, under the subheading ‘other commitments’, it reports that the town council has a maintenance contract with NCS all the way to 31 October 2011.

pic_201212_23small

(click to enlarge)

What’s strange about it? Teo Ho Pin said that AIM, which had bought the system early 2011, was charging each town council $785 a month until 31 October 2011, and that “AIM engaged NCS to further maintain and develop the system”. So why is Ang Mo Kio town council still paying NCS?

So here again are numbers that demand accountability.

Managing is not the same as maintaining

Why are the town councils continuing to pay so much for computer services even after AIM has bought the system and is supposed to be responsible for it? A close look at Teo’s 24 December statement gives a clue. He said that AIM’s role was to ‘manage’ the system. I believe that word was carefully chosen to distinguish it from ‘maintaining’ the system.

Of course, a cascade of questions will follow. How many IT professionals does AIM have on its payroll with the expertise to ‘manage’ the system? How much does its payroll expenditure come to?

Also, why is it that the town councils suddenly needed a third party to ‘manage’ the system when previous years they managed it on their own? Why should town councils pay extra now?

pic_201212_25If I am hitting close to target, Teo can’t be having an easy time crafting replies.

And yet, there’s more. . .

‘785’ is a magic number

The high expenditures on computer services we saw in four town councils’ financial reports got me thinking about the ‘cheap’ $785 a month that AIM is charging them after the take-over. And then I saw it!

$785 per month  x  12 months  + 7% GST = $10,000 (approximately)

$10,000 per year per town council  x  14 town councils = $140,000.

It looks like the scheme was for AIM to pay the town councils $140,000 to purchase the system, and then to recover $140,000 in ‘management fees’ over 12 months. This in turn leads me to suspect that in reply to my question (above) regarding how much AIM is charging the town councils after 31 October 2011, the answer is ‘Zero’. Which may explain why Teo’s press statement was so oddly phrased, talking about 2011 fees and saying nothing about current fees.

If he admits that the current monthly management fee is zero, it will summon an even bigger question: What management does AIM actually perform for zero dollars? Which in turn will only put the spotlight even more brightly on WHY the computer system was sold to AIM?

And if the sale consideration and the management fee cancel each other out, does it not mean that the asset was handed over to AIM for nothing?

But I am jumping ahead of the known facts (at least known so far) and speculating. Let’s wait for Teo to reply.

pic_201212_24

The tender exercise

Teo said five parties collected tender forms but only AIM submitted a bid. Other commentators have called on him to disclose the tender terms, how long the tender exercise was open and who the other four parties were. I second those calls.

What I find remarkable is how convenient it was that a PAP-owned company was the only bidder. I mean, as is becoming obvious by now, the intention of the entire exercise seems to be to put the computer system in the partisan hands of a PAP-owned company, complete with a guillotine clause to disadvantage any non-PAP town council. But what if a non-PAP company (such as NCS themselves) had put in a better bid than AIM? It would then defeat the apparent point of the exercise.

So: How did they manage to avoid that inconvenient outcome? Were the other four companies somehow dissuaded from putting in their bids? What informal communication took place with them? Is there a case to say the tender exercise had been undermined?

All in all, there are enough questions — serious ones — to warrant a deep independent investigation.

See also PAP mis-AIMed, faces blowback, part 3.

63 Responses to “PAP mis-AIMed, faces blowback, part 2”


  1. 1 yuen 29 December 2012 at 15:24

    > AIM is fully owned by the People’s Action Party (PAP)

    this cannot be correct; Aljunied TC’s description seems more accurate

    > PAP-managed Town Councils, which developed the computing and financial systems at significant cost and co-owned them,

    Tanjong Pagar’s Annual Report appears to be in error; I cannot imagine computer hardware/software leasing alone costs 600K a year; I would guess the sum includes office rental as well

    • 2 yawningbread 29 December 2012 at 15:34

      Straits Times, 25 Dec 2012 reported (in ‘Firm says it got contract in open tender’):

      QUOTE
      Action Information Management (Aim) said it did so in an open tender.

      The company, fully owned by the PAP, was started more then 20 years ago to provide IT-related services, Aim said in reply to queries raised about why and how the system’s ownership was transferred to a firm run by former PAP MPs.
      ENDQUOTE.

      • 3 Anon 1R70 29 December 2012 at 20:04

        I am surprised to hear that AIM was started more than 20 years ago. I wonder if it was always owned by the PAP.

        For a company providing IT services, it is strange that they seem to no presence on the internet. I couldn’t find anything during my visit to the PAP website either

    • 4 Chanel 30 December 2012 at 08:57

      Yuen,

      The facts are staring at your face. Are you implying that Teo Ho Pin is lying or the audited accounts of tanjong pagar is misstated?

  2. 5 yawningbread 29 December 2012 at 15:30

    I see that Teo Ho Pin’s immediate reaction, as reported in the Straits Times and Today on 29 Dec 2012, is to try to make into the ‘key question’ whether Aljunied-Hougang town council was anyway going to stop using the computer system after taking over the council.

    He is evading the real issue again.

    As reported by Today:

    QUOTE
    “This is inaccurate. AHTC wrote in on June 10, 2011 to state that it wanted to develop its own system. Thereafter the contract was terminated with mutual agreement on Sept 9, 2011, after two extensions had been given at AHTC’s request. AHTC thanked AIM for the extensions.”

    He added: “Ms Lim should come clean on the facts. Why state that AIM wanted to terminate, while suppressing the fact that AHTC had on June 10, 2011, written to say that it wanted to develop its own software? The question has not been answered by her.”
    ENDQUOTE

    This is completely beside the point.

    The point is why did PAP town councils sell the system to a PAP-owned company with $2 paid-up capital BEFORE the general election? Not what happened after.

    I’m not surprised that the Workers Party was not keen anyway to use the system. In wanting to merge Hougang and Aljunied into a single system, they had to choose between using the system they had at Hougang or using the system in Aljunied. But it should not be a situation where they didn’t have the option at all to use the existing Aljunied system simply because AIM invoked the “material change” clause.

    As citizens, we are not concerned which system a town council chooses to use so long as they deliver results, but we are concerned when an asset developed with public funding is sold to a private company in circumstances that strongly suggest conflict of interest, for apparently partisan purposes.

    The key question is not the termination, but the sale.

  3. 6 Funny 29 December 2012 at 16:23

    That teo guy was reported in the news report that answers to some of the questions will be provided in the coming days hence let us wait patiently for his reply.

    Having said that I am very curious as to why can’t he give us the answers now but have to wait for a few more days? Funny, isn’t it?

    • 7 Tan Choon Hong 31 December 2012 at 13:09

      They need to find someone who can provide clever answers like “if you’re inside the compound, you’re not loitering within a radius of 200 metres of the polling station.”

  4. 8 Ng Pian Ying 29 December 2012 at 17:38

    As a political party registered with the registry of society are they not supposed to conduct business basing on conditions from the society.

  5. 10 HGB 29 December 2012 at 19:22

    shame it must be fully investigated CPIB PLEASE CHECK

  6. 11 Corruption 29 December 2012 at 19:41

    Isn’t it obvious this is another Brompton Bike saga? It is ridiculous that the town councils spend so much on computer system. I would like to see how much Hougang spend on IT versus another PAP SMC. Did the money to AIM get channelled to some covert activities? CAD should investigate. This is really fishy.

  7. 12 Descended 29 December 2012 at 21:12

    A HUGE CAN OF WORMS, CATERPILLARS, VIRUSSES….

  8. 13 Alan 29 December 2012 at 21:34

    The more they try to disclose, the more it stinks. Appears like they are trying to use a lie to cover another lie. It looks every bit like a case of the thief crying out “Thief, thief” when caught with their pants down.

    Are our Town Councils not considered quasi-judicial organisations set-up to serve each constituency ?

    S0 why haven’t they answer the most fundamental question what fucking business is it for a PAP S$2 company to go about tendering for IT jobs for the govt sector ?

  9. 14 Norm 29 December 2012 at 22:26

    The PAP has set the system up to make people rely upon it.

    Another topic worth looking into is the PAP Community Foundation (PCF) which is Singapore’s largest pre-school operator. Although the PCF was converted into a charitable foundation some years back, it still uses PAP branding and is controlled by PAP heavyweights.

  10. 15 Cin 29 December 2012 at 22:32

    In chess when you face a potential attack, you don’t necessarily have to respond directly to that threat – sometimes because your options to defend are restricted and defeat is imminent.

    So what you do is to counter with a move that feels like a threat but is in fact harmless. Your intention is to put your opponent in the defensive and hope that he makes a mistake to allow you to reverse the earlier advantage he had on you.

  11. 16 Chow 29 December 2012 at 23:24

    On a facetious note:
    I would think that what with all those ex-SAF generals in the system, they may have sub-consciously carried over the SAF’s Golden Rule: “Do things, but don’t get caught”.

    Well, unfortunately for them these things have a nasty way of popping up at the most embarrassing moments. Metaphorically speaking, “Murder will out”.

  12. 17 cristel 29 December 2012 at 23:50

    Thanks for the investigative work done. I saw somewhere that AIM has two shareholders, Chandra das and another person, registered with ACRA. If so, how can it be said that AIM is owned by PAP? Are they fronting for PAP? Are the fees collected re-directed to PAP? Is that legal?

    • 18 yawningbread 30 December 2012 at 00:14

      It is very common practice for named shareholders to hold their shares ‘in trust’ for the real owner, even in publicly-traded large companies on the stock exchange. If you look at those companies’ shareholders’ list you will see shareholders such as “XYZ Nominees” or “PQR Nominees”. This indicates a Nominee firm is holding the shares on behalf of someone else, possibly because the real owner wishes to remain anonymous.

    • 19 The 30 December 2012 at 16:30

      All three shareholders are ex-PAP MPs. That AIM is wholly owned by PAP came from the horse’s mouth.

  13. 20 sgcynic 30 December 2012 at 00:18

    It seems abundantly clear that at least another MP may have to resign very soon.

    • 21 Lye Khuen Way 30 December 2012 at 06:47

      Am looking forward to that day!
      Have an itching desire to see five more biting the dust so to speak, before the year 2013 is out.

  14. 22 Saycheese 30 December 2012 at 00:51

    I can’t wait for part 3.

    Happy New Year.

  15. 23 Damien Toh 30 December 2012 at 01:07

    Someone ask that CPIB to investigate on this saga. Asking CPIB to investigate on this is probably going to be as difficult as launching an expedition to th moon. CPIB is located in the PMO. They report to the govt. How likely is it for them to investigate their own bosses?!

  16. 24 Men in Blue 30 December 2012 at 02:39

    why don’t you dish the dirt of FMSS assignment to AHTC’s project

    That FMSS was set up 7 days after the 2011 elections
    With 3 of its directors, all from the WP Hougang Town coucil (and possibly party members)
    Hired 70 or more people without a single sale or contract
    Got a gigantic project without tender under AHTC
    Also resecured the AHTC with “3 taking the tender documents, but only FMSS submitting the bid”

    One sided much

  17. 25 Yeoh Lian Chuan 30 December 2012 at 03:05

    Alex, with great respect, your analysis of the Town Councils’ financial statements contains several analytical and (possible) factual errors …

    You say :

    “The most striking thing about the figures in the above table is how they appear to contradict claims that the computer system was sold to AIM in January 2011, who then charged merely $785 per month per town council for its use, at least up till 31 October 2011. This rate translates to an annual fee of $9,420. Yet, each of the town councils continued to spend over $300,000 in FY 2012 (ending 31 March 2012) on computer services.”

    Most Town Councils consistently spend about S$300-400k on computer services, and have done so for many years, well before Jan 2011.

    It is thus quite obvious that the figure of S$300-400k – the total computing spend of a Town Council – bears no particular relationship to whether “town council management software” – a particular item of software – was sold to AIM which then merely charged S$785/pm.

    Your argument that there is a contradiction here makes no sense at all, with respect.

    Your analysis of Tanjong Pagar TC’s computer spend is also probably wrong. I agree with you that note 20 of the financial statements was ambiguous as to whether the figures you cited include future year commitments for rental of hardware and software only, or whether they also include commitments for office premises. But I think the greater likelihood is that they do include office rentals. Anyway, I’m a resident of Tanjong Pagar GRC so I’ve written to our Town Council to ask for clarification of the figure. This will indicate if you were wrong or my surmise was wrong.

    Your analysis of Jurong’s probable computer expense is also likely wrong. You deducted the amount of “office rental and upkeep’ expense from the commitment to derive a figure of about S$43k per year of computer expense. But I think you forgot that office rental and upkeep includes more than rental – it includes upkeep and this is not insignificant.

    I also take issue with your comment that the financial statements are inconsistent with Dr Teo Ho Pin’s statement that “all computer hardware belong to the respective TCs”. I don’t think Dr Teo meant that none of the Town Council’s rent their computer hardware. What he meant was simply that the transaction with AIM had nothing to do with hardware.

    You speculate that AIM charged zero after Oct 2011. I suspect you are wrong. The amount charged by AIM would have included payments to NCS and it is not intuitive that NCS would have charged zero after Oct 2011. Your speculation is in my view probably wrong factually but as you say let’s wait to see what Dr Teo replies.

    All in all, the analysis of the Town Council financial statements was clearly not one of your better pieces of analysis, with all due respect.

    I agree with you, however, that the key question is whether the sale of the software by the Town Councils to the PAP was above board. That is a fair question to ASK. Since Dr Teo has promised a fuller explanation, let’s wait to see what else he has to said before discussing further.

    • 26 yawningbread 30 December 2012 at 09:56

      > Most Town Councils consistently spend about S$300-400k on computer services, and have done so for many years, well before Jan 2011.

      > It is thus quite obvious that the figure of S$300-400k – the total computing spend of a Town Council – bears no particular relationship to whether “town council management software” – a particular item of software – was sold to AIM which then merely charged S$785/pm.

      But that’s exactly the point.

      Now, possibly, town councils pay licence fees for other software, e.g. Microsoft Office, but its chief software must be its financial system which is central to its function of collecting conservancy fees and tracking services to residents. I would expect the chief expense of “computer services” or “computing services” (the description used in the accounts) to relate to this piece of software. There was a material change in the ownership of the software late 2010 or early 2011. One would expect that after that, town councils would be paying AIM, not NCS.

      But here’s the contradiction: AIM itself says it collected on $785 a month up to 31 Oct 2011, or under 10k a year. The vast gap between >300k shown on town council accounts and 10k claimed by AIM causes a great amount of suspicion. Who is being paid >300k a month? For what software?

      AMK town council accounts gives us a clue. It says it is NCS. But AIM now owns the software, and presumably is responsible for maintaining it. So why is the town council still paying NCS?

      And if 300k is a reasonable amount to pay to maintain such software, what is AIM doing for 10k a year? What value-added does it offer?

      > Your analysis of Tanjong Pagar TC’s computer spend is also probably wrong. I agree with you that note 20 of the financial statements was ambiguous as to whether the figures you cited include future year commitments for rental of hardware and software only, or whether they also include commitments for office premises. But I think the greater likelihood is that they do include office rentals.

      I agree that Tg Pagar’s accounts are not quite clear. They seem to show separately the commitments for (a) computer hardware and software and (b) total rental expense for the year. Obviously the $631,944 figure is not a summation of $380,196 and $175,000 only. It may in fact be a historical figure placed there for comparative purposes. But it seems clear enough that Tg Pagar says it is committed to paying $380,196 for computer hardware and software in the next 12 months and $175,000 more after that.

      > Your analysis of Jurong’s probable computer expense is also likely wrong. You deducted the amount of “office rental and upkeep’ expense from the commitment to derive a figure of about S$43k per year of computer expense. But I think you forgot that office rental and upkeep includes more than rental – it includes upkeep and this is not insignificant.

      I should have been clearer how I derived $43,000. Jurong town council’s 2012 accounts says in Note 23 that “As at Balance Sheet date, the Town Council was committed to making the following payments in respect of rental of office premises and rental of computer hardware and software under non-cancellable operating leases with lease terms of more than one year.”

      Then it gives a figure for Payables (not later than one year): $417,296.

      Since this figure includes both office rental and computer/software, it may be worthwhile to attempt a split. To do that, I looked at how much the town council paid as rent and office upkeep in 2012 itself. Note 10 of the accounts reveal it to be $374,712. Assuming that rental and upkeep in 2013 will be not much different from 2012, the difference (thus: for computer/software) is around $43,000. Actually, it will be more, because as you say, upkeep is no small expense, and it does not take the form of non-cancellable commitment. In other words Jurong’s commitment for computer/software is, in my opinion, at least $43k, possibly much more, e.g. $100k.

      > You speculate that AIM charged zero after Oct 2011. I suspect you are wrong. The amount charged by AIM would have included payments to NCS and it is not intuitive that NCS would have charged zero after Oct 2011.

      But I have already shown that town councils continue to pay NCS directly after selling the system to AIM. How can you say “amount charged by AIM would have included payments to NCS”?

      • 27 Yeoh Lian Chuan 30 December 2012 at 16:22

        Thanks Alex.

        On further reflection and study, I now agree that your primary thesis is *probably* correct.

        I should say that looking at the commitment figures for Tanjong Pagar in note 20 of their accounts, I still think the figure of S$380,196 (one year commitments) and S$175,000 (commitments from 2-5 years) includes rental commitments. It is true that the preceding sentence talks about “computer hardware and software” but the next sentence mentions office premises. I personally think the reference in the opening sentence of note 20 contains a typo and should have included rental commitments as well – bearing in mind the fact also that it includes commitments from 2-5 years (this is in particular because none of the Town Council reports – and I’ve looked at all of them which are on the web – indicate contracts for software going beyond 2013 – a number of councils indicate that they have software contracts which I’ve analysed as being until Oct 2012).

        But anyway that is a small point, not really critical to the central thesis.

        The central thesis is that the S$785pm EXCLUDES maintenance payments to NCS IN RESPECT OF THE TCMS, which payments continued after the software was sold to AIM.

        To be frank – this thesis is completely inconsistent with “… there [being] considerable variation [in software payments] from one town council to another”.

        If Marine Parade paid $0 to NCS, Jurong pays $80k and Ang Mo Kio pays $350k (annualized), this seemed to me obviously incompatible with the theory that what was paid to NCS was in respect of the TCMS.

        For that thesis to hold good, it seemed to me necessary that amounts the town councils paid to NCS across all 14 town councils must be broadly the same, taking into account some variations of town council size.

        Its no good if, just taking a sample of 4 town councils, the evidence of payments to NCS is all over the place.

        That would support rather the thesis that what AMK TC paid to NCS was for something else other than the TCMS.

        Which is why I originally argued that Alex’s thesis was likely wrong.

        That being said, I think that the evidence available does suggest, on a balance of probabilities, that PAP town councils are continuing to pay NCS for the TCMS.

        For the reasons explained, this must entail that the lack of reporting of commitments in Marine Parade does NOT mean that MPTC is not paying NCS anything (if that were the case, I think its inconsistent with Alex’s hypothesis).

        But from what I understand, the requirement to disclose commitments is only in respect of “operating lease payments” (under FRS 17) and the payment to NCS is an “other commitment” which means that it is probably not mandatory to disclose under FRS.

        So this can explain the differential reporting in the case of MPTC.

        In the case of Jurong TC, if the payment for NCS were only S$43k per year, again I would say that this amounts to evidence which is incompatible with Alex’s thesis. But as I explained myself above, the figure for “rentals and upkeep” includes a significant upkeep component and I suspect that the software payment for Jurong TC is >$100k.

        Looking at the annual reports of the other town councils, some of them don’t report any software payments for commitments at all, whereas others report payments under contracts ending in Oct 2011 and Oct 2012 – see e.g. http://www.hbptc.org.sg/files/Annual%20Report%201011.pdf (Holland-Bukit Panjang) and http://www.wctc.org.sg/AR1112.pdf (West Coast). None of the other town councils identify the payee but it *COULD* well be NCS, and if the payment pattern is consistent (instead of demonstrating considerable variability), then I agree it could be in respect of the TCMS.

        For these further reasons, I agree with the questions Alex raises – but please note that the above analysis, and Alex’s as well if I may respectfully say, are all based on incomplete information. We may yet prove to be wrong.

        But if the thesis is *correct* that what was paid to AIM EXCLUDES maintenance and development costs that continued to be paid to NCS in respect of the TCMS, it raises a profound question of what the payment to AIM was for, and what the sale to AIM was for.

  18. 28 ronald 30 December 2012 at 04:19

    if there is a complain lodged, CPIB is obliged/duty-bound to investigate is it not? Even if a logical explanation exists, a thorough independent investigation would nonetheless dramatically improve the transparency and credibility of our government

  19. 29 Jentrified Citizen 30 December 2012 at 04:29

    Good sharp questions which they will as usual endeavour to avoid answering or to talk around it. With absolute power they have gotten away with so much before that they do not know the meaning of accountability anymore. About time they stop behaving like emperors without clothes as we see them warts and all.

  20. 30 tichy 30 December 2012 at 05:03

    If PAP never send lawyers letter to you, what you say is probably not wrong

    • 31 New media press on n don let this issue subside without a conclusion. 30 December 2012 at 13:31

      Even if PAP have sent lawyer’s letter to Au, and Au apologised as requested, it does not imply what Au said is wrong.

      As we know, what the lawyer’s letter achieved is to silent the critics as the latter has no solid evident on his side, and hence wanted to avoid the uncertainty of a lengthy and costly law suite. If there is solid evidents like the email and smses in the PalmerGate, the response might be to the tune of certain MP automatically bravely resign to take accountability for his judgement error, and our PM will then thank the resigned MP for his years of dedicated service to the people (no, not the party).

      Hence the correct way is for the PAP to come out to explain clearly the question raised by the public and not side step any issue, if they want to maintain that they have done nothing wrong.

  21. 32 JG 30 December 2012 at 05:35

    “We are the PAP and we can do whatever we want (sticks finger out ..)”

    And yes, despite this, you WILL still vote for me, because we will obsfugate the issue and ensure that most Singaporeans aren’t paying attention to it.

  22. 33 Chanel 30 December 2012 at 08:53

    Great forensic work, Alex !!!!

    So the PM’s ward (Ang Mo Kio town council) was still paying NCS even after the software was sold to AIM? The footnote of the accounts stated that the contract with NCS was renewed till Oct 2011 !!!!

    It is weird that none of your sampled town councils used any of the Big 3 accounting firm to audit their accounts. In fact, 3 of the 4 ton councils have engaged relatively unknown auditors. Given the importance of town council accounting (they collect and spend money from residents), wouldn’t it be sensible for them to hire reputable names, eg. KPMG, Ernst & Young, Deloitte and PwC???? One may argue that even hiring such big names is not a guarantee to guard against any hanky panky by town council management. But these big names are far more professional and have far better auditors, so the likelihood of hanky panky by management being undetected is significantly lower.

    I am disturbed that town council historical audited accounts (going back several years) are not available at their website. Listed and even non profit organisations maintain several years’ of their historical audited accounts on their websites. Since town councils handle huge amounts of residents’ money, the more it should have historical accounts readily and easily avilable to the public.

  23. 34 Chanel 30 December 2012 at 09:03

    Another strange thing is why Teo Ho Pin meeds a few days to come up with a response as to why AIM was allowed such a draconian terminattion clause. Did Teo scruntinised the contract with AIM before signing it in January 2011. Didn’t the 14 town councils negotiate the contract terms before agreeing to sell? Why does he need time to find out the rationale now?

    According to ACRA, AIM is a limited exempt private company. This means that it need not publish audited accounts under certain circumstances. I wonder why AIM was given such a status. Was it to avoid public disclosure of its finances?

    • 35 yawningbread 30 December 2012 at 10:32

      See http://www.acra.gov.sg/Company/Making_Changes/Annual_Return_of_Local_Company/Exempt+Private+Companies.htm :
      “An Exempt Private Company (EPC) is a private company which has at most 20 shareholders.”

      Most companies are exempt.

      However, it may be argued now that since PAP has admitted to owning the company by proxy and PAP as a registered society has more than 20 members, AIM should not enjoy exempt status anymore.

      • 36 Yeoh Lian Chuan 30 December 2012 at 16:30

        An exempt private company cannot have more than 20 members.

        “Members” in company law means the persons who are registered holders.

        The fact that the PAP is a beneficial owner doesn’t make them members.

        This point is a bad point.

      • 37 Chanel 31 December 2012 at 11:18

        ACRA states that for limited exempt private company, the number of shareholders is limited to 20 and can only be individuals.

        Now, Teo Ho Pin has publicly stated that AIM is a PAP company. This means that the 2 shareholders of AIM are holding their shares in the company on trust for the PAP. Therefore, AIM does not qualify for exempt private company status as PAP is not an “individual”.

    • 38 Yeoh Lian Chuan 31 December 2012 at 13:31

      What the ACRA actually say in their website – and this is based on the definition of “exempt private company” in Section 4 of the Companies Act – is that no “corporation” may directly or indirectly hold a “beneficial interest” in the shares.

      “Corporation” is defined as any “body corporate” formed or incorporate or existing in Singapore or outside Singapore.

      The PAP is a registered society under the Societies Act.

      This does not make it a “body corporate” or a “corporation”.

      This is why the point is a bad point.

  24. 39 Clarence Teo 30 December 2012 at 09:12

    Who authorized the sale of software to AIM?
    This is a sale of assets owned by the Singaporean public.

  25. 42 henry 30 December 2012 at 11:13

    How can any lay person understand the accounts without basic accounting knowledge?

    Expense items are accounted for using vague terms with wide meanings.
    All town councils have same sources of income: the conservancy charges, same expenses such as rent, utilities and staff salaries and office software & hardware.

    For the sake of consistency and ease of comparison, the accounts should be presented in a manner understood by secondary student level.
    Apparently, in its current form, it serves to allow people in power to interpret it as they wish and hide what needs to be hidden.

    Apparently designed to obfuscate. These are gaps that needs to be addressed.For a small island nation this is not “on”.

  26. 43 Duh 30 December 2012 at 12:09

    So many questions, so many doubts…

    With AIM having essentially two (?) PAP members with $2 shares in it – how does it come up with the capital of $140k to pay for the software in the first place?

  27. 45 Thor 30 December 2012 at 12:51

    Perhaps these are some of the ‘national’ issues which are keeping LHL so he cannot call for the by election.

  28. 46 Peter 30 December 2012 at 13:07

    As a supporter of PAP all these years, I too feel something is amiss with the way the Town Council software was sold to a $2 company owned by PAP. Let’s give Teo Ho Pin the time he needs to provide us with an explanation.

  29. 47 fedora 30 December 2012 at 14:43

    Is it normal that 14 TCs, under the same mgt so to speak, all present their accounts so differently? The TCs differ in the items they group tog. They are also not clear what the diff items are. Some are not even listing stuff others have. It shouldn’t look so haphazard/unprofessional.

    How does one make the TCs account for what they are claiming, and make sure that what’s there is correct? As it is, it appears one lot are still paying NCS for services supposed to be rendered by AIM.

    And of course, there’s the extreme oddness of Teo HP not being able to answer Basic questions right off – eg how much was NCS paid to develop the software system? WHY WAS THE TC SYSTEM SOLD AND LEASED BACK????? – on a fresh and major contract.

    He seems to be flummoxed as to what to say. How difficult can it be?! How wild are the answers that there has to be all this pussyfooting? How is it that people who claim to have so much foresight not have forseen or planned for an inevitable accounting? And some like to claim the Opp parties are bad!

  30. 49 Do they know it's corruption at all? 30 December 2012 at 15:37

    Nice forensic work. The PAP has enabled and hid behind doors and walls, and sought to deceive the people of Singapore. They don’t even know when they are corrupt, as can be seen by the Palmergate scandal. Too bad the wake up call will only fully come in 2016.

  31. 50 James Kwek 30 December 2012 at 16:09

    Alex, there is a risk to analyse financials without adequate information. Any inaccurate conclusion is an opportunity to be used to demolish yr argument in toto and create to diversion.. It is quite likely that AIM merely gets the management fee without doing much and the TCs still have to bear and reimburse all system-related expenses incured directly or through AIM. Some of the TC’s hardware may still have outstanding lease payments and under certain accounting conditions can be listed as their owned assets in their financial accounts. AIM is unlikely to have taken over such liabilities.

    Nevertheless yr analysis is useful as a good launching pad to ask valid questions for Teo HP to reply. To pre-empt any half truth when Teo’s reply comes and also to counter his “don’t ask don’t tell” strategy, suggest you list down the key questions and issues and post them on his facebook so that he cannot say that he is unaware of them.

    I have a few to add for yr consideration:

    1. What is the value and synergy raised for the TCs and the public from sale to a 3rd party which seems to be just a middleman with no expertise or manpower of its own?

    2. Since the actual service company is NCS which the TCs are already a client of in the system development and maintenance, AIM is of no added value, except it stands to gain financially from the deal. The payback for its purchase cost is recoverable within 12-13 months and thereafter the mangaement fees payable by the TCs serve as a cah cow for AIM and hence to its parent political party. Going beyond 13 months, TCs and hence the public are the losers. Why compelling economic or social reason is there for the Tcs to do the deal with AIM, the terms of which pose a risk to continuity and stability of the running of the municipality responsibilties of the TCs. against public interest.

    3. How does it make economic sense for a sound system which possibly cost a million dollars to build be sold at a huge loss at about 14% of the cost?

    4. Teo HP had said that a reason to tender out the sale is to sort of determine the value of the system. How is that served by selling at a cut price to a single tender party? From all available info presently, the REAL and SOLE winner in the deal is AIM. Why then does the TCs push it through?

    Is there a question of a criminal breach of trust somewhere here on the part of Teo HP as the co-ordinating Mayor of mayors and his co-PAP mayors and MPs? Don’t know for sure although there seem to be circumstantial evidence. Let the fact’s show the way and get through the message that you can run but there is nowhere to hide. Give him all the rope to hang himself. After the TC’s (his especially) debacle loss in derivatives securities during which time he was also beating around the bush, I have little respect for him.

  32. 51 ikanrajah 30 December 2012 at 16:16

    Probably had the sanction of the Old Man to put meat in his words ” Aljunied voters will repent!”

  33. 52 AXW 30 December 2012 at 21:30

    You are on the right track – but I think you’ve somehow missed one key point that will bring this all together.

    “[...] explain why Teo’s press statement was so oddly phrased, talking about 2011 fees and saying nothing about current fees.”

    I suggest the reason he says nothing of current fees is because there are no current fees. My hypothesis is that AIM was inserted as an intermediary for the sole purpose of giving a PAP controlled entity the legal right to terminate the contract if the opposition won control of the TC at the GE. As I realised from the Reform Party press release, the timelines seem very curious. Based on the time that the tender was called, and what we know of the law around when GE must be called, making the tender run until that date lines up with the latest possible date that a GE could be called. Since I suggest the whole point of the deal was to enable post GE fixing by the PAP, there is no reason for the AIM deal to continue to exist post GE. I therefore suggest it has subsequently been cancelled / lapsed or similar – and is not currently in operation. Would be interesting to try and confirm this…

  34. 53 Anon sCmT 30 December 2012 at 22:04

    The forensics are laid out and…yes to the ordinary man on the street with little accounting experience will not understand the indepth but will agree readily on the plain and simple fact of a possibile corruption case that must be answered by the government. The many years every ordinary struggling citizen trying to make ends meet are being hogwashed by those enriching themselves and being threatened that investors will leave Singapore if we elect the opposition into power.

    From the many debacles being committed by the governing (Elected Management) party isn’t it about time we should increase our “Auditors” (Opposition Parties) to dig deeper and bring about justice and any misdemeanour committed.

  35. 54 The Pariah 30 December 2012 at 22:27

    Unwittingly thru this AIM-Town Council saga, Pay And Profit (PAP) once again expose their “chow kuan” (rogue-like) value system.

    The rot likely runs deeper than what we do NOT know for the past 3 decades. The rot festered after 1G PAP leaders got “retired” by LKY who is evergreen …. even when LKY is being lowered into his grave, he will rise if he thinks something is going awry for Singapore – so he said in a GE rally once upon a time, remember?

    Well, fellow Singaporeans, we deserve the kind of government we have. Who voted in PAP all these decades WITHOUT buying common sensical insurance of having one-third Opposition in Parliament as check-and-balance? We did!

    • 55 JG 31 December 2012 at 13:33

      The people DID buy insurance. At least 1/3rd of the people vote Opposition in most recent elections. The problem is that PAP changed the rules. They garner only 60% of votes but control >90% of Parliament. Basically, to get 1/3rd seats in Parliament, the opposition needs to gain 40+% of votes. This system is not good for Singapore because it delays the inevitable. And it makes the dominant ruling party smug and thinks its policies have broad popular support, when really, it doesn’t.

  36. 56 Riki Tan 31 December 2012 at 16:19

    Alex, very good work. Please continue to press on for the sake of us taxpayers and residents paying town council fees. I am a resident of Marine Parade TC and I expect a reply from my MP too.

  37. 58 y.h.wong 1 January 2013 at 08:53

    G ‘morning ,

    We r so grateful to u for all yr conscientious n concerted effort in compiling n analysing so much relevant /Interesting updates for us that are in d unknown or being masked in d past.

    Kindly keep up with yr gdworks n update us all progress , comments n new developments etc.

    Tq v much indeed.

    God protected n blesses u always .
    N Happy New Yr2013.

    Warm rgds ,
    Wong .

  38. 59 Philip 1 January 2013 at 20:09

    Great detective work Yawning Bread. We need more PF you, including you to join the WP and give this corrupt PAP govt & party a big kick on the ass, and out of Parliament in 2016

  39. 60 Anon BDsW 3 January 2013 at 06:29

    From:

    http://www.asiaone.com/print/News/Latest%2BNews/Singapore/Story/A1Story20130102-393038.html

    Wed, Jan 02, 2013
    AsiaOne

    Here is Dr Teo Ho Pin’s statement in full regarding the town council’s transaction with Action Information Management:

    [snip to paragraph 20]

    “AIM was willing to purchase our existing software IP for S$140,000, and lease it back at S$785 per month from November 2010 to October 2011. The lease payments to AIM would end by October 2011, with the expiration of the original NCS contract. Thus after October 2011, the TCs would be allowed to use the existing software without any additional lease payments to AIM, until the new software was developed.”

    [snip]

    YB you are right that the Town Councils need not pay AIM fees to use the software after Oct 2011.

    Very sharp of you!

    • 61 Yeoh Lian Chuan 3 January 2013 at 22:18

      Credit where credit is due.

      Alex was quite right to induce that no lease fees would be payable.

      His analysis was right and my comment was wrong.

      A clever analysis.

  40. 62 XL 4 January 2013 at 00:22

    Dear Editor,

    The link to the Dr Teo’s media statement 26 Dec 2012 (but published by Straits Times 25 December) is dead. Appreciate if you can update it. Thanks.

    • 63 yawningbread 4 January 2013 at 01:40

      Thanks for letting me know. Yes, the link to the media statement by Teo Ho Pin is dead. As you can see for yourself by trying the link, it originally linked to the PAP website, where the statement was put up. Inexplicably, PAP has taken it down (suspicious?). I didn’t keep a copy of it, but I have the Straits Times press reports of 25 December 2012, from where you’ll see much of the same substance as Teo’s and Chandra Das’ press statements See: http://yawningbread.files.wordpress.com/2013/01/pic_201212_15.jpg


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For an update of the case against me, please see AGC versus me, the 2013 round.

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