Teo Ho Pin’s latest public statement regarding the sale of the town council computer system to Action Information Management Pte Ltd (AIM) is far from convincing. If anything, it lends even more weight to suspicions that it was improperly decided and executed.
His statement was posted on Facebook 2 January 2013 (link), and here. It’s been picked apart (I think by Molly Meek) line by line here. I agree with the comments there and there’s no need for me to repeat them. See also the commentary by Harish Pillay.
The statement provides considerably more detail than have been disclosed so far. At least it produces the benefit of focussing the issue down to five key areas:
The decision to sell
Teo’s explanation about the decision to sell is wholly unconvincing. For seven years, the 14 People’s Action Party-run town councils had dealt directly with National Computer Systems Pte Ltd (NCS), including through the most complex phase — developing the software in the early years. All of a sudden, when the software had become mature through use, a decision was made to sell it simply because they needed to negotiate an extension beyond 2011 with NCS. There are many ways a group of users can liaise efficiently with a vendor through a point person or team; selling the software is not the most compelling.
I am not convinced that we have heard the real reason why Teo and the town councils chose this route.
Moreover, when Teo offered “Having each of the 14 individual TCs hold the Intellectual Property (IP) rights to the software was cumbersome and inefficient” as a reason, it is almost laughable. Here is software that is becoming obsolete, that the town councils were nearly sure they’d have to replace completely, and they’re concerned about who should hold the rights to the corpse? Offering such a lame excuse only adds to suspicion.
The tender notice
Having made the decision to sell, how was it executed? The tender notice looks rather shoddy. Several questions have been raised by The Online Citizen, such as over the paucity of information about what the contract would be about, the two-week period when it should be three, etc. (See The curious case of the tender notice with no details). It gives the impression that there was no interest in securing wider participation.
Teo’s statement does not address these questions. Was he not aware of them even though The Online Citizen posted the article about 48 hours before Teo released his statement?
Commercial or political value?
Teo has now disclosed who the other four parties were who, besides AIM, purchased tender documents. They were NCS, CSC Technologies Services Pte Ltd, Hutcabb Consulting Pte Ltd, and NEC Asia Pte Ltd. A simple websearch will reveal that all four are reputable IT companies with an impressive list of clients. AIM does not even have a website.
Yet none of the four chose to submit a bid. It is hard to avoid the conclusion that none saw any commercial value in the deal.
Town councils made a small profit from the sale, Teo said
Teo said, “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.”
[Aside: Once again, he doesn't actually say that AIM paid $140,000 for it. Why does he not say it in plain language?]
S$785 per month multiplied by 12 months and multiplied by 14 town councils, means the total lease fees paid back to AIM was S$131,880. This appears to be the basis for his assertion that the town councils “expected to gain a modest amount (about S$8,000) from the disposal of IP in the existing software.”
But seven paragraphs down, Teo said AIM was now charging the town councils a management fee of S$33,150 for the 18-month period November 2011 to April 2013. Several questions follow:
1. Was this part of the June 2010 tender or was this negotiated separately after AIM had been awarded the tender? This is important because if it was part of the tender, the other four parties might have seen commercial value and put in bids. If it was negotiated separately without calling for a new public tender, how does it meet procurement standards?
2. Add the $8,000 gain and the $33,150 fee and one sees that the town councils are paying AIM more than AIM paid for the asset. Teo might argue that AIM is providing services beyond the asset, but the town councils could have continued dealing directly with NCS and also sourced for a new system (as they did in 2003) without having to pay this sum. Teo needs to explain the rationale.
3. Why did Teo not volunteer to mention this S$33,150 fee in his earlier statement of 24 December 2012? Why the half-truth then? Why only disclose it after I had asked what the fee to AIM was after October 2011?
That being the case, either AIM had special insight and could see commercial value where experienced companies could not — hard to believe, since AIM was a dormant company — or AIM could see value that was not commercial in nature. Given the fact that AIM is owned by the PAP, the inescapable conclusion is that it saw political value. The details in Teo’s statement only reinforce this feeling.
Does PAP ownership qualify or disqualify?
Despite not having any track record — the tender notice had stipulated that it should be an ‘Experienced and reputable company with relevant track record’ — Teo said AIM was considered a reputable enough company simply because it was a PAP-owned company: “we were confident that AIM, backed by the PAP, would honour its commitments.”
This is to see continents as wet and oceans as dry. Teo is saying that PAP ownership super-qualifies a company (super because it even obviates the need to demonstrate track record) when to any thinking citizen, it should disqualify it.
Despite being the sole bidder, the town councils should never have considered AIM’s offer.
The most troubling thing is that Teo sees no conflict of interest when putting state assets into partisan hands. It does not matter how it is done, whether through a tender or negotiated sale. The result is plain unacceptable. Arguing that there is nothing illegal about it — as either he or Chandra Das of AIM (and ex-PAP member of parliament) did in an earlier statement — only proves how they resist the ethical question.
There is a red line that should not be crossed. Most citizens can see that.
If the PAP thinks that putting a town council computer system in the hands of a PAP-owned company is not crossing that red line, then tomorrow, we may well wake up to discover that a ministry’s computer system, e.g. the national identity card and passport system, has been sold to the PAP. Or that the Central Provident Fund has entrusted a few billion dollars to a PAP-owned company to manage.
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On a slightly happier note, Teo’s statement is notable for one thing it does not dwell on: Aljunied-Hougang Town Council’s (AHTC) switchover to a new system. Earlier, Teo and Chandra Das tried to use it as a smokescreen to avoid scrutiny of their own actions in passing the computer system to AIM.
The mainstream media played their dutiful part, reporting the matter as a “dispute” between PAP and the Workers’ Party which runs AHTC. But social media kept the focus on the sale of the software. Now, Teo’s abandonment of his earlier defensive position and his attempts to answer some of the specific questions raised online show the reach and power of new media.
So, one more time: Teo and PAP — why don’t you guys see a red line when others quite clearly do?