I 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.
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.
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:
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.
(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?
If 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.
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.