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WP has not explained important questions: Khaw

Acra records show EM Services made a profit margin of 7% in FY13/14; FMSS's margin is over 20%

Mr Khaw Boon Wan, Minister for National Development taken at Gardens by the Bay on Tuesday, 4 August 2015.


THE Workers' Party (WP) has not explained "important questions" on the clawback from the former managing agent of Aljunied-Hougang-Punggol East Town Council (AHPETC), said the Minister for National Development, Khaw Boon Wan, on Thursday.

He also charged that the party has been distorting facts, and putting out "half-truths". This followed comments by WP's chairman Sylvia Lim - also the chairman of AHPETC - at the party's first rally of the election stretch, where she said that she was debunking "myths" about AHPETC.

MND released figures on Saturday showing that FM Solutions & Services (FMSS) posted a post-tax profit of S$2.04 million in FY2013/2014, and said that FMSS was "grossly profiteering off its sole client, AHPETC". While its profit about quadrupled from the same period a year ago, FMSS's revenue was up by just 30 per cent in the same time. The numbers translate to a profit margin of 23 per cent.

BT's separate check on Thursday using Acra records showed that EM Services - which manages nine out of 15 town councils in Singapore - had a profit margin of 7 per cent in FY13/14. It made a post-tax profit of S$7.53 million.

EM Services has other businesses besides town council management, but said the latter is its core business and it has a 60 per cent market share of the town council business.

AHPETC revealed this week it was disputing certain payment claims made by FMSS for services delivered between April and July 14 this year. This came about after a New Paper report about a letter of demand filed by FMSS over a S$3.5 million payment allegedly due from AHPETC.

Ms Lim has argued during the rally that, among other points, that FMSS had not been overpaid since payments are tied to a contract, and that its profits are not under the town council's scrutiny. She had declined to give more details about the S$3.5 million claim, other than that it is for projects that are charged separately from managing agent fees, and that "substantial" payment has been made.

AHPETC's latest FY14/15 report showed a S$811,375 project fee charged by FMSS for the fiscal year ended March 31, 2015. As it stood, it had already more than doubled from a year ago. Most of the fresh S$3.5 million payment being claimed - which includes an undisclosed sum in dispute - will be accounted for in fiscal 2016, Ms Lim noted. She said that this matter was due for mediation, and she did not want to jeopardise the reconciliation.

FMSS was mainly run by the late secretary and general manager of the town council. The Auditor-General's Office (AGO) had rapped AHPETC in a report this year for poor disclosure of the related-party transaction, and said that it "did not adequately manage the conflicts of interests". AHPETC stopped work with FMSS in July.

Mr Khaw responded on Thursday that the party has continued to "mislead" residents on "very important facts". "So if they had been paying in accordance to what has been agreed in the contract, then why are they suspending payment? Why are they trying to claw back the money? They never explained all these important questions at the rally," said Mr Khaw, who spoke to reporters while on a walkabout.

He also stressed that AHPETC's accounts remain qualified by their independent auditors.

"At the Workers' Party's rally, they spent a lot of time talking about their problems at AHPETC, so obviously they knew this is an important subject that concerns the residents of Aljunied. It concerns the question of honesty and integrity," said Mr Khaw.

Law and Foreign Affairs Minister K Shanmugam also spoke on the matter earlier in the day. "Look, Mr Low (Thia Khiang) says, 'I'm not in jail' . . . So, you can do pretty much anything you like as long as you don't go to jail. That is the sort of standard the party has set for candidates."