Here is the wayang to cover the tracks.
The Business Times - March 7, 2007
By: Wee Li-en
THE Ministry of Trade and Industry (MTI) has further clarified the issue of land sales at Sentosa Cove.
Yesterday's statement followed the background given by MTI Minister Lim Hng Kiang in Parliament on Monday to questions relating to the Auditor-General's findings that there were deficiencies in land sales procedures at Sentosa Cove.
In its statement yesterday, the MTI said that based on past experiences, selling land in a complex mixed development like Sentosa Cove using the normal government methods would not achieve the best value.
Sentosa Development Corporation (SDC) therefore formed a private sector company, Sentosa Cove Private Limited (SCPL), to undertake the land sale, adopting practices commonly used in the private sector to better meet market needs. These have proven to be effective, and Sentosa Cove has done well over the past few years, it said.
However, the Auditor-General found that such practices do not comply with the government's Instruction Manual which the SDC as a statutory board has to follow. The MTI statement yesterday elaborated on the three instances cited by the AG.
The first relates to the award of 24 bungalow parcels to a sole bidder, Ho Bee Investments Pte Ltd, at a price below valuation. MTI said the tender exercise took place just the year after the Sars outbreak, and given that it was the first en bloc sale of bungalow plots, it was unclear how much risk developers were prepared to bear.
The SCPL thus made a commercial decision, which took into consideration the prevailing market sentiment and the fact that the bid price was still substantially higher than what SDC had paid the state for the land.
In addition, being the first en bloc sale, the valuation process may not have adjusted adequately for the higher perceived risks and uncertainties.
The MTI said that SCPL's key consideration was to maximise the returns from the overall portfolio of land sites in Sentosa Cove and not of individual plots.
The steady build-up of market confidence and sales momentum for Sentosa Cove that followed bears out SCPL's judgment to give the award, the MTI said.
The second issue cited by the AG involved the sale of 33 bungalow land parcels in August 2005 using an expression of interest (EOI) - an approach commonly practised in the private sector. SCPL had sent a letter of invitation to all 170 Redas developers to participate in the exercise, of which only 15 developers indicated interest and subsequently obtained the marketing brief and EOI kit from SCPL. These 15 developers were thus informed of the EOI details, including the award criteria as well as the subsequent extension of the deadline. This is similar to normal tendering procedures, where the practice is to notify only the registered prospects of changes in specifications.
In addition, in response to a specific query by some Redas members during the EOI exercise, SCPL clarified, before the EOI deadline, that they reserved the right to make a counter-offer to the highest bidder should the received bids fall below expectations. This was duly made known to all 170 Redas developers on the same day that the query was received.
The third point raised in the AG's report relates to a former SCPL board member who participated in an open tender for land sales at Sentosa Cove after he retired from the board.
Putting things in context, the MTI said SDC and SCPL board members are not disqualified from participating in Sentosa Cove land sales. The MTI said that it would not be fair or practical to disqualify them because respected individuals with real estate experience have been invited to sit on the board.
Instead, to ensure transparency and fair competition, board members wishing to participate in any sale of sites have to declare their interest in writing and submit a confidentiality undertaking.
In this instance, the director, Chua Thian Poh, even though he was no longer a board member when Ho Bee Developments Pte Ltd submitted its bid and was no longer subject to the disclosure requirement, did declare his interest and submitted a confidentiality undertaking before participating in the open land tender exercise. Mr Chua's company, Ho Bee Developments Pte Ltd, submitted bids for four land parcels, and won the tender for two plots as it was the highest bidder.
THE MTI said that following the AG's observations, the SDC has reconciled its sale practices with the government's Instruction Manual and obtained exemption from certain provisions. SDC will also further review and tighten the procedures for its Sentosa Cove land sales, the MTI said yesterday.
