The latest development follows an ad hoc review done by the Accounting and Corporate Regulatory Authority (Acra).ST PHOTO: DESMOND WEE
PUBLISHED 21 MIN AGO UPDATED58 SEC AGO
Walter Sim
SINGAPORE - The Ministry of National Development (MND) has accused FM Solutions & Services (FMSS) of grossly profiteering at the expense of its sole client - the town council run by the Workers' Party (WP).
In a statement on Saturday, MND noted that for financial year (FY) 2013/2014, the Aljunied-Hougang-Punggol East Town Council (AHPETC) had suffered an operating deficit of $2 million. But that same year, FMSS made a net after-tax profit of $2 million after paying its directors and shareholders fees and salaries amounting to $1.14 million.
And although FMSS' revenue rose 30 per cent between the two financial years, from $6.7 million to $8.8 million, its profit after tax rose 300 per cent from $510,904 to $2.04 million.
"Had the town council not overpaid FMSS, it might well have had been able to break even," the MND said. It noted that the total payments by AHPETC to FMSS owners and directors had amounted to 22 per cent of FMSS' revenues in FY2012/2013, and grew further to 36 per cent in FY2013/2014.
"Such levels of profit margin are abnormal," said the MND. "As AHPETC was FMSS' only client, these findings support MND's earlier concern that the town council had overpaid FMSS excessively."
The latest development follows an ad hoc review done by the Accounting and Corporate Regulatory Authority (Acra) into FMSS' auditor Teo Liang Chye & Co, to determine the quality of FMSS' accounts and its audit process, the MND said.
FMSS was appointed managing agent for the Aljunied-Hougang-Punggol East Town Council (AHPETC) from 15 July 2011 to 14 July 2015, during which a series of accounting and governance lapses were found at the town council in a special audit by the Auditor-General's Office.
Among which were related party transactions, because FMSS' main shareholders were the late Danny Loh, who died in June while on holiday abroad, and his wife Ms How Weng Fan. The two owned 70 per cent of share of FMSS, and were respectively the town council's secretary and general manager.
Separately, a pending judgment from the Court of Appeal will decide if independent accountants can be appointed to, among other things, safeguard government grants to the AHPETC.
Because the AHPETC is FMSS' sole client, the MND has written to WP chairman Sylvia Lim to ask, among other things, if she was aware of the extent of profiteerin g in FMSS, if she has examined past transactions with FMSS, and how she intends to recover the monies lost due to overpayment.
"As FMSS was paid using service and conservancy charges collections from residents and operating grants from the MND, public monies are at stake," said the MND. "What happened between the town council and FMSS is not a private matter, but one which MND needs to look into."
