AHTC trial: Defence explains more than S$194,000 in payments labelled 'improper' in KPMG report

AHTC trial: Defence explains more than S$194,000 in payments labelled 'improper' in KPMG report

The Aljunied-Hougang Town Council office. (File photo: TODAY)
SINGAPORE: Nearly S$200,000 that auditors had marked as "improper" payments was used to pay staff salaries and provide essential services for Hougang Town Council (HTC), defence lawyers said on Tuesday (Oct 9), the third day of a landmark trial.According to KPMG, four payments amounting to S$194,759 made in 2011 by Aljunied-Hougang Town Council (AHTC) to its then-managing agent FM Solutions and Services (FMSS) or its service provider FM solutions & Integrated Services (FMSI) were "unsupported by certifications of services received".
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Mr Rajah said that AHTC would pay out invoices only if the word "paid" was stamped on the invoices.
"There was a system in which the invoices would be checked and certified with the word 'paid' before invoices were accepted. Do you accept that?" he asked.
Mr Hawkes said it was "fine" that the word "paid" was stamped on the invoices, but said the Town Councils Financial Rules require that work had to be "satisfactorily done".
"I don't think the word 'paid' meets that," he said.
The issue of the town council having appointed a higher-priced architect instead of a cheaper alternative was also raised by the defence during the cross-examination of Mr Hawkes.According to documents, AHTC had appointed the more expensive LST Architects instead of Design Metabolists for seven out of 10 construction projects. The plaintiffs have contended that AHTC could have paid about S$2.8 million more than it would have, had it appointed Design Metabolists for the seven projects.Both companies had been appointed to AHTC’s panel of architects, following which either of the two could have been selected for the town council’s projects.The defence had argued in court documents that LST Architects were appointed over Design Metabolists as they were considered to be the better consultant. AHTC’s experience with Design Metabolists, the defence said, was that they were “significantly less efficient” than LST, resulting in project delays that were “to the detriment of the residents”.

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Mr Rajah also brought up one instance where the company had renegotiated a "much higher fee" based on the percentage of a particular project's total cost, even after it had been awarded the project on a fixed-fee basis.This was in 2010 when the Aljunied Town Council had awarded the firm a Neighbourhood Renewal Programme project worth about S$7.8 million, on a fixed fee basis.However, citing an email drafted by former AHTC deputy secretary How Weng Fan, Mr Rajah said that Design Metabolists had submitted claims which worked out to about double the fixed fee it had quoted and this was accepted by the previous town council.Mr Hawkes admitted that he had not seen the email when KPMG made its report.“From what we have seen from the previous instance, it may well be that Design Metabolists may not be prepared to carry out the works at this fixed fee, and may seek to renegotiate,” said Mr Rajah.Lawyer for AHTC, Mr Chan, protested to Mr Rajah's line of questioning and the judge agreed, pointing out that “it does not follow” that if Design Metabolists had charged a higher rate in 2010, they would do so again.Mr Rajah responded that the defence’s case remains the same: "It’s that (AHTC) felt that other people were more suitable for the job."The trial continues, with Mr Rajah expected to complete his cross-examination of Mr Hawkes on Wednesday.
Source: CNA/lc(hm)