<Ministry of National Development Perm Sec Mr Benny Lim holding a 'I'm a boss" mug>
Prime Minister,
In January 2013, you asked the Ministry of National Development (MND) to review the sale of the Town Council Management System (TCMS) software belonging to the PAP Town Councils (TCs) in an open tender to Action Information Management Pte Ltd (AIM) in 2010.
The MND was to review the transaction fully and its context, and satisfy itself that public funds were safeguarded and residents’ interests were not compromised.
In the course of the review, the MND was also to make observations on the nature of TCs and how they are run, with a view to improving the current framework.
A MND Review Team led by the MND’s Deputy Secretary Mr Tay Kim Poh was formed. The team examined reports and documents and interviewed parties relevant to the AIM transaction.
In addition, the Review Team studied the Town Councils Act (TCs Act) and the Town Council Financial Rules (TCFR) and the Parliamentary proceedings related to the enactment of the TCs Act in 1988 so as to appropriately contextualise the issues examined in the review.
An important issue that has been raised in public discussions is that of conflict of interest and whether the interests of the TCs were protected because AIM, a PAP owned company, was contracting with TCs which were headed by PAP MPs. In considering this issue, the background to the setting up of TCs is important.
The TCs Act does not prohibit transactions with persons or entities associated with political parties. TCs were set up for, and fulfil a political purpose. In the administration of the Act, latitude has always been given to the MPs, across parties, to exercise autonomy, where they see fit, in employing or appointing those who share their political agenda or are affiliated to their parties.
The substantive issue is, therefore, whether a conflict of interest arose in terms of the TC members having a pecuniary or direct interest in the AIM transaction, whether the interests of residents were protected or impaired and whether there was any misuse of public funds.
The Review Team has completed its work. After reviewing the facts of the 2010 AIM transaction, the team’s key findings are:
a) There was no pecuniary or material interest by any TC member in AIM or in the contract awarded to AIM in 2010.
b) The PAP TCs complied with the open tender process under the TCs Act and TCFR. They advertised the tender in the Straits Times on June 30, 2010. It attracted expression of interest by 5 vendors but eventually, only one bid was received which came from AIM.
c) The acceptance of a single bid for award is permissible under the TCFR as long as it satisfies the tender requirements and evaluation criteria. The PAP TCs awarded the tender to AIM as they evaluated that its bid of S$140,000 to buy the TCMS software, which was near obsolescence, was a fair one and because they were confident, given AIM’s track record working with TCs in the past, that AIM would be able to meet the requirements of the contract.
d) AIM did not make a profit from the TCMS transaction in 2010; its Directors were not paid any fees and it charged only a fee to cover its operational costs. AIM in fact sustained a loss during the one-year sale and leaseback arrangement of the TCMS software.
e) There was no misuse or loss of public monies in the transaction. The PAP TCs had acted in good faith in the interests and for the benefit of their residents. They crafted a contract with terms which explicitly assured against any increase in maintenance fees while they sourced for a new TCMS software.
f) In the light of the above findings, the team concluded that the AIM transaction in 2010 has complied with the TCs Act and the TCFR.
In the course of the review, the team observed that the party political nature of TCs operating in a competitive context raises a constant risk of politicising town council administration. This may not always lead to outcomes beneficial to the interests of residents.
In particular, the team noted that a broader issue which merits further study is how to ensure continuity of services to residents in the event of a change of MPs, especially if from different political parties.
The TCs have operated for over 20 years in their current form. The team recommends that the Government consider a strategic and comprehensive review of TCs.
A copy of the Review Team’s report is attached and submitted for PM’s consideration.
Benny Lim
Permanent Secretary of MND, Prime Minster's Office
Editors Note:
“In addition, the TCs assessed that AIM was a company with an established track record in TCs and IT services, including past working experience with the PAP TCs. The TCs had confidence that AIM would deliver on its commitments.”
How is this possible when the company has no staff, office, hardware, website, or any other business dealings. The only information on it was that it shared the same mailing address as the PAP - is this sufficient to say it has an "established track record"?
The outcome of this review has reflected badly on the Ministry of National Development as a public sector department and also made the PAP government lose all the trust of its citizens.
What do you think?