The Real PAP

Ah, the thrill of a Committee of Inquiry strikes again! The joy of watching your career slip right before your eyes, of seeing your name immortalized for generations, of wondering who will be the last Survivor…

PM Lee has wisely decided to call in MND to investigate the AIM saga. Maybe it won’t be so bad this time around, it’s only a ‘review’ and not a full-blown COI. Here’s what they’ll likely find.

1. No corruption, no criminal breach of trust. Those who alleged this have overactive imaginations. Really, do you think the PAP is so stupid as to do something patently illegal? What they do is sometimes distasteful, but always legal. They hire smart lawyers to write laws for them, they hire smart lawyer to advise them, and to sue people for them. With lawyers like these, how can they ever fall foul of the law?

2. No misuse of public monies. Those who allege this do not understand what public money is. Town council fees are not public money, unlike taxes, levies or duties. The latter are used to fund public services; the former are used to pay for specific services consumed by the payee, in this case, estate cleaning and maintenance services. They are no different from condo management fees or even fees collected by (say) polyclinics, which pay for drugs and medical services used by the payee. If you don’t consume the said services, you don’t pay. 

Public money is  different. When you pay taxes, you are not consuming anything specifically. You just pay. Public money is used to run public services, and is distributed by the ministry of finance. Those who have too much (eg SLA, LTA) contribute their excess to the Govt Reserve. Those who don’t have enough (eg Mindef) draw from the Reserve.

Public money is also subject to President oversight. Basically, if the govt doesn’t raise enough revenue and has to borrow or draw from the Govt Reserve, his approval is needed.

As far as I know, Town Councils do not have to contribute their excess funds to the Govt Reserve, nor do they need Presidential approval for overspending. Hence to me, it’s very clear this is not public money.

3. Town councils are political organizations. Technically wrong, since Town Councils aren’t gazetted, like TOC. However, it is totally correct that town councils are run by political parties and their employees are not paid by the Civil Service. So again, they are in many ways different from govt employees, though many residents can’t appreciate the difference.

4. Conflict of Interest. I think not even MND can deny that having a Pap company buy software from pap town councils is a conflict of interest. However, they can point out that no one else was interested in the tender. So how?

Sale and leaseback is not illegal. In fact, it’s quite common in business. Many businesses want to free up cash, lighten their balance sheets. Outsourcing also makes sense. No point having 14 groups of IT support staff, 14 server rooms, 14 IT helpdesks etc. when centralising it brings economies of scale and cost savings. Hence, in principle, I have nothing against sale and lease back, not just because it’s legal, but because it makes business sense.

I think MND will just fault the Town Councils for not calling for a re-tender before awarding to AIM, as MND itself does if there’s only one bid for a hawker stall.

5. The Poison Pill clause. To me, this is the crux of the matter. The right for aim to walk away when there is a material change of ownership of the town council is political poison by the pap. One sees such clauses only in commercial contracts such as joint ventures, where both partners have the right to walk away if there is a material change, eg if the other party is acquired by a direct competitor. It would seem pap regards other parties as direct competitors and puts the same kind of poison pill clauses in its contracts as companies in a joint venture.

Again, this is perfectly legal but it shows just how political and self-serving PAP is.

In summary, I don’t believe PAP or AIM did anything illegal. However, I see what they did is for their own political interest, and I’m glad this case has exposed the lengths to which PAP will go to cling on to power.

Voters should see PAP for what it really is. They should also realise that AIM stands for “Aljunied Is Mine”.

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Someone who sees beyond PAP and "opposition" in Singapore politics. To understand more please see the Top 10 link below.
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21 Responses to The Real PAP

  1. MikeZeng says:

    You left out completely the money part…..mainly did AIM profit or not ? And by how much? Where did the $140k come from? Who has it now? Etc etc

    • There is no reason why AIM should not profit from the arrangement. Even cleaning companies that serve town councils are in the business to make $$. Profit is not illegal. That’s not the point.

  2. henry says:

    Town Councils can apply and if approved, receive grants from the Government. The origins of the grant is public money.

    You are correct in that everything is legal. It is the ethics that is being subscribed to. This is very different from what people are being told: Be kind, help others, donate, be charitable, embrace community. The signal is in conflict with what is being practiced, and preached.

    Machiavellian techniques are useful in measured quantities and in specific circumstance, however the internet has opened up many other alternative views. Illusions and magic are easily exposed for what they really are. ( it is not illegal to practice magic )

    The world trend is towards meaningful living with each one interconnected and a healthy respect for all. I am glad that some political parties do not recognise this, and instead ignore
    it at their own demise. Cut my nose to spite my face? Yes!.. with advances in technology and science, a new one can be cultivated. For the current nose is old and will never ever be made to adapt to a face that has changed.

    • I understand about grants. I agree they are public money. However, you have to prove that grants were used to develop the system in question. I don’t believe that to be the case. Grants are typically given for activities such as upgrading, facilities, etc.

      Notwithstanding this, there is no reason why public money cannot be used to develop a system and then, if it makes financial sense, for the said system to be outsourced to a third party. Surely it would be ridiculous to insist that govt agencies not outsource systems just because they were developed with public money. Why should the public pay more to maintain a system if it is more cost-effective for the system to be outsourced?

      The problem is not whose money was used to develop the system. The issue is that party they outsourced to. I see a clear conflict of interest, and I think the PM realises this as well. We should have a clear position at the end of his ‘review’.

      Either they affirm that town councils are run by political parties and as such they can bring in their related companies to develop and run such organisations. Or else, as with any other company with standards of corporate governance, one must show that related party transactions must be done at arm’s length and independent directors should attest to this.

      I stress again, I do not agree that there was anything illegal, and I do not support the position that even if public money is involved, one can never transact with related parties.

  3. faber says:

    If I arranged to transfer an asset to another entity where I am a member at questionable price, terms and means, that’s fraud. Aljunied residents may have a civil case of tort for damages and loss. Provisions under the TC Act may have been breached. Enough said.

    • If you think it’s fraud, please make a report to the Commercial Affairs Dept.

      If you think Aljunied residents have suffered tort, please ask them to file a suit in the High Court.

      I personally do not see this, and I have stated clearly I do not believe the PAP to be so stupid as to do anything plainly illegal.

      • faber says:

        I agree with you that profit, sale and leaseback, related party transactions, or protecting partisan interest can all be legal. And that PAP would be so STUPID to do anything so PLAINLY illegal.

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  5. SM Goh says:

    From the Town Councils Act (Chapter 329A), a town council is established by the Minister and incorporated by the Act.

    1) Why does it require someone in a Minister’s capacity to establish a political organisation?
    2) Statutory boards are also incorporated by similar acts. Does it mean the CPF and MAS are political organisations, and all their assets belong to a political organisation?
    3) Does it mean that the HDB has been donating money towards political organisations all this while for the upkeep of residential towns?

    • I disagree that the Town Council is a political organisation. I think PM realises this too, that’s why he wants MND to establish the ‘nature’ of town councils. Haha. Someone spoke too fast for the PM’s liking.

  6. JG says:

    “2. No misuse of public monies. Those who allege this do not understand what public money is. Town council fees are not public money, unlike taxes, levies or duties. ”

    I hadn’t look at it this way before, so I appreciate you pointing it out. But I still disagree with your point.

    For example, town council monies are also used to build walkways, shelters and yes, invest in assets (like the infamous Lehman bonds). By your reasoning, it is perfectly legal to transfer walkways, shelters, funds in XXX investment, investment funds in shares etc to a PAP held entity. Ater all, these are “PAP initiated programs”. And the PAP is worried that the incoming opposition party will screw up all the rainy day funds painstakingly built up over the years. So fish those funds out, let WP build their own reserves.

    Another way to look at it is in the context of a company. A company didn’t levy taxes, or use public money. Its members willingly subscribed for shares. Board and management decide how the funds is used. Suppose the company invested in a software asset for $1m and then decide to sell it to the ex-Chairman of the board for $10. This would be a misappropriation of funds, wouldn’t it?

    Especially if the way the sale is done looks suspicious. Badly worded tender notice, winning bidder being an interested party who submitted his bid 5 days late. And allegedly round-tripping too (ie. paid $X for it, and within 1 year, got $X back). City Harvest also allegedly did round-tripping in the forthcoming case.

    I know many Singaporeans dismiss this AIM saga as a tit-for-tat, dirty politics but perfectly legal. I think at the back of their minds, they give the benefit of the doubt about its legality because the consequences if it were not so is so unthinkable – you mean the PAP (!!!) did something illega? Just like City Harvest with the use of members’ funds?? Gosh …

    If it were the other way round (ie. WP or SDP) having done such shenanigans, many so called corporate governance experts would long ago have denounced the actions. In fact, PAP will be jumping up and down about why this is not just a small issue (you know, like CSJ using Univ funds to send his wife’s thesis overseas) but a bigger “character issue”, “what kind of people you want to send to Parliament”.

    I personally felt that the PM should have taken the moral high ground right from the start. Not wait for weeks until the can of worms got larger. Yes, blame it on some low level staff and be reverse the transaction right from the start. But now its gone so big and you can’t just stuff Pandora back in the box again.

    • I hope you see from the tone of my piece that I disagree with the PAP. But one must disagree from the right platform, for the right reasons.

      Money that we pay a service provider– in this case a Town Council– is really money for services rendered. As long as they keep my estate well-maintained, I can’t tell them what to do with the rest of it, any more than I can tell Singtel what to do with my mobile subscriptions.

      That’s why Town Councils can invest in minibonds, etc. Because THEY DECIDE.

      Of course, in private sector, we rely on competition to keep companies honest and fees competitive. In the public sector, we rely on elections. If voters didn’t see fit to vote out those who lost money in minibonds, so be it.

      Accountability starts and ends at the ballot box.

      Your example is not really appropriate. If the Board, which is elected by shareholder at its AGM, decides to sell an asset at below market value, it has to answer to shareholders at the next AGM or even at an EOGM, is it not so? Hence one has to choose Board members one can trust.

      That’s one reason why banks came under such pressures in recent years– because their Boards were letting management take too much risk and giving them too generous bonuses. Right?

      I do not consider your example as a misappropriation of funds. That’s illegal. To sell something below market price is not illegal. However, it is not acting in the interests of a company and I’m sure a concerned shareholder could file an injunction to stop the sale. That is, if Audit wasn’t caught sleeping on the job.

      Notwithstanding the above, the PM is smart, he knows which way the political wind is blowing, that’s why he calls for a review. Because he is one the MPs’ involved, he can’t go around saying he’s right. So he needs someone else to look at it. In other countries, the opposition would be calling for a public inquiry into this. Here we have a review by a govt ministry that ultimately reports to him. I wonder how effective it will be for him.

      • JG says:

        I noted you disagree with the PAP.

        What I wanted to point out is that even though you believe that this is not illegal (whether in a company or Town Council context), and the recourse for shenanigans is vote the bumps out, I disagree. Based on my understanding of the law, in the case of a company, it is well established that the Board and directors have a fiduciary duty to act in the interests of all shareholders, especially in a related party transaction. Its not a nice to have – its a legal requirement. That’s partly why City Harvest is now being prosecuted.

        If selling a software belonging to a company is sold to a $2 company owned by the ex-chairman, for say $1m, in return for the ex-chairman’s company charging $1m to the company within the 1st year and 100% recuperating his investment, then under the law, this can be illegal. This is under s157 of the Company’s Act. He’s also bound under the law, to avoid acting in a manner that advantages himself and cause detriment to the company. Blah blah blah …

        My point is that a similar principle applies (or should apply) in this case, even though we’re dealing with Town Councils not companies.

      • I agree there is a fiduciary requirement. But no one would go about violating a fiduciary requirement so blatantly as in your example. The problem is, if someone sells below market price, how do you prove that it was a breach of fiduciary duty? Because no one will be so stupid as to sell it for $1.

        Notwithstanding this, I believe there is a conflict of interest here, which apparently the pm thinks he can survive. Good luck to him.

  7. George says:

    There appears to be a ‘gray’ area which perhaps you can clarify.
    Namely, under what law are TCs appointed? Under what law was the responsibility of the HDB to maintain and run HDB estates transferred to Town Councils? What is the consideration offered to the TCs to take on this role?

    If the TCs are not answerable to the HDB why then are there such things as annual performance reports submitted to the HDB that is the source of the current ‘review’? My point is if the TCs are to viewed as entities independent of the HDB why is it answerable to it?

    • Do you know what answerable means? It means there are consequences if you do not meet requirements. Eg you are answerable to your boss at work, you can be sacked if you do not perform.

      Does hdb have the power to sack any town council management?

      • George Lam says:

        That is but one aspect of being answerable.

        Another being , you are also answerable if you indulge in clandestine activities to further your own private ends at the expense of the public good, in this case the polity of Aljunied GRC.

        You are right, the system or process should provide for TC high office bears to be SACKED for incompetence and malpractice – conduct to the prejudice of the people whose well being you have been entrusted with, but betrayed. Please don’t tell me that the residents of Aljunied GRC ceased to be Singaporeans after the PAP lost it to the WP?

        What about your ideas for the rest of my query?

      • The annual reporting to HDB is not so much about accountability to HDB, but transparency to the public. Just like companies are required to file their accounts with ACRA, Town Councils are required to file annual reports with HDB and subject themselves to annual MND audits. This allows the annual performance of town councils to be publicised for public scrutiny. Of course, it also allows PAP to claim their town councils perform better than WP town councils, but the point is, everyone’s performance is open to public scrutiny, and that is good for transparency, yes?

        HDB may not have the power to sack town council management, but it is hoped that transparency will allow voters to make the right decisions. Just like ACRA cannot sack company directors for poor performance but shareholders can.

        In my view, Town Councils are not answerable to HDB for performance; they’re only required to provide certain information to HDB. HDB cannot sack them because it is voters who appointed them. Thus it is voters that they have to answer to for performance. That is fair and proper.b

        I think you’re aware of the Town Councils Act, under which Town Councils were established. You can read about it through Internet search. I doubt there is consideration involved, since this is not a contract.

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  9. George Lam says:

    IMO, it is more than a political liability for improper, even infamous, conduct. As it suggests that the residents of a ward have to live with a TCs management that has been exposed to be pursuing flawed if not nefarious activities.

    If the govt is to redeem itself in the eyes of Singaporeans of what some of its politicians, put in positions of responsibility, have done in stealth, then whether there are existing laws against such activities or not, some sort of sanction has to be imposed on the conspirators. If there are no existing laws, the yardstick by which their acts should be judged would have to be a moral one and the govt would do well to put into place quickly a code of best practice for the TCs applicable to all, whether PAP or Opposition, We are talking about a very deliberate prima facie, if infantile, attempt at SABOTAGiNG the running of a GRC, in this case, where thousands of households are involved. If we are to believe that we have a responsible political party in charge of running Singapore, which brooks no nonsense as far as law and order is concerned, the PAP cannot or should not avoid or side-step the issue without committing political suicide in the longer run.

    Banging on interpreting issues solely by whether laws in the statute book have been broke, to determine guilt, would be a huge cop out, which can only serve to condemn itself further in the eyes of thinking and discerning citizens.

    • To use an American example, the Congress can impeach a President, but it cannot fire him. He can removed from office forcibly only under very specific circumstances, as specified in the 25th Amendment. Nevertheless, a President who has been impeached must have committed a very grave mistake, and would have lost the support of the people at large and of the Congress and the House. Thus resignation is really the only choice for such a President.

      Is it not the same for MP’s who are exposed for mismanagement of town councils? The people’s elected representatives cannot and should not be removed from office except by the will of the people. One should allow the law to take its course. Transparency creates wonders.

      Notwithstanding the above, I do not believe pap mp’s in this case are guilty of anything more than protecting their partisan self-interest, which is not illegal.

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