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Tuesday, December 18, 2012

Terminating Aljunied Town Council's Contract: What's their AIM?


Palmergate is yesterday’s news.  Let’s move on.  He’s human.  He erred.  He has resigned.  This is now a personal issue for him to deal with his family.  What remains to be sorted out is the vacant Parliamentary seat.  Even though the current judicial interpretation of the Constitution would result in a full discretion for the PM to decide whether or not to hold a by-election in Punggol East, it would be politically prudent for the PM to call for one in order to avoid the further hardening of moderate voters against the PAP. 

Amidst all this, and amidst online discussion about the undesirably close (though not necessarily improprietous nor unlawful) relationship between PA and PAP (with Michael Palmer and Laura Ong providing the useful metaphor of being in bed with each other), the Workers’ Party’s  Sylvia Lim has revealed that a certain Action Information Management Pte Ltd manages the computing and financial system for PAP run Town Councils.  This information has surfaced as a result of Sylvia Lim’s public clarification as to the reason for delays in her Town Council’s audited statements.  The following is from her statement:

"After the GE in May 2011, the Town Council was served with a notice that the Town Council’s Computer and Financial Systems will be terminated with effect from 1 August 2011 due to material changes to the membership of the Town Council. This Computer and Financial Systems had been developed jointly by the 14 PAP Town Councils over a period of more than 15 months but was in January 2011 sold to and leased back from M/s Action Information Management Pte Ltd, a company which was dormant. This effectively meant that the AHTC had to develop its own equivalent systems, in particular the Financial System, within a 2 months’ timeframe."

Sylvia Lim has brought this information up in the context of explaining delays to the audit of the Town Council.  She does ask the relevant question as to why the Computer and Financial System was sold to Action Information Management (AIM).   Although AIM director, S Chandra Das, has attempted to clarify that they were willing to grant a further extension if requested, he has not stated anything about how or why AIM was awarded this contract in the first place. 

At this point in time we do not know what is the price for which the 14 PAP run Town Councils sold their Computer and Financial Systems to AIM. 

Let’s assume that the System was valued at market value through an independent valuation process and sold to AIM.  AIM then leased it back to the Town Councils.  The Town Councils will now be contractually bound to pay a price to AIM under the terms of this leasing agreement.  What is the contracted price?  Is there a profit derived by AIM through the purchase by them of the System and the subsequent lease back to the Town Councils?  If so, what is the amount of profit so derived?

Whilst it is understandable that a Town Council might commission a third party to develop a system, it is indeed strange that a system developed by a Town Council should be sold to a third party only to be leased back to the Town Council.  But, perhaps the third party might have had particular skill and expertise that it could bring to bear in relation to the system.  If that were the case, what was the specific skill and expertise that AIM brought with it in order to justify this contractual arrangement.  Sylvia Lim claims that AIM was a dormant company.  (The company’s registration number is 199103607Z.  That would mean that it was incorporated in 1991.  Perhaps it was operational for some time.)

What was the process by which AIM was awarded this sale and lease back contract?  Was it done through a tender process?  Considering that the directors of AIM are ex PAP MPs, did the Town Councils invest in extra effort in going through a transparent process in awarding the contract (so as to avoid inviting unwarranted allegations of impropriety)?

On the assumption that AIM derives no profit from the contract, why would a private company want to enter into a contractual arrangement where it is not going to benefit at all?  That leads us to come up with a grand conspiracy theory (which was probably what Sylvia Lim was hinting at).  Anticipating that PAP might lose control of more constituencies at GE 2011 and therefore some Town Councils, the Computer and Financial System might have been sold off to a third party with a lease back arrangement.  The contract provided for termination by giving a month’s notice.   In the event that a Town Council management falls into the hands of an opposition party, AIM’s services could be withdrawn by giving 1 month’s notice.  There is nothing illegal about it.  Just some old-style politics.  The kind of politics that we hope to eventually see the back of.  

PAP leaders have recently lamented the increasing polarization of Singaporeans and expressed their wish that we don’t embrace divisive party politics.  The problem is that it is the PAP’s traditional approach of demonizing, maligning and disadvantaging opposition parties that has caused a certain degree of anger and frustration amongst many voters and led to the kind of online vitriol that we witness on and off. 
Expecting civility in politics would mean that one has to be civil in the first place.  It is not too late.  We can start afresh.  We can start by looking at all the aspects of our electoral and political system that creates a less than level playing field and seek to change that.  Right now, that looks like a mammoth task.  It may involve a systemic overhaul.  Many citizens are arguably ready for it.  But, is there the political will or desire for it?

 

 

30 comments:

Anonymous said...

This looks like it's more than a dirty political trick. Public money is involved, we must know the basis of the sale to AIM, at what price, why no tender, terms of the leaseback, profit margin to AIM etc.

You should copy your article to Sylvia Lim and have her ask these questions in Parliament.

Anonymous said...

Sale and leaseback is common in business. It allows one to transform a capex into an opex. In some cases, due to economies of scale, it also allows cheaper opex as the new operator can scale his operation across a number of clients.

Nothing sinister in sales and leaseback arrangements.

However, what is sinister is that the contract can be terminated by the company just because the Town Council had a material change of membership. That is a true poison-pill clause!

Anonymous said...

So that IT Company is literally holding the Opposition TC to ransom, a sort of political blackmail ?

Which IT professional company would want to terminate their service contract with a long time customer ? Whovever is doing this behind the scenes must be downright despicable ? That means they don't give a damn about the constituents that they have servicing in the past ?

On the other hand, is this not a blessing in disguise that the Worker's Party is coping rather well in spite of this bullying tactic by PAP saboteurs ?

Anonymous said...

Just like the plots of land suitable for community activities transferred to the PA from TC after Aljunied was lost, this speak of the underhand dirty tricks by the losing Party.
On national level, the leaders take the high moral ground and talk to citizens with motherhood statements, but at grassroot and community levels, they are doing this to citizens that did not support them.
Do we need to trust them anymore?

Anonymous said...

Assuming that the sale and lease back was based purely on economic consideration, it would then be another way in which the government/ruling party socialized costs and privatized profits.

Anonymous said...

No, sale and leaseback is a common business arrangement. It frees up cash by selling fixed assets, and the leaseback arrangement creates tax benefits.

I say again: nothing sinister from a business point of view. However, the termination is something quite unheard of, as typically there will be long-term leaseback contracts to protect the interest of both parties.

Anonymous said...

Go make a report to CPIB.

Anonymous said...

Let the public know. We must be transparent.

Anonymous said...

No, sale and leaseback is a common business arrangement. It frees up cash by selling fixed assets, and the leaseback arrangement creates tax benefits.

It is common, but then the development cost, sale price, leaseback price and the selection of vendor must be made transparent as they are dealing with tax payers money. This is not a simple issue of transferring ownership to a sister compnay.

Anonymous said...

Actually it's not tax payers money. It's money paid for council services. Not taxes.

Anonymous said...

Why would any business tell a regular customer to fuck off? That is the question.

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