Over the last week, this has become something of a pet issue for me.

Is there or is there not any conflict of interest in the management of our Town Councils?

The following article has appeared in Todayonline:

MPs: No conflict of interest …

by Cheow Xin Yi 04:46 AM May 30, 2011SINGAPORE –
They are general managers accountable for the day-to-day administrative functions of town councils. Some of them are also employees of managing agents who win contracts from the town councils to service the estate.

This arrangement – known to occur in at least four town councils in Singapore – has raised the issue of conflict of interest in town council management.

At Aljunied and Jurong town councils, the respective GMs, Mr Jeffrey Chua and Mr Ho Thian Poh, in fact also hold the position of managing directors at CPG Facilities Management and UGL Premas.

CPG is currently the managing agent of Aljunied Town Council, although it is not clear if the agreement will continue following the Workers’ Party taking over of Aljunied and the subsequent merger to form Aljunied-Hougang Town Council .

UGL Premas, meanwhile, is the parent company of Emasco Township management, the managing agent of Jurong Town Council.

To National University of Singapore business school associate professor Mak Yuen Teen, the first issue to establish is how the GMs of town councils are appointed. “Are they appointed after the facilities management company has been selected? If so, there would not be a conflict in terms of someone being put in a position to recommend or award a contract to his own firm,” he said.

“There will, of course, still be the issue of who evaluates the performance of the facilities management company – it certainly should not be the GM of the town council if they are related parties,” he added.

When contacted, former chairman of Jurong Town Council Halimah Yacob confirmed that was the case: Mr Ho was only appointed GM after the town council contracted Emasco as the managing agent. His salary is also paid by Emasco.

“The Council pays the managing agent the fee agreed upon under the contract which the managing agent uses to cover its costs of providing service to the council including staff salaries,” she said.

Mr Ho is also not authorised to approve any tender, said Mdm Halimah, who is a Member of Parliament in Jurong Group Representation Constituency.

“We have a transparent and rigorous system in place where all tenders, including the appointment of the managing agent, are evaluated by the Tenders and Contracts Committee comprising Councillors. This committee’s recommendations are then reviewed by the full Council,” she said.

At Holland-Bukit Panjang Town Council, its secretary Albert Teng is also an employee of its managing agent, EM Services. Bukit Panjang MP Teo Ho Pin, who has been the coordinating chairman among PAP town councils, reiterated: “We must comply with the Ministry of National Development (MND) guidelines if there is a conflict of interest among our councillors or staff when tendering for contracts.”

Still, given the close working proximity between the GM and the councillors, isn’t there the chance of the committee favouring contractors of their own working partners?

An ex-town councillor at a town council, who declined to be named, said the possibility is mitigated by the diverse groups of people making decisions on the tenders.

At his town council for instance, where the general manager is in fact an employee of the managing agent, there would be at least 10 councillors in subcommittees making recommendations for particular contracts for a total panel of more than 40 councillors to approve.

Weighing in on the issue, the MND said there are safeguards within town council financial rules to prevent a conflict of interest, even as the ministry stressed that it monitors the award of tenders to ensure they comply with the financial provisions.

If a managing agent intends to participate in a tender for works or services called by the town council, the managing agent is required to declare its interest to the town council and is prohibited from participating in the evaluation of the tenders received, said a MND spokesperson, adding that the independent tender committee must ensure that the” tender specifications do not favour any particular tenderer.”

Firstly, I am glad that the Ministry of National Development has clarified that there are safeguards within town council financial rules and it is indeed to be lauded that the Ministry monitors the award of tenders to ensure that they comply with the financial provisions.

To be fair, as I have maintained from the very beginning, the mere fact that the General Manager of a Town Council is also the director of the company that provides services as a managing agent does not amount to conflict of interest.

Based on information that has been forthcoming thus far, there is no obvious case of a conflict.

Secondly, the above article indicates that there are 4 town councils with the potential conflict situation. But, the article has mentioned 3 town councils: Jurong, Aljunied & Holland-Bukit Timah. I had speculated about Holland-Bukit Timah in an earlier blog post on the basis of a listing on the website of the Association of Facilities and Property Managers that names Teng Ann Boon, Albert as an employee of EM Services. Today’s Todayonline article confirms this fact. I wonder which the 4th Town Council is.

Thirdly, this issue of potential conflict of interest is one that should be examined at the level of individual Town Councils rather than at a national level. The Ministry of National development should at best be expected to devise a policy guideline for Town Councils to follow and monitor whether or not structural devices are in place in Town Councils to ensure that conflicts do not arise. Town Councils collect conservancy charges from residents and these TCs should be answerable to residents if there happens to be any conflict of interest.

Fourthly, I wonder about the situation involving Mr Ang Mong Seng (the former MP for Bukit Gombak & former chairman of Hong Kah Town Council). He is the Chief Operating Officer of EM Services. The explanation given by Mdm Halimah of Jurong Town Council is, to me, satisfactory in assuring that there is no conflict of interest in relation to Mr Ho Thian Poh. Her explanation is that Mr Ho was appointed as the General Manager after Esmaco was awarded the contract to manage the estate and that Mr Ho was under the payroll of Esmaco. Provided that the award of other projects and contracts and the monitoring of Esmaco’s services is carried out by other persons/committees, prima facie there is no reason to assert that there could be a conflict of interest.

In relation to Mr Ang Mong Seng, the situation is not very clear. When was he appointed as the Chief Operating Officer of EM Services? He was the Chairman of Hong Kah Town Council at a time when EM Services was bidding for projects. The Town Council has a tender committee and it is clear that Mr Ang was not a member of that committee. But, what measures did the Town Council have in place to ensure that conflicts do not arise? Would Committee members feel obliged (through no coercion or influence) to award a contract to EM Services? The reason why we try to come up with measures against conflict of interest is that we want to battle against human weaknesses.

Shouldn’t there simply be an absolute no-conflict rule for those who serve as town councillors or Chairmen/Vice-Chairmen of TCs? This would mean that if they are in an executive position in a company that bids for a Town Council project, then the company would be automatically disqualified from making such a bid. This would be the better way to go in the future. So, for instance, EM Services should not have been permitted to bid for projects in Hong Kah.

Fifthly, I agree with the MND spokesperson that the tender committee should ensure that the tender specifications do not favour any particular tenderer. This is one area worth exploring and monitoring. Are the specifications drafted in a manner that might favour any single company? It is one thing to say that there is a tender committee but it is a wholly different issue of the tender process is hijacked by rigging. Again, as observed earlier, residents could play an active role in keeping the committees and town councillors on their toes.

Another thing I want to add…. Keeping them honest and keeping them transparent should apply equally to PAP as well as WP wards. WP in Aljunied should heed this and build a transparent system there that residents can readily scrutinise.

All Town Councils should implement an internet-based disclosure regime for the tendering of all projects. (Incidentally, I got some of the information relating to Hong Kah Town Council because they have uploaded their tender results on their website. This is useful and a step in the right direction.)

‘Conflict of interest’ raises important ethical and moral issues in governance and we shouldn’t treat it as a frivolous matter.

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