# MND Statement on FMSS' Accounts

- **Source:** Ministry of National Development
- **Published:** 2015-08-29T09:00:00.000Z
- **Author:** Ministry of National Development
- **Original:** https://www.mnd.gov.sg/newsroom/press-releases/view/mnd-statement-on-fmss-accounts
- **Topics:** Market Updates

## Featured rationale

The findings signal weaknesses in town-council financial oversight that could increase scrutiny of managing-agent payments and affect resources available for estate operations.

## AI summary

FMSS’ after-tax profit rose 300% to $2,035,784 in FY13/14 while its sole client, AHPETC, recorded a $2.0 mil operating deficit.

## Original article

Following an Accounting and Corporate Regulatory Authority’s (ACRA’s) ad-hoc review of FM Solutions & Services’ (FMSS) auditor, Teo Liang Chye & Co, the Ministry of National Development (MND) has found that FMSS has been grossly profiteering off its sole client, Aljunied-Hougang-Punggol East Town Council (AHPETC). In FY13/14, while AHPETC suffered an operating deficit of $2.0 mil, FMSS made a net after-tax profit of $2.0 mil, after paying its directors/shareholders fees and salaries amounting to $1.14 mil. 

FMSS was the Managing Agent (MA) for AHPETC from 15 July 2011 to 14 July 2015. In AHPETC’s FY13/14 Financial Statements and Reports, its independent auditor, Audit Alliance LLP, found that the TC’s Deputy General Manager, who was also a shareholder and director of FMSS, certified invoices received from FMSS totalling $2.1mil on behalf of the TC, and subsequently also approved the related payment vouchers by the TC to FMSS, with no segregation of duties. This reinforced MND’s concerns about the TC’s state of financial management, and in particular, whether payments made by the TC to FMSS were valid and proper. On 9 July 2015, shortly after MND received the Financial Statements and Reports, MND wrote to ACRA to ask if ACRA had any concerns about the quality of FMSS’ accounts and the audit process that validated them. 

In response, ACRA commenced a practice monitoring review on FMSS’ auditor, Teo Liang Chye & Co, on 14 August 2015, after giving them one month’s notice. ACRA has completed its review and surfaced its findings to MND on 27 August 2015. 

On examining the accounts, MND has found gross profiteering by FMSS, at the expense of AHPETC, its sole client: 

For FY12/13 

FMSS made a profit after tax of $510,904. This was after FMSS paid its three Owners/ Directors1, fees and salaries of $702,295, and consultancy & secretarial fees of $300,0002. 

Total payments to the three FMSS Owners/Directors for FY12/13 amounted to $1,513,199. 

For FY13/14 

FMSS made a profit after tax of $2,035,784. This was after FMSS paid its four Owners/Directors3, fees and salaries of $839,696, and consultancy & secretarial fees of $300,0004. 

Total payments to the four FMSS Owners/Directors for FY13/14 amounted to $3,175,480. 

Between FY12/13 and FY13/14 

While FMSS’ revenue increased by 30% in one year, from $6,740,572 to $8,773,429, its profit after tax rose 300%, from $510,904 to $2,035,784. 

MND observes that the total payments by AHPETC to FMSS Owners/Directors amounted to 22% of FMSS’ revenue in FY12/13. It grew further to 36% in FY13/14. Such levels of profit margin are abnormal. As AHPETC was FMSS’ only client, these findings support MND’s earlier concern that the TC had overpaid FMSS excessively. In addition, MND notes that AHPETC had an operating deficit of $1.5 mil in FY12/13, and a further deficit of $2.0 mil in FY13/14. Had the TC not overpaid FMSS, it might well have had been able to break-even. 

As FMSS earned its revenues solely from AHPETC, and FMSS’ Owners/Directors also held key management positions in AHPETC, MND has written to Ms Sylvia Lim, Immediate Past-Chairman of AHPETC, to ask if she was aware of the extent of profiteering in FMSS, and if so since when had she known, and what she had done about it. In addition, as AHPETC had terminated its contractual relationship with FMSS, MND has also asked Ms Lim if she has examined past transactions of the TC with FMSS, and how she intend to recover the monies lost due to any overpayment. 

As FMSS was paid using Service & Conservancy Charges (S&CC) collections from residents and S&CC operating grants from MND, public monies are at stake. What happened between the TC and FMSS is not a private matter, but one which MND needs to look into. MND is therefore making a public statement on this matter of public interest, which underscores why MND has applied to the Court to appoint Independent Accountants. 

Background Info on FMSS 

FMSS was incorporated on 15 May 2011 as a limited exempt private company. As a limited exempt private company, FMSS did not have to file its accounts with ACRA. FMSS’ main shareholders were the late Mr Danny Loh and his wife, Ms How Weng Fan. Together they owned 70% of the shares of FMSS. During the period when FMSS was the MA for AHPETC, the late Mr Loh and Ms How were also the TC’s Secretary and General Manager (GM).

1The shareholdings as at 1 May 2013 were the late Mr Danny Loh 60%, Ms How Weng Fan 20%, and Mr Yeo Soon Fei 20%. 

2For FY12/13, on top of Directors fees and salaries, the late Mr Danny Loh was also paid $180,000 in secretarial fees, Ms How Weng Fan was also paid $108,000 in consultancy fees and Mr Yeo Soon Fei was also paid $12,000 in consultancy fees, a year. 

3The shareholdings as at 30 April 2014 were the late Mr Danny Loh 50%, Ms How Weng Fan 20%, Mr Yeo Soon Fei 20%, and Mr Lieow Chong Sern 10%. 

4For FY13/14, on top of Directors fees and salaries, the late Mr Danny Loh was also paid $180,000 in secretarial fees, Ms How Weng Fan was also paid $108,000 in consultancy fees and Mr Yeo Soon Fei was also paid $12,000 in consultancy fees, a year.

## Chinese translation

> Translation model: grok_cli

### 国家发展部就FMSS账目的声明

在会计与企业管制局（ACRA）对FM Solutions & Services（FMSS）的审计师Teo Liang Chye & Co进行临时检讨后，国家发展部（MND）发现，FMSS从其唯一客户阿裕尼—后港—榜鹅东市镇会（AHPETC）中严重牟取暴利。在2013/14财政年度，AHPETC出现200万新元的营运赤字，而FMSS在支付董事／股东共114万新元的费用与薪金后，仍录得200万新元的税后净利。

FMSS自2011年7月15日至2015年7月14日担任AHPETC的管理代理（MA）。在AHPETC的2013/14财政年度财务报表与报告中，其独立审计师Audit Alliance LLP发现，市镇会的副总经理同时也是FMSS的股东兼董事，代表市镇会核证了来自FMSS共计210万新元的发票，随后又批准市镇会向FMSS支付相关付款凭单，职责未作分离。这加剧了国家发展部对市镇会财务管理状况的关切，尤其是市镇会向FMSS支付款项是否有效且妥当。2015年7月9日，国家发展部在收到财务报表与报告后不久，致函ACRA，询问ACRA是否对FMSS账目质量及验证该账目的审计程序有任何顾虑。

作为回应，ACRA在给予Teo Liang Chye & Co一个月通知后，于2015年8月14日对其展开执业监察检讨。ACRA已完成检讨，并于2015年8月27日将其调查结果提交国家发展部。

在审查账目后，国家发展部发现FMSS以牺牲其唯一客户AHPETC为代价严重牟取暴利：

2012/13财政年度

FMSS税后利润为510,904新元。此前，FMSS已向其三名业主／董事1支付费用与薪金702,295新元，以及咨询与秘书服务费300,000新元2。

2012/13财政年度支付予FMSS三名业主／董事的款项总额为1,513,199新元。

2013/14财政年度

FMSS税后利润为2,035,784新元。此前，FMSS已向其四名业主／董事3支付费用与薪金839,696新元，以及咨询与秘书服务费300,000新元4。

2013/14财政年度支付予FMSS四名业主／董事的款项总额为3,175,480新元。

2012/13财政年度与2013/14财政年度之间

虽然FMSS的收入在一年内增加30%，从6,740,572新元增至8,773,429新元，但其税后利润上升300%，从510,904新元增至2,035,784新元。

国家发展部指出，AHPETC支付予FMSS业主／董事的款项总额，在2012/13财政年度占FMSS收入的22%，并在2013/14财政年度进一步增至36%。如此利润水平属异常。由于AHPETC是FMSS的唯一客户，这些发现支持国家发展部早前的关切，即市镇会过度向FMSS支付了过高款项。此外，国家发展部注意到，AHPETC在2012/13财政年度有150万新元的营运赤字，并在2013/14财政年度再有200万新元赤字。若市镇会未过度支付予FMSS，其本有可能达至收支平衡。

由于FMSS的收入完全来自AHPETC，且FMSS的业主／董事亦在AHPETC担任重要管理职务，国家发展部已致函AHPETC前主席林瑞莲女士，询问她是否知悉FMSS牟取暴利的程度，若知悉则自何时起知情，以及她就此采取了何种行动。此外，鉴于AHPETC已终止与FMSS的合约关系，国家发展部亦已询问林女士是否审查过市镇会与FMSS的过往交易，以及她打算如何追回因任何超额付款而损失的款项。

由于FMSS是以居民缴纳的杂费（S&CC）及国家发展部提供的杂费营运津贴支付，涉及公帑。市镇会与FMSS之间发生的事并非私人事务，而是国家发展部需要介入的事项。因此，国家发展部就这一关乎公众利益的事项发表公开声明，这也说明国家发展部为何向法院申请委任独立会计师。

有关FMSS的背景资料

FMSS于2011年5月15日注册成立为有限豁免私人公司。作为有限豁免私人公司，FMSS无需向ACRA呈交账目。FMSS的主要股东为已故Danny Loh先生及其妻子How Weng Fan女士。两人合共持有FMSS 70%股份。在FMSS担任AHPETC管理代理期间，已故Loh先生及How女士亦分别担任市镇会秘书及总经理（GM）。

1截至2013年5月1日的股权为：已故Danny Loh先生60%，How Weng Fan女士20%，Yeo Soon Fei先生20%。

2就2012/13财政年度而言，除董事费与薪金外，已故Danny Loh先生每年另获支付180,000新元秘书服务费，How Weng Fan女士每年另获支付108,000新元咨询费，Yeo Soon Fei先生每年另获支付12,000新元咨询费。

3截至2014年4月30日的股权为：已故Danny Loh先生50%，How Weng Fan女士20%，Yeo Soon Fei先生20%，Lieow Chong Sern先生10%。

4就2013/14财政年度而言，除董事费与薪金外，已故Danny Loh先生每年另获支付180,000新元秘书服务费，How Weng Fan女士每年另获支付108,000新元咨询费，Yeo Soon Fei先生每年另获支付12,000新元咨询费。