What the MND review really means

How does one conduct a comprehensive review while wearing blinkers?

Headed by one Mr Tay Kim Poh (apparently a deputy secretary in the Ministry of National Development), the MND team found that the PAP-AIM deal was

1. Not illegal
2. Followed due process and did not represent a conflict of interests

We have already predicted in February that the deal would not be illegal, though the ownership of AIM by PAP would fall under a grey area. The deeper issue of political financing and political donations were not addressed by the "comprehensive" MND review, which only strove to investigate the deal through the blinkers of the Town Council Act.
We've already pointed out that Singapore's regulatory framework of political parties with respect to these two issues is at odds with international legal norms, which ban political parties from owning private enterprises.

Further, it's only through very imaginative acrobatic manoeuvrings that MND could find the deal in accordance with due process and free from conflict of interests. MND had to accept that being town councils, appointments and contracts will be, can be, and can be allowed to be preferential, can be parcelled out as political appointments.

By allowing this, MND in effect says that certain practices which could end the political career and legacy of... let's say a former mayor of Paris, would be perfectly legal and above board in Singapore because we allow that local government is, by nature, "politicised".

Implications of MND's findings

1. The civil service or at least the team headed by Tay was simply incompetent, and utterly stupid.

2. The civil service or at least the team headed by Tay lacked independence, and had become politicised. They were charged by the prime minister to conduct a comprehensive review and turned up a heavily blinkered review.

Whether there was self-censorship or behind-the-scenes political pressure, this may cause some to conclude that the civil service is either very openly batting for the ruling party or intimidated by the prospect of having to investigate the party. The MND review may ironically further undermine public trust in the system.

3. The MND review legitmises the idea that local government in the form of town councils are held to lower standards of corporate governance and due process, and higher thresholds of conflicts of interest than the private sector. This is the gateway to open preferential contracts, clientelism, and procurement corruption.

In light of all these, we at Illusio again renew our call for the Town Council-AIM deal to be investigated fully by the Auditor-General of Singapore and the Register of Societies. We further call upon the Minister for National Development to step down and for his deputy secretary to be censured by the head of the civil service for publishing a review that holds local government to lower standards than the private sector.

The Ministry of National Development comprehensive clown show

We examine the Ministry of National Development's oft-delayed, long-awaited review of the transaction between the People's Action Party's 14 town councils and Action Information Management, published on 3 May 2013 (PDF link), in light of the parliament sitting on 13 May 2013.

Whatever happens on Monday—a dramatic showdown headed by a bold opposition, a comedy of missed chances authored by an underperforming opposition, or a grotesque self-interested bipartisan agreement to sweep all embarrassing issues under the carpet—the ruling party and the establishment press will declare the sitting a fitting closure to a contentious debate, and call for the citizenry to lay aside their misgivings, move on, and to reinvest their blind trust in a to-be-reformed town council system.

We present this post so our readers can see for themselves on Monday whether Monday's debate is the real thing, a clown show, or pure political kabuki.

Will Monday's parliament session be a farcical pie fight?

Follow the breadcrumbs with Illusio!

The issues as we see it

The public disquiet in the streets, online, and in social media over the AIM affair stems from several concerns:

1. Conflict of interest of the political variety. In the tender process, PAP-appointed party member Ho Pin Teo basically gave the contract to a company only he and other senior party members knew was "owned" by the party and managed by fellow party members. This was special knowledge of a relationship that could not have been found in any public record.

2. Questions of procedural irregularities and non-transparency
a. conflict of interest not reported in town council's annual report on the AIM contract deal(s) amounts to a breach of due diligence.
b. Teo's reason for awarding the contract - that he knew the special status of AIM - was not reported in the town council annual report. This may be perfectly legal within the bounds of the town council regulations, but amounts to another breach of due diligence.
c. non-transparent tender for a contract of no viable commercial value, which basically is one of the criteria for determining procurement corruption (whether legal or illegal).

3. Political trust, legitimacy of the PAP.

How did the PAP come to own a private business and not have the business declare its true ownership or even declare its ownership? Is this legal?

Even if legal, is this a circumvention of laws on political donations in Singapore, and completely at odds with international legal norms on political financing?

Can the people place their trust in the PAP if it owns a clandestine business empire and is legally entitled to own a clandestine business empire?

How can a political party manage become so secretive when the laws regulating political parties (i.e. the Political Donation Act, Societies Act) are written to ensure they operate with transparency and scrutiny?

Note that the majority of these three sets of concerns are ethical and procedural, not legal.

The issues as MND saw it

1. MND reviewed the external audits of the PAP town councils but not AIM's audit reports. It accepts the town councils' assertion that AIM made no profit, that whatever was paid to it was to cover its operating costs... It should have just reviewed the annual audits of AIM instead.

2. MND clears the town councils of any illegality. The public outcry was about ethics, transparency, politicisation of town councils, and conflict of interest.

3. MND clears the town councils and Ho Pin Teo of any conflict of interest only because MND accepts that town councils will have political conflicts of interests, that party MPs will engage party-affiliated companies to manage their town councils—and then pretends these aren't really conflicts of interests that matter.

Strangely enough, MND exonerates AIM. Reason? The company actually developed the TCMS in 1996, so it had a track record prior to the tender in 2010. MND however doesn't ask why AIM was even given the 1996 contract, as a $2 company with STILL zero staff in 1996.

MND, investigating with blinkers on

By refusing to acknowledge the real reasons for the loss of public trust in the system, the MND's review is unlikely to restore this trust.

It is clear that MND's investigation falls far short of popular expectations, even far short of Minilee's directive for a comprehensive review. It has stuck to a purely legalistic review, only of the town councils - leaving AIM and its political affiliations out of the picture. By not questioning AIM and its political affiliations, it obviously does not find any procedural irregularities with a senior PAP member awarding contracts to a company whose PAP affiliations were not public knowledge.


It has not found any conflict of interests because it already accepts as a matter of principle, that political conflicts of interests will arise and are encouraged by the current town council system.

We at Illusio believe that MND's blinkered report fully justifies our stand that it was the wrong agency to investigate the town councils. We call upon the Auditor-General of Singapore and the Registrar of Societies to launch an independent investigation to audit the PAP Town Councils, AIM, and the People's Action Party, to ensure full transparency, to identify weaknesses in the legislation and regulation of town councils and political financing, and to suggest measures that will restore Singaporeans' trust in the political and town council system.

The Singapore population white paper clown show

The priestess of Ise has no interest in publishing a review of the Singapore government's white paper on population. There is no proper white paper to speak of, none constructed with care and intellectual honesty to deserve a point by point response.

Just look at this image of an empty train station on page 53, or any of the strangely depopulated urban landscapes, or any of the skylines of Singapore that take up half of every page in the white paper. This is how its authors think they can sell a policy that will change Singapore completely, forever.

We do not exaggerate. Donald Low of the Lee Kuan Yew School of Public Policy  has this to say:

There was very little scholarship and academic rigour in the report. There wasn't even a References section to show what research the writers of the paper had done, what social science theories they relied on, what competing theories/frameworks they looked at. There was also a surprising lack of rigorous comparison with other countries that have gone through, or are going through, a similar demographic transition. If this was a term paper, I would have no qualms failing it - whether or not I agree with it.

That's coming from a think-tank insider who would normally be involved in crafting policy and white papers for the powers that be.

To weigh the merits of Low's outburst, which surely breaks an unspoken code of honour between Singapore's government and its local think-tanks useful idiots, we present for comparison:
Singapore's population white paper (PDF link)
Australia's white paper on their response to the Asian Century (PDF link)
UK's white paper on marriage equality (website, multiple PDF links)

The most obvious differences:

1. Singapore's white paper does not have an introductory address.

The politician who is in charge of it has chosen not to take responsibility for what is a very unpopular policy proposal. Can you guess who it might be? It's not the minister for national development, since the national population and talent division is a department under the Prime Minister's Office. Yet according to the division's website, it's not headed by any minister in the PMO but Teo Chee Hean, the minister for home affairs. What an amazing organisational structure NPTD has! Who really answers to whom? Inquiring minds want to know!

2. As Donald Low points out, the discussion in the 87 pages of Singapore's white paper is sorely lacking in rigour, as though its authors really don't want to be taken seriously. There exist references and footnotes; they merely say "DOS", no year, name of publication so it's one big fail. No bibliography. And of course, no cross-country, longitudinal comparisons.

3. The UK's white paper is a series of documents: a green paper soliciting consultation from stakeholders (March 2012), a white paper addressing specifically actual feedback from said consultations (December 2012), and better yet, easy-to-read versions of the white paper and factsheets for those who get a serious case of tl;dr.

Note the timeline between publication of the UK white paper, a period of further public consultation, and its debate and passing in parliament. For comparison, Singapore's population white paper had one week between publication and debate in parliament.

White paper an intellectual paperweight despite an increasingly educated and contentious middle class

So what if Singapore's white paper has no methodology, framework, assumptions, or models shown? So what if its figures and recommendations come out of a black box? The average Singaporean may not understand, may not be interested in the debate beyond their visceral reaction towards the 7 million figure.

This argument is borne of ignorance and the bigotry of low expectations. The Australian and UK white papers accommodate all sorts of readers from expert academics, policymakers, interested citizens to the disengaged reader. Australia's white paper alternates between easy to digest summaries and thick, deep statistical modelling. The UK's controversial and contentious social policy proposal is couched in the simplest, clearest, and most direct language, as though its authors are content to hide nothing from its arsenal of statistical wizardry, and leave everything to critics and supporters alike.

In contrast, Singapore's proposal is a one-note affair, content to chug along for 87 pages in the spirit of an MLM or timeshare brochure where the workings and assumptions are hidden from any reader who may decide to question it.

Third world white paper for a first world nation?

Perhaps the largest problem of a white paper with no methodology, framework, assumptions, models shown is this:

Outside of the Prime Minister's Office, both PAP MPs and opposition MPs have no cognition what lies in the black box of assumptions and models used to generate the seemingly unsubstantiated figures and projections in the white paper. Parliamentarians on either side of the aisle are for all intents and purposes flying blind - making unsubstantiated critiques, counter-proposals, and endorsements of a white paper based on workings and rationales they do not and cannot comprehend.

And yet here we have it: 5 days of passionate debate over the white paper, after which there will be a vote.

Ladies and gentlemen, I present to you the Singapore parliament clown show.

The Workers Party, led by Mao Chen Show, have put forward an alternate proposal with an alternate target population figure, and an alternate extrapolated GDP growth figure. These are all based presumably on the same assumptions and statistical modelling of the white paper, that no one knows about aside from its unnamed authors.

Ladies and gentlemen, I present to you the WP clown show.

The People's Action Party has its usual pretense of a reasoned debate to show it's hardly rushing to implement a white paper despite the one week gap between publication and parliamentary debate ("How many foreigners are working in essential services?" Shouldn't this be in a white paper?).

The most embarrassing thing is how one after another, PAP MPs will line up to scrutinise and then endorse a white paper whose assumptions, models, even policy credibility remain unknown to them even at the end of their questioning. In contrast, when faced with activists, tertiary students, and the general public in various dialogue sessions, certain PAP MPs are infamous for demanding to know the exact models, theoretical frameworks, and assumptions - and then dismissing these alternative policy proposals from activists and critiques from the general public out of hand anyway.

While demanding such high standards of Singapore's activists and their critiques and alternate visions, the MPs of the People's Action Party are content to blind themselves when it comes to a proposal that would not pass muster from their exacting standards had it not come from the Prime Minister's Office.

Ladies and gentlemen, I present to you the PAP clown show.

A white paper with no methodology, framework, assumptions, models shown is a paper that shortchanges the legislation, a white paper that reduces the legislature to a bunch of grossly overpaid chattering monkeys, a white paper that brooks no real debate or challenge, that depends on passage by a legislature unable to ascertain its true merits.

Modelling the by-elections: What was the real vote swing against the PAP?

Previously on this blog, I conducted a post mortem of the 2011 general election because Alex Au had made several claims about groundwork and campaigning being essential in determining voting outcome.

I disproved Au's claims through available electoral data and statistical modelling and explained the GE2011 results in several GRC contests to show that the Workers Party had in fact underperformed relative to other opposition parties in contests in wards with highly unpopular ministers, that Aljunied was simply won because of the 6.6% average vote swing against the PAP, and that the average voter in 2011 was simply voting for or against the ruling party.

Although Alex Au has not quite acknowledged our corrections of his thought, his analysis of the Punggol East by-elections attempt to explain the Workers Party win over the People's Action Party, the Reform Party, and the Singapore Democratic Alliance by analysing the swing vote.

His conclusion? There was a 10.83% swing against the PAP since 2011.

A swing to the left, a swing to the right

We argue that Au mistakes the eventual result of the Punggol East by-election to comprise solely of a swing against the PAP. Again assuming the Punggol East voter is simplistically voting for or against the PAP like in 2011, we in addition propose a more sophisticated model of the Punggol by-election vote as an aggregate of two swings.

Aggregate swing = sex scandal + vote against PAP

Given the public uproar in the intervening months against the various sex and sex and corruption scandals, we posit that a sex scandal results in political costs for the incumbent. But how many votes does a sex scandal cost?

We look towards the Hougang by-election, where WP's Yaw Shin Leong resigned from his party and vacated his seat in parliament following a protracted sex scandal.

As it turned out, the WP won Hougang with a marginal change in vote share.

GE May 2011 Hougang SMC: PAP 35.2%%
May 2012 Hougang SMC: PAP 37.92%

For the moment, let's all be naive and simplistic. In an opposition ward of more than 20 years, highly insular and loyal Hougang voters in a by-election one year after a general election are unlikely to change their voting preferences and attitudes towards both the incumbent party and the ruling party. If so, the cost of a sex scandal leading to a by-election is merely 2.7%. This conclusion may be surprising but we note the relative absence of public outrage against the sex scandal in the run-up to the by-election.

Note however the public outrage against the prime minister's initial refusal to call for a by-election, the constitutional challenge that followed, and the positive reaction to Kenneth Jeyaratnam's call for donations online to defray the costs of the case. These factors in addition to the breakdowns in infrastructure since 2011 and the outbreak of the underaged sex scandal would have caused a small swing against the PAP, which would then offset the real cost of a sex which would be at say about 5%, causing an aggregate shift of 2.7%.


Two swings in the same direction

Let's now look at the Punggol East by-election.
Aggregate swing = cost of sex scandal for incumbent + 'national' vote swing against ruling party

GE May 2011 Punggol East SMC: PAP 54.54%
Jan 2013 Punggol East SMC: PAP 43.71%

Here, the incumbent is the ruling party so the final swing of 10.83% is an aggregate of two swings working in the same direction. Taking the projected real cost of a sex scandal as 5%, the actual vote swing against the PAP in Punggol East since 2011 is about 6%. This is our naive estimation.

Now if we take into account local issues that caused unhappiness in the ward - such as unfinished construction projects, inadequate and shoddy infrastructure works that make Sengkang feel more like a slum than Potong Pasir, and the high property prices in the ward - the actual vote swing against the PAP would be far less than 6%.

In other words, we're positing that in Punggol East,
aggregate swing = cost of sex scandal for incumbent + cost of local issues + 'national' vote swing against ruling party

And yes, we're saying that if you did the math before the by-election, you would have put good money to bet on a PAP loss.

Now, we're not saying Alex Au is politically illiterate. He's actually more aware and informed than the average Singaporean but it seems that again, the task has fallen to the priestess of Ise to correct Au's political mis-diagnosis!

The roads taken to a by-election

On the eve of cooling off day, I make no prediction on the by-election for the ward of Punggol East but instead offer everyone a platform for reflection for their words and actions, the paths they chose to take to herd public opinion and potential voters for the vote on Saturday.

We don't need opposition unity

Perhaps overcompensating for the loss of the multi-cornered presidential election last year, online commentators, bloggers, and alternate media groups were more than eager to declare the Workers Party the natural candidate to contest the People's Action Party in Punggol East.

Whatever the merits of this argument, which has just about as many holes in it as Singapore's take on the concept of meritocracy, online commentators, bloggers, and alternate media groups saw their role to cajole, intimidate, castigate, ridicule, and in essence bully the Singapore Democratic Party, the Reform Party, the Singapore Democratic Alliance, and their supporters into dropping out of the contest, in the interests of "opposition unity" and the apparent mandate of heaven for the Workers Party.

In the best of worlds, the blogosphere ought to be a vanguard of society. It may not be representative of the public (not to say the voting population of Punggol East), but it can lead public discussion, shape responses and criticisms to policies.

We at Illusio question the mobilisation of online resources to be unleashed as attack dogs on RP, SDP, and SDA. As a vanguard, the power of the blogosphere has been underestimated and misused. Long after the nominations were tendered and the by-election was under way with rallies held, my online colleagues continued to expend much effort attacking the RP and SDA. Now if these two parties are that obviously non-contenders, why did the attacks persist till 22 January?

I do not enjoy calling my fellow Singaporeans political illiterates. Yet many of the loudest voices of this fortnight seem to forget the political narrative: the PAP is on a long downhill slide in popularity and it is far more effective and economical for the political blogosphere to drive up the negatives of the PAP during this by-election instead of driving up the negatives of their non-preferred opposition parties.

They have forgotten their power as the vanguard to set the national issues for this election, their power to force agendas onto the political incumbents. Because of this curious blindness and muteness, the major national level issue of AIM-gate only surfaced, brought up half-heartedly at the WP rally last night - 3 days before the election.

Again, I do not enjoy calling my fellow Singaporeans political illiterates. What appears to be elite strategy to leave major issues of an election unexamined till the eve of the election is pure unadulterated utter stupidity. It is a strategy designed to not make major issues count in an election. Where the blogosphere could have pushed the agenda on both the PAP and WP, to accelerate the timeline so that this major issue has sufficient time to percolate into the considerations of voters, by and large it chose not to.

This particular argument applies to the SDP as well. Whatever merits its decision to pull out of the election, the SDP is not excused from continuing to speak out against the policy failures of the ruling party, and driving up its negatives.

We hope the blogosphere at large will reflect on their mis-steps in this by-election, get themselves a real political education, and do better by 2016.

The PAP clown council political funding reform show

As the author of Illusio, I have only one operating principle:  the priestess of Ise never opines or offers analysis proffered elsewhere. Weeks or months after the eruption of a cause celebre, find much to say that no-one has pointed out, or an angle from which no-one has approached. It is not to keep a dead issue alive but to examine if consensus has been manufactured, a status quo hurriedly agreed upon, a veil and a gag brought down to shutter the eyes, the ears, the mind of a public unaccustomed to inquiry.

Over the last 3 posts, we have offered a thorough (though not exhaustive) analysis of the PAP-AIM town council clown show. No other blogger so far has walked you, dear Reader, step-by-step through this tangled web. It is one thing to say there is a conflict of interests; it is yet another to show you where that conflict lies, which part of it is legally actionable and which part merely unseemly, and at which point in the procurement process that conflict arose.

From a legal and procedural analysis of the PAP clown council-AIM scandal in our previous 2 posts, we ascertain that:
1. It is not in fact illegal for the PAP to own, directly or indirectly, the company AIM. It is also not illegal for AIM to be 'owned' indirectly by a different entity.
2. Both AIM and the PAP are not legally obliged to indicate to the general public the status and details of ownership. (*AIM would have to disclose this to their appointed auditors, nonetheless.)
3. As it stands, the law is silent on whether the conflict of interest between AIM and the town councils should have been reflected.

Nevetheless, Minilee has called for the Ministry of National Development to investigate fully the clown counil-AIM deal to ensure that 'trust in the system' is maintained.

Decoding Minilee, it should be apparent to Singaporean observers that for all the legalistic posturing by Teo Ho-pin, whether the clown council-AIM deal was technically legal (arguably true) or whether international standards of corporate governance had been adhered to (arguably false, see our immediate previous post), the mere fact that the clown councils engaged AIM to be a middleman to deal with the previous contractor NCS is enough to compromise trust in the system.

Perhaps people will eventually find the eloquence for their supposed disquiet and ask: Why do our laws permit a political party to financially back companies so that these companies accrue political advantage in financial dealings?

Follow the money trail

Last post, we left off with the question: What happens to the money AIM earns from its contracts with the town councils? Will the Ministry of National Development even investigate that?

In a procurement audit involving potential conflict of interests, it is a general rule to ask where the money goes. While Teo Ho-Pin is not a shareholder or director of AIM and Chandra Das and his co-owners and directors at AIM are not officials or employees of the town council, it remains that all the parties involved in the procurement deal are members of the PAP.

We have argued that Dr Teo issued a tender for a contract that was financially unfeasible and did not make business sense, and that AIM was awarded the contract on the sole merit that it was a PAP-owned or PAP-backed company. In other words, AIM accrued business advantage from its political affiliation to the extent that it could be the sole bidder, be a dormant company that had no public track record, put in a late bid. Yet it won the contract because Dr Teo, unlike most other Singaporeans, knew the political affiliation of AIM, and said that was sufficient cause to award the contract to AIM.

But what happens to the money AIM earns from its contracts with the town councils? On his part, Das acclaims that he doesn't take a single cent as salary, share dividends, or directorship fees from his position in AIM. That is curious until we read PAP's party constitution, which states in Article X:

No member shall except for professional services rendered at the request of the Central Executive Committee, receive any profit, salary or emolument from the funds or transactions of the Party.

We hypothesise that as party members who are shareholders and directors of a company backed by a letter of guarantee by the PAP, Das and his party colleagues, former and present shareholders and directors likewise, are subject to this stipulation.

But where does the money go to then? Who does it belong to? Does it sit forever in Action Information Management in trust of the People's Action Party? Or does it go eventually to the People's Action Party?

Note that if the earnings of AIM go back to the PAP, then it may be argued that it is Teo who has committed a legally actionable conflict of interest. By awarding the contract to AIM, which he knows to be PAP-backed, he has made it possible for AIM's income deriving from the contract to be transferred to the PAP (of which he, Das, and the AIM shareholders and directors are members), thereby awarding financial advantage from the deal ultimately to the PAP and its members.

Political financing reform drastically needed

A reading of the Political Donations Act affirms the extensive strictures limiting donations to political parties. There are limits to how much money a political party may receive from companies and other organisations, the nature of companies. Parties are required to account to minute detail the donations they receive each year.


Yet as the PAP clown council-AIM affair illustrates, there are sufficient loopholes in the laws of Singapore to allow political parties to 'own' private companies indirectly, and the incomes derived from these are, as a result of lacunae and silences in the law, not subject to scrutiny. Further, we now know that as written, the laws do not require political parties to declare even if they do indeed own indirectly private businesses, much less clarify on the legality of such arrangements.

To regain public trust in the system, a relook at political financing regulations needs to be performed. We believe that the Ministry of National Development does not possess the mandate and has not been tasked to examine this particular issue.

I suggest interested readers do their own research on the international legal norms concerning political ownership of private corporations.

The clown council-AIM affair is not a purely administrative matter; the conflict of interests ultimately rests on whether undue political advantage was accrued by AIM and whether undue financial advantage was accrued by the PAP. If this were illegal in the eyes of the law, it stands that there can be no damage to the people's trust in the system. The damage to the people's trust in the system stems from the possibility that such conflicts of interests are apparently not illegal as the law currently stands.

Hence, I call upon the president of Singapore to convene an independent board of inquiry chaired by the Auditor-general of Singapore and the Registrar of Societies to investigate the issue, and not the MND. Only these two regulators may request for a full and public account from the PAP of all private enterprises it directly owns or indirectly backs and the incomes derived thereof, and to ensure that these incomes are indeed reflected in the accounts of the PAP, and do comply with the Political Donations Act, (I)(3).

With the surprise revelation of AIM's ties to the PAP, the PAP's refusal to disclose whether it owns other companies, and AIM's refusal to disclose the details of other financial dealings it may have had in the past, it appears there is a legal loophole for a political party to own, however indirectly, private enterprises without traditional transparency and accountability mandated elsewhere in the law. Several lacunae in the law have coalesced such that these standards of transparency appear suspended when it comes to the very special case of political financing, where a party owns private enterprises.

Singapore's elected parliamentarians and other politicians must take this issue seriously and urge for a new Political Financing Bill that will clarify these blind spots currently existing in the law, and to harmonise Singapore's political financing regulations to internationally-accepted norms.

The PAP Clown Council procedural show

Like experts on corporate governance who weighed in officially on the issue after Minilee's decree for an investigation into the clown council by the Ministry of National Development gave them the much-needed spine, we at Illusio are convinced that there is a pressing and obvious question of conflict of interests, non-transparency, and inappropriate procedures surrounding Teo Ho Pin's sale, as 'coordinating chairman', of municipal-level management software of 14 town councils to Action Information Management Pte Ltd.

In our last post, we established that very strictly speaking, the questions of conflict of interests, non-transparency, and inappropriate procedures do not lie on Chandra Das and the other directors of AIM. In addition, we proposed that the conflict of interests involved in this case are not legally actionable but fall under the wider issue of the ethics of corporate governance and also, appropriate procedures and full disclosure.

From the point of view of process auditing, at the very minimum, these two questions should be asked in any subsequent investigation by any appointed authorities and regulators as an automatic trigger for the conflict of interests issues surrounding the town council sale.

1. Was the conflict of interest disclosed by AIM to the town council during the bidding process? Note this is despite the fact that legally speaking, AIM Is not legally bound to disclose its PAP-ownership to the public via its accounts or company statements. Legal requirements are not the same as auditing or corporate governance requirements.

2. Was the conflict of interest disclosed by the town councils in their annual reports submitted to the Ministry of National Development and the Auditor-General of Singapore?

In many cases of conflicts of interest that are non-actionable by law, the issue is of an issuer and issuee who are affiliated entering a contract. That is to say, the issuer or issuer are not shareholders, directors, or employees of each other but possess other corporate, social, political, or personal affiliations. For example, both parties could be separate subsidiaries of the same conglomerate, or have known each other for 20 years as members of the local Toastmasters, or are related by marriage or blood.

Yes, it's not legally actionable. But no, that doesn't mean the conflict of interest doesn't exist. What it means is you're supposed to, for the sake of your auditors and the regulatory body, declare this conflict of interests during the process as well as the audit, to say, "Yes, we are both affiliated but the contract was awarded due to the bidder's superior offer, track record, etc." Failure to do so? Not illegal per se but just plain ugly.

Unlike certain conspiracy theories, we therefore do not predict that the MND investigation will lay the blame on the auditors; they simply didn't know and wouldn't know there's a conflict of interest since AIM's political ownership structure is still legally non-transparent and an object of speculation, even ours.


Next, the regulators or investigators will need to consider the following:


3. Was the contract one which was economically, financially, operationally justifiable? Was AIM's PAP affiliation a necessary and sufficient factor for its winning the contract?

It stands that if there are no takers for the contract Teo Ho Pin offered, then from the market point of view, the work entailed in the contract for the sum offered did not make financial, operational, or economic sense. Note that The New Paper has canvassed procurement and software experts who have said just as much.

Now, we consider Teo Ho Pin's statement on 2 January 2013. We note his statement that having considered AIM's sole bid to indicate that the town council offer was reasonable and made market sense, "...we were confident that AIM, backed by the PAP, would honour its commitments."

We suggest that if procurement and software experts may still be found to testify to the Ministry of National Development's investigation (and that the MND would field the question in the first place) that the town councils' contract was not one that any profit-making software company would enter into, then it might follow that AIM was mistakenly awarded the contract by Teo Ho Pin purely out of the fact that he knew it was PAP-backed. If the contract is not economically or financially justifiable, then it is impossible to win it on any merits.

Next. Depending on the investigator, a case might even be made that AIM accrued political benefits from its affiliation in this contract.

4. When and how did Teo Ho Pin know about the PAP affiliation of AIM?

As noted by too many other commentators, there is no publicly available information to corroborate Teo's assertion that AIM is "PAP-backed" or Chandra Das's claim that AIM is PAP-owned.

We at Illusio look forward to the Ministry of National Development to investigate just when and how Dr Teo knew about AIM's nature. It could very well turn out that not only did Teo mistakenly award the town council contract to AIM solely because of its PAP affiliation but also that he made the decision while being privy to its secret ownership. This would be properly speaking, a prime example of improper procedure in corporate governance where the issuee awards the contract for reasons only available to the issuee and not the general public, not even the regulatory body.

Now if our previously-mentioned investigator has taken to inquire if AIM had accrued political benefits from its affiliation, backing, or ownership by the PAP, this investigator may well be swayed by the fact that Dr Teo, being a PAP member having very specialised and restricted knowledge of AIM's affiliation with the PAP, did not in fact declare this to the town council and excuse himself from the awarding of the contract - but instead used it as a prime reason for awarding the contract when the tender should have been called off.

5. So will the investigation by the Ministry of National Development investigate where the money AIM earns from these town council contracts end up? Is this line of inquiry mandated by Minilee's assumption of the investigation committee?