Sale of Town Council Software begs explanation…

When I heard that PAP Town Councils sold their Town Councils Management System (TCMS) software to an external company, AIM, then leaseback the software, I was really curious to hear the explanation for such a move. I have heard of leasebacks being done by cash strapped companies to raise cash  – they sell their building or equipment because the need the cash badly then lease these back from the new owners. Such deals are financially disadvantageous for the company leasing back – they usually do such deals when they no longer have access to cheap money from the banks and bond market.

The response given below by Dr. Teo Ho Pin just does not make any sense. It does not give the rationale for doing such a deal.

1. One important missing information is cost of developing the software. Selling the software means that they have to incur the cost of redeveloping the software if the AIM decides to charge an exorbitant fee for the leaseback or if it decides to terminate the leaseback. This put their constituents on the hook

2. They sold the software for $ 140,000 and leased it back for $ 785 per town council per month. There are 14 town councils so the total paid to lease the software i $ 11K.  AIM gets its money back after 13 months and starts to make a profit after that at the expense of constituents.  This looks like a financially unfavorable deal that will cost the town councils more money in the long run.

“Dr Teo said although five companies collected the tender agreement, the sole bid was submitted by AIM, a company fully owned by the PAP.” – Report Below.

The PAP Town Councils owe the people an explanation for what it has done. I’m surprise that a company fully owned by the PAP is allowed to even bid for the contract given the potential conflict of interest involved here.  The explanation reported below is completely unsatisfactory for anyone who has any ability to think and reason….it insults the intelligence of Singaporeans.

 Computer firm says town council’s claim “inaccurate”

by Tan Qiuyi
Updated 06:09 PM Dec 24, 2012

SINGAPORE – A disagreement between Aljunied-Hougang Town Council (AHTC) and a company that used to provide its computer and financial systems continues.

In a letter to the media, Action Information Management Pte Ltd (AIM) said AHTC Chairman Sylvia Lim’s allegation that a service extension with AIM had to be “fought for” was inaccurate.

AIM said two service extensions were granted – in August and September 2011 – before the contract lapsed.

AIM also said it would have agreed to a further extension if the AHTC had asked for it.

As AHTC did not do so, the contract was allowed to lapse.

AIM Chairman S Chandra Das said the company’s current directors, three former People’s Action Party (PAP) MPs, namely himself, Chew Heng Ching, and Lau Ping Sum do not receive directors’ fees or any other benefits.

In a separate letter, PAP Town Councils said its Town Councils Management System (TCMS) was sold to AIM through an open tender, and their contract was in accordance with the Town Councils’ Financial Regulations.

Ms Lim had earlier asked why PAP Town Councils (TCs) had transferred ownership of its computer software to a third party, and questioned the AIM’s contract with the PAP TCs.

Coordinating Chairman of 14 PAP TCs Dr Teo Ho Pin said the TCMS owned and used by them was developed by National Computer Services Pte Ltd.

In 2010, PAP TCs called an open tender to sell the ownership of the developed application software.

Dr Teo said although five companies collected the tender agreement, the sole bid was submitted by AIM, a company fully owned by the PAP.

AIM offered to buy the software for S$ 140,000 and manage the system for a monthly fee of S$ 785 per TC, for an initial term ending 31 October 2011.

Dr Teo said after the 2011 general election, AIM decided to end the contract with AHTC.

AIM only owns the rights to the software, so all computer hardware belong to the respective TCs and these remained with AHTC when its contract with AIM ended.

Dr Teo also said the handover by AIM to AHTC took place from 27 May to 9 September, and during the transition, AIM had promptly handed over all data and information to AHTC in accordance with the TC’s preferred format. CHANNEL NEWSASIA

Full News here – Diary of A Singaporean Mind

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