Motion First or Review First? Both AIM and Teo are lone defenders.
The AIM saga has reached a new stage and AIM and Dr Teo Ho Pin are now the only defenders. No supports are given to them by the Prime Minister or the PAP Headquarters. Look like the PAP wants to concentrate their forces on the defence of Punggol East by-election.
PM is now more interesting on fighting the real war of by-election rather than the paper war or conversation of AIM. He wants to cut his association with AIM and has instructed the Ministry of National Development to review the town council management and the safeguard of public interest.
PRESS STATEMENT BY PRIME MINISTER LEE HSIEN LOONG: MND TO REVIEW AIM TRANSACTION AND CORPORATE GOVERNANCE IN TOWN COUNCILS Last week, Mayor Teo Ho Pin explained the circumstances of the sale of Town Council (TC) management software belonging to PAP TCs in an open tender to Action Information Management Pte Ltd (AIM) in 2010. The transaction was not raised as an issue by any of the external auditors who audited the FY2010 accounts of these TCs.
In the interest of transparency and maintaining trust in the system, I have asked the Ministry of National Development (MND) to review this transaction fully, and satisfy itself that public funds were safeguarded and residents’ interests were not compromised.
With a view to ensuring high overall standards of corporate governance in TCs, MND will take a broad-based approach, including re-examining the fundamental nature of TCs. MND has begun the review, which is expected to take a month or two.
PRIME MINISTER’S OFFICE 8 JANUARY 2013
This came as the same day as the Workers’ Party filed an adjournment motion #1 on “Safeguarding the Public Interest in Town Council Management”.
Is this a coincidence? The Motion came first or the Review announcement came first. These are political strategies. The PAP wants to give up the defence of AIM and the WP wants to add more fire powers at AIM in the Parliament.
Can we leave everything to auditors?
PM Lee mentioned about the role of auditors in his statement: “The transaction was not raised as an issue by any of the external auditors who audited the FY2010 accounts of these TCs.”
Like sex for contract, how do auditors assess the sex is for contract or for love? Hence, an investigation is needed. Perhaps this is why PM wants to review the AIM computer transaction.
If auditors can do all the safeguarding then they are not called auditors but investigators.
Similarly, besides external auditors, you also need more independent and third party assessments and evaluation just like the case of Olam International.
If not because of Muddy Waters research, Singaporeans will see only one type of story even its external auditors satisfied with the final reports. In fact, the Hong Kong Exchange has banned Olam type of accounting for companies seeking IPOs there.
Dec 10 (Reuters) - Hong Kong Exchange is prohibiting companies that seek approval to list on its stock market from relying on an accounting practice at the centre of accusations by short-seller Muddy Waters against Olam International Ltd.
What does it mean? Why is our accounting standard different from another international financial centre? For the case of AIM, for so many years are we using the auditing standard of the PAP but not the people’s standard and not the public interest?
However, the Hong Kong Exchange’s action has forced SGX to be ‘cautious’ but no action. And Olam maintained they followed Singapore financial standards.
SGX Cautious On Blanket Ruling Over Biological AssetsIn the wake of the Olam-Muddy Waters saga, Singapore Exchange (SGX) plans to be cautious on whether it should follow Hong Kong exchange’s footsteps in banning companies seeking a listing from including unrealised gains on biological assets, according to SGX head of issuer regulation Mohamed Nasser Ismail. The Hong Kong exchange noted that agricultural companies could not rely on “unrealised fair value gains on valuation of biological assets” to demonstrate a trading and profitability track record when listing.
This accounting practice is at the heart of accusations by Muddy Waters against the commodity firm to boost the latter’s bottom line. Olam’s defence is that its accounting was in line with Singapore financial standards, which is a requirement by SGX; to prepare the statements according to accounting standards at levels of the International Financial Reporting Standards (IFRS), Singapore Financial Reporting Standards (SFRS) and US Generally Accepted Accounting Principles.http://sg.finance.yahoo.com/news/singapore-daily-bulletin-14-12-024224120.html
Just 6 days ago, on 3 Jan 2012 Today reported “Olam-at-its-strongest-since-IPO”.
SINGAPORE - Olam International, the commodity trader that short-seller Carson Block said may fail, said its balance sheet is the strongest since it first sold shares to the public in 2005 and that it is "comfortable" with its current equity levels and gearing.
But today, 9 Jan 2012, major news in the stock market is: UBS downgrades Olam to 'sell' from 'buy'.
UBS downgraded Olam International Ltd to 'sell' from 'buy' and cut its target price to S$1.33 from S$2.95, citing uncertainties around the cost of its Gabon project.
The brokerage also said its bankruptcy analysis of Olam shows the company's financial position has deteriorated to below financial health levels, but remains above distress levels.http://sg.finance.yahoo.com/news/stocks-news-singapore-ubs-downgrades-011123042.html
The case of Olam will go on and we may see another research giving positive assessments and followed by another negative evaluation. No matter what, the Singapore standard alone is not enough in the international financial market. It has failed to face the challenges of the world – the external assessors outside the auditing of Singapore’s external auditors.
Same for AIM, the statements and explanations put up by Teo and AIM are not sufficient and enough. These are based on Singapore accounting standard or rather the PAP standard. People and the general public outside the audit of AIM transaction want to know more and more.
But town councils are not stock markets. And town council management must have only one standard not the PAP standard but the public standard.
When doing the review, MND must always remember they are entrusted to carry out their duty according to public interest not the PAP’s standard and interest. If they are doing the job like the Singapore external auditors of Olam, then we are afraid its final report on AIM and suggestions will follow the pattern of Olam shares - up and down depending on investors’ confidence.
The PAP has to realise that setting up a review on AIM is one thing and getting voters’ confidence is another thing, especially this is based on the so-called Singapore standard.