That 7-day deadline for Aljunied-Hougang TC

Nov 05, 2016 07.00PM |

by Bertha Henson

NO, THE G is not calling in the white-collar cops to investigate Aljunied-Hougang town council (AHTC). You’d almost expect it to, given the way auditors KPMG concluded its report. KPMG said it has “been advised” (presumably by lawyers) that its findings of improper payments “may give rise to personal claims against the Town Councillors or disclose the commission of criminality”.

So, while KPMG said there were “improper payments”, which AHTC has denied, it could well boil down to incompetence. Or, it’s about whether the town councillors, individually or as a group, deliberately turned a blind eye or were involved in some way in helping their pals, the managing agents, profit from the town council. If so, the Penal Code could be used against it. So, who’s going to look into this? Nothing’s been said.

KPMG also said:  “To the extent that such matters involve overpayments or erroneous payments to vendors and contractors, the Town Council may, as one avenue of recovery, seek recovery of losses from the recipients of the improper payments. At the same time, the Town Council may potentially look to the Town Councillors as a further avenue of recovery, for recovery of losses or cost-savings arising from any breaches of fiduciary duties.”

Now, perhaps KPMG was being coy, leaving it to the town council itself to find ways to recover the money, which could be as low as $600,000 or as high as $23 million. KPMG said it could claw it back from its ex-managing agent FM Services and Solutions (FMSS) and assorted vendors, contractors and consultants it has used since 2011. Or, the town council as an entity, could get individual councillors to pay up.

As if.

The Workers’ Party (WP) which runs the town council doesn’t agree that payments were improper and the only money they will consider recovering is $1,500 from a certain un-named town councillor who had been wrongly paid.

Enter the G.

The Housing Board cited the KPMG practically word-for-word in its letter yesterday to the town council on the recovery of money, adding that it was “imperative” for AHTC to do, including taking legal steps. Because town councillors themselves might be involved, it wants a third party to conduct the proceedings. It gave AHTC a seven-day deadline to respond and, presumably, comply.

The National Development Ministry weighed in as well adding this rather ominous statement: “The Government is also considering what other steps are necessary in view of the concerns highlighted by KPMG, in relation to the way some of the Town Councillors have behaved, in dealing with public funds.”

Neither agency gave a figure. KPMG cited $625,000 that AHTC should get back from FMSS, the sum it is probably most certain was wrongful payment, although it had a higher $1.5 million figure. That’s about what it thinks the AHTC over-paid FMSS. But what about vendors, contractors etc? KPMG gave a ballpark figure of $23 million worth of transactions that went through the hands of “conflicted” persons.

AHTC hasn’t said anything yet in response to the HDB ultimatum. In fact, the HDB and MND didn’t cite any authority which empowers either agency with such powers to compel action. Are we going to see yet another drawn-out court saga on this issue, especially since the AHTC denies that there were any improper payments and is taking legal advice?

WP’s Low Thia Kiang tried to query the word “improper” and has repeatedly pointed out that auditors found no evidence of wrong doing.

According to KPMG, any payment process that doesn’t follow the Town Council Act or Town Council Financial Rules or AHTC’s own internal process is considered “improper”. It added: “Our approach has also been to consider payments to be improper when the payment exceeds the sum that the Town Council is required to pay under a given contract (i.e. an overpayment), or when payment is made for work or services that have not been performed satisfactorily or not sufficiently delivered,” it said.

The party is also banking on this phrase which appeared in its report when it toted up breaches of financial rules and internal controls. KPMG said it has “identified numerous miscellaneous breaches… which, while meeting the definition of improper payments.., do not appear to have a practical effect on the legitimacy of the underlying payments”.

In its statement after the release of the report, the WP noted this point: “KPMG acknowledged that while some payments were deemed to be made improperly, they do not appear to have an effect on the legitimacy of the underlying payments, hence, may not necessarily be recoverable.”

Looks like more work for bean counters. And lawyers.


Featured image from TMG file.

If you like this article, Like The Middle Ground‘s Facebook Page as well!

For breaking news, you can talk to us via email.