AHTC must take steps to recover lost monies: MND, HDB

SINGAPORE — The Aljunied-Hougang Town Council (AHTC), which has been found to have made improper payments running into millions of dollars, must take steps to claw back public monies it had lost and hold to account those who had acted wrongfully, said the Ministry of National Development (MND) on Friday (Nov 4).

This is so as to protect residents’ interests, the ministry said, adding that the Government is also looking into what other steps are needed to tackle concerns flagged over the way some AHTC town councillors dealt with public funds.

"These findings by KPMG are serious. There has been a significant loss of public monies," the MND said in a statement on Friday, referring to a recent report by the audit firm that was brought in to fix major lapses and compliance and governance in AHTC, as well as review its past payments.

"The report found serious legal and other regulatory breaches, and improper payments made from Town Council funds running into millions of dollars. The report also identified the possibility of criminal conduct," the ministry added, saying it was "deeply concerned".

The Housing and Development Board wrote to the Workers’ Party-run AHTC on Friday, asking for confirmation that a suitable third party will be brought in to recover the monies.

The ministry did not specify the amount of public monies AHTC lost and should recover. But in its report, KPMG said that AHTC ought to recover at least S$625,000 from its former managing agent FM Solutions & Services (FMSS) and service provider FM Solutions and Integrated Services (FMSI) — of which some six of the town councils’ senior staff holding key management and financial control positions were shareholders.

The amount formed part of the S$1.5 million AHTC improperly paid the firms. These included overpayments for project management fees, overpayments for purported overtime and CPF contributions payments without certification that work had been performed, as well as payments made without the requisite co-signature of members of the town council.

The 68-page report, which was made public by AHTC on its website on Tuesday, flagged "serious conflicts of interest" and a "failed control environment" which exposed millions of dollars in public funds to improper use. The six "conflicted" individuals had approved 132 payment vouchers amounting to more than S$23 million from the town council to the company.

Meanwhile, the town councillors relinquished an "unacceptably high degree of financial responsibility" to the conflicted persons. As custodians of public funds entrusted to the town council, they bear a "personal and collective responsibility" for the losses reported, KPMG had said.

Corporate governance experts told TODAY that the people AHTC is expected to bring in could include lawyers, forensic fraud investigators and the police.

President of the Institute of Chartered Accountants Gerard Ee said a joint effort between accountants and lawyers will be required to determine the amounts to claim, and take legal action, if necessary, as is "typical in a civil suit".

"The third parties should preferably not be affiliated with the party," said Singapore Management University law don Eugene Tan, adding that AHTC could consider appointing a law firm or public accounting firm to do the needful.

"The crux of the problem is that public monies are not properly accounted for. Investigations, if any, will take some time. But it is crucial that we not get ahead of ourselves by presuming the town councillors to be guilty. Ultimately, it could boil down to a question of competency," added Associate Professor Tan.

Assoc Prof Mak Yuen Teen from the National University of Singapore of Business added: "I don’t think we can expect town councillors to do this on their own. It would be bit like expecting a board of directors or management to take legal actions themselves."

AHTC could not be reached for comment. Previously, it said that although KPMG deemed some payments to have been made improperly by AHTC, these "do not appear to have an effect on the legitimacy of the underlying payments, (and) hence, may not necessarily be recoverable".