Singapore

KPMG report on AHTC’s past payments, transactions ‘inconclusive’: Low Thia Khiang

KPMG report on AHTC’s past payments, transactions ‘inconclusive’: Low Thia Khiang
The Workers' Party chief Low Thia Khiang speaks to reporters at his Meet the People Session on Nov 2, 2016. Photo: Ernest Chua
WP chief emphasises that KPMG did not find town council had broken the law
Published: 10:10 PM, November 2, 2016
Updated: 12:44 AM, November 3, 2016

SINGAPORE — The audit report on the Aljunied-Hougang Town Council’s (AHTC) past payments and transactions remains “inconclusive” despite the manpower and resources spent, said Workers’ Party (WP) chief Low Thia Khiang on Wednesday (Nov 2).

Mr Low was making his first comments on audit firm KPMG’s finding that flawed governance in the WP-run AHTC had exposed millions in public funds to improper use, to the extent there could be criminal conduct if lapses were deliberate.

“The report seems to have a lot of answering (to do) despite the fact that they had deployed a lot of manpower, public monies (were) used, and eight months spent,” said Mr Low, who was speaking to reporters before the start of his fortnightly Meet-the-People Session at the void deck of Block 522 Hougang Avenue 6. “The town council also spent a lot of manpower responding to their queries. The MPs were also being interviewed to satisfy their questions, but unfortunately the report seems to be inconclusive in that sense. So that’s it.”

KPMG’s 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, including in payments to its former managing agent FM Solutions & Services and service provider FM Solutions and Integrated Services.

The owners of these two companies concurrently held key management and financial control positions in the town council and approved 132 payment vouchers amounting to more than S$23 million from the town council to the company.

KPMG also said improper payments to FMSS and FMSI alone amounted to over S$1.5 million, of which at least S$600,000 ought to be recovered by the town council.

The improper payments to FMSS and FMSI included overpayments for project management fees, overpayments to FMSS for purported overtime and CPF contributions payments to FMSS without certification that work had been performed, as well as payments made without the requisite co-signature of members of the town council.

AHTC also overpaid when it appointed FMSS as its managing agent by more than S$1.2 million.

Responding to these issues, Mr Low reiterated the points in a statement issued by his party on Tuesday, saying KPMG had found “no fictitious, fraudulent, nor duplicate payments”.

“So that is what is important for the public to know,” he added.

Mr Low also said the report “has not said anything” about conflicts of interest among the WP Members of Parliament, the town councillors, FMSS, and other contractors it appointed.

“To me, the report is simply more detailed than AGO’s report, in terms of the framework, and the kind of lapses they found are basically as the AGO’s but in more detail, yes, because they had spent a lot of time going through the records. It is a forensic audit,” he added.

Mr Low was referring to a special audit by the Auditor-General’s Office that found major lapses in compliance and governance in AHTC. The finding led to a High Court ordering AHTC to appoint auditors to fix these lapses.

After fielding questions for five minutes, Mr Low ended the doorstop interview, saying the town council was still studying KPMG’s report and would issue media releases on the matter, if necessary.

Meanwhile, Nanyang Technological University accounting professor El’fred Boo said the proposed amendments to the Town Councils Act would help strengthen governance in a few ways, such as how to avoid conflict of interest situations. But he felt that there could be other changes, such as a requirement to set clear objectives and performance milestones to make it easier to assess them and hold them accountable.

More regular compliance audits could also be made a requirement to boost the Ministry of National Development’s ability to monitor the situation at individual town councils, said Associate Professor Boo. At the same time, there should be a channel for people to report matters of concern to the town council chairman and/or MND, he added.