S&CC grants to AHPETC withheld until issues fixed: Khaw

SINGAPORE — Calling the current state of affairs “clearly unacceptable”, National Development Minister Khaw Boon Wan yesterday said his ministry has withheld this financial year’s Service & Conservancy Charges (S&CC) grant allocated to the Aljunied-Hougang-Punggol East Town Council (AHPETC) until it fixes the weaknesses and problems listed in the Auditor-General’s Office’s (AGO’s) report.

The move is one of three steps the Ministry of National Development (MND) is taking to remedy the problems at the AHPETC flagged by the AGO after a year-long audit of the town council.

The MND will also strengthen the Town Councils Act and set deadlines for AHPETC to submit its financial reports for FY2013 and FY2014.

It is also looking at what legal measures it can take against the AHPETC over any monies lost as a result of its managing agent’s “gross incompetence”, Mr Khaw said.

In its report released on Monday, the AGO highlighted five major lapses by the AHPETC. These include the failure to transfer the required amount of monies into its sinking-fund bank accounts within a stipulated time frame as spelt out by the Town Councils Financial Rules, inadequate oversight of related party transactions and not having a system to monitor arrears of S&CC accurately.

Speaking in Parliament for almost an hour yesterday, Mr Khaw noted the AGO had said there was no guarantee public funds were being properly spent by the AHPETC. The minister said this was cause for serious concern as the town council collects about S$37 million in S&CC from residents and tenants, and receives another S$7 million in government grants each year.

The S&CC grant has been set aside in a separate deposit account, and will be paid out when the AHPETC “cleans up the mess”, he said. However, MND is mindful not to let the suspension unwittingly affect residents as a result of the town council being unable to pay for essential services.

“We are prepared to consider paying out the S&CC grants, in full or at least in half, if AHPETC could assure MND that the grants will be properly channelled to the purpose for which they are given,” said Mr Khaw.

“These are all public funds. As stewards of public funds, all town councils must keep proper accounts and records, and maintain adequate control over their assets,” he said.

Although the MND noted it was too late for the AHPETC to submit its FY2013 financial reports on time, the ministry expects the town council to remedy its problems and submit an unqualified set of its FY2013 financial reports by June 30 and FY2014 financial reports by Aug 31, said Mr Khaw.

The AHPETC will also be expected to “deal decisively with the gross incompetence” of its managing agents, where one agent, FM Solutions and Services (FMSS), was paid “abnormally high fees”, he added.

“There has been overpayment and public funds have been affected. Will the town council be suing the FMSS for return of money lost? Meanwhile, MND is studying what other legal recourse the aggrieved parties may have.”