The Auditor-General's Office (AGO), in its report released yesterday, flagged several lapses and instances where procurement rules were not complied with at various grassroots organisations under the purview of the People's Association (PA).
In its audit carried out for financial year 2014/2015, the AGO found irregularities in procurement and payment at Admiralty Citizens' Consultative Committee (CCC).
The AGO did not name the CCC in its report, but National Development Minister Khaw Boon Wan, in his capacity as an MP for Sembawang GRC, said that Admiralty CCC co-operated fully with the PA Investigation Panel.
"We treated the AGO finding seriously. The Admiralty CCC fully co-operated with the PA Investigation Panel," Mr Khaw said.
He added that the MP in charge of Admiralty ward, Vikram Nair, told him that the grassroots leader involved had stepped down to facilitate a full investigation.
PA said in a separate statement that the panel had been convened on July 1 to establish the facts and investigate any wrongdoing, as well as review its processes.
The CCC chairman voluntarily stepped down on July 5 and the investigation was completed on July 14.
"I am glad that the Investigation Panel found no evidence of dishonesty. Nonetheless, it was a related party transaction that was not declared," Mr Khaw said.
"The CCC will study the investigation report, and review its procedures to ensure that such lapses do not recur," he added.
Among these lapses, the CCC chairman was found to have approved his own claims, amounting to $114,767, on seven occasions.
The AGO said in its report: "This is a clear conflict of roles as the approver of payments should not be approving his own claims."
It added that there was no supporting document for three of the payments, and approving them this way exposes the CCC to the risk of paying for "invalid expenditure".
The CCC was also guilty of other lapses in management of related party transactions and did not manage conflicts of interest adequately.
Citing two cases, the AGO said the chairman was involved in approving the awards of two contracts worth $32,000 and corresponding payments to a company where he held a senior management position.
In one of the contracts, another CCC member who took part in the approval process was both a director and shareholder of the company.
In addition, the chairman also approved payment for a $1,500 purchase from another company where he was a director and shareholder.
"The chairman and the CCC member did not declare their interests in the transactions. As a result, there was no assurance that the transactions were conducted at arm's length," the AGO report said.
In its statement, PA said the Investigation Panel verified that all quotations for works and services were handled by the staff in a confidential manner.
The bids were then submitted to the CCC for evaluation and the tender was awarded to the lowest bidder, which was about 30 per cent lower than the next lowest bid.
These tender procedures were in accordance with the rules.
"However, the CCC chairman and a CCC member were related to the company which submitted the bids, which were also the lowest and winning bids in both cases. According to the rules, the CCC chairman should have declared his interest and excused himself from the evaluation and approval process. Likewise, although the CCC member did not know beforehand that the bid from his company would be presented at the meeting for approval, he should have excused himself when he realised it," PA said.
"Regarding approval of own claims, the Panel noted that the amounts claimed by the CCC chairman were subsequently verified by supporting documents. However, the staff responsible for preparing the payments should have been more conscientious in ensuring compliance with the financial rules by requiring that the vice-chairman, secretary or treasurer approve the claims instead of the CCC chairman himself."
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