Auditor-General flags conflicts of interest

Auditor-General flags conflicts of interest
PHOTO: The Straits Times

Singapore's Auditor-General Willie Tan has signalled his concern over the way government agencies handle conflicts of interest, or related-party transactions, in business matters.

Also, some ministries and statutory boards were found to have been lax in the way they administered grants. They failed to ensure that the correct amount was paid out and conditions adhered to.

Lapses were uncovered as well in the handling of tenders for contracts and purchases.

These weaknesses in governance were set out in the latest annual report of the Auditor-General's Office (AGO) released yesterday. It focused on the failings at four ministries and 11 statutory boards.

Most notable among them was the National Library Board (NLB), which comes under the Ministry of Communications and Information.

The way it procured electronic resources such as e-books and databases has led the ministry to refer the matter to the police for further investigation.

The AGO noted that in all seven cases of procurement, no documentary evidence could be found on why NLB chose one vendor over another. Its subscription to an e-resource was also renewed twice, although its evaluators had recommended its termination and NLB's guidelines found usage to be too low for renewal.

"By procuring the e-resources without going through a proper process of sourcing, selection, evaluation and justification, NLB may not have availed itself of the best offer from the market and may be subject to allegations of bias, unfair and inappropriate procurement processes," said the report.

As for related-party transactions not carried out at arm's length, it noted that substantial sums of money were involved.

These related parties were not charged or were charged below market rate for goods and services provided by the public-sector agencies, said the AGO. "In effect, they were given hidden subsidies."

The three organisations cited were People's Association (PA), Institute of Technical Education (ITE) and Singapore Polytechnic.

At the PA, there were seven instances in which the chairman of the Citizens Consultative Committee of Admiralty ward approved his own claims, totalling more than $114,000. But PA investigations found no dishonesty on his part.

In the ITE's case, it made a $2.43 million interim payment for construction work its consultants had certified as completed, even though no work had been done. Since the audit, ITE has excluded the item from its final account.

Singapore Polytechnic leased a plot of land to a related party for $12 a year when it was leasing it from the Land Office at $2.19 million a year. The lease was to the polytechnic's Graduates' Guild for its alumni and industry leaders to network.

The school said it would consult the Education Ministry on this arrangement.

Those found to have been slack in administering grants and handling tenders included the Education Ministry, Health Ministry, National Population and Talent Division, National Research Foundation and Infocomm Development Authority.

Another is the National Parks Board (NParks). The AGO found that managers of the Gardens by the Bay project had awarded contracts of more than $20 million that waived competition without compelling reasons. NParks cited a tight timeline as the main reason for the waiver, but there was no evidence that it was caused by unforeseen events, said the AGO.

"Among other things, NParks had breached the government procurement principle of open and fair competition for consultancy services contracts and there was no assurance that value for money was achieved for the services procured," it said.

NParks admitted that it should have called for an open tender.


This article was first published on July 16, 2015.
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