The High Court has turned down the Ministry of National Development's (MND) application to appoint independent accountants to oversee government grants to the Workers' Party-run town council.
But Justice Quentin Loh, in explaining why the court was not in a position to do so, was scathing towards the council in his 80-page judgment released yesterday , saying it was a "travesty" that the Aljunied-Hougang- Punggol East Town Council (AHPETC) ignored its duties and obligations to residents. "They owe a duty and a heavy responsibility to their constituents to run AHPETC properly and it is incumbent on them to put their house and finances in order," he said.
Noting the "grave and serious questions" raised over the state of its accounts and propriety of past payments, Justice Loh said such lapses would result in "severe consequences" to office holders had they occurred in a public company. And if the council were a management corporation, it could well have faced civil or criminal liabilities.
MND wanted the High Court to appoint independent accountants to safeguard government grants that had been withheld owing to serious lapses in governance and compliance by AHPETC. MND would disburse the grants - of $14 million - if the court agreed to its application.
But Justice Loh said the High Court does not need to step in as the law already allows the National Development Minister to impose conditions on grants disbursed to town councils.
It would be up to AHPETC in this instance to decide whether to accept these conditions. If it chooses not to, or wishes to challenge the conditions, it may opt for judicial review proceedings.
Although he was unable to grant MND's application, Justice Loh found the conditions proposed by MND reasonable in the light of the Auditor-General's Office's report that unearthed serious accounting and governance lapses.
Noting that problems remain unrectified, and that AHPETC's management of funds and finances is "far from satisfactory", he urged both sides to reach a consensus on the conditions. This is so that grants can be promptly disbursed, and necessary transfers made to the sinking fund.
And on the "most heavily contested issue" of whether the accountants should be empowered to scrutinise past payments, Justice Loh said Parliament's intent when passing the Town Councils Act was to give councils latitude to operate and manage funds.
So MND stepping in as a form of "regulatory oversight" would go against the intent of the law, which already gives the Housing Board and residents the right to seek orders from the court.
The MND noted that the court agreed with its concerns about AHPETC, and said last night it would study the judgment and decide on the next steps. AHPETC and WP chairman Sylvia Lim said the town council respected the decision and would study its findings.