MND appeal on AHPETC ruling expected to be heard on Aug 3

MND appeal on AHPETC ruling expected to be heard on Aug 3

Aug 3 is expected to be the hearing date for the Ministry of National Development's (MND) appeal against a High Court decision not to appoint independent accountants to the town council run by the Workers' Party (WP).

But it still hinges on whether two other Judges of Appeal are available to sit with Chief Justice Sundaresh Menon for the hearing.

Chief Justice Menon gave the tentative date yesterday at a High Court hearing when he agreed to the ministry's request to hasten the appeal, a move supported by the WP as well.

Later, MND issued a statement giving three reasons for wanting the matter to be resolved quickly.

Pointing to the persistent breaches of duties by the Aljunied-Hougang-Punggol East Town Council (AHPETC), it said it needed the court to determine as soon as possible what steps the town council must take to remedy the breaches.

Second, it noted that AHPETC was in urgent need of fresh service and conservancy charges grants to both deliver essential services to its residents and meet legal obligations.

The town council had "consistently resisted" its offer to disburse half the grants, with terms attached, MND said, adding that the move was "presumably because it wants the grants, but without conditions and accountability".

Third, the ministry noted the serious questions that had been raised about the validity and propriety of payments made previously to related parties.

This was in reference to two companies engaged by AHPETC, including managing agent FM Solutions and Services (FMSS), being owned by some key officials of the town council.

"There is an urgent need for the independent accountants to be appointed with powers of inquiry and recovery," said the ministry, noting AHPETC's contract with FMSS would expire on July 14.

Separately, when asked why AHPETC would like to speed up the case, chairman Sylvia Lim said: "We want to move on from what we consider (to be) needless litigation and to fully focus on our core mission of serving the residents."

The ministry has withheld from AHPETC about $14 million in grants, over two financial years, owing to financial lapses. It said last week it could not immediately disburse the sum without independent accountants safeguarding the monies, given the High Court's grim view of AHPETC's actions.

Despite his harsh words for AHPETC, Justice Quentin Loh said there was no legal basis for the court to appoint the accountants as MND has the powers to impose conditions when disbursing the grants. He said only the Housing Board or residents - and not MND - can take legal action against a town council if it fails to perform its duties.

During the hearing, the High Court was told that AHPETC was in urgent need of the grants because it was "technically insolvent", and would run out of funds by this month.

It also failed to make two out of four transfers into its sinking fund for the last financial year, using the money instead to pay for routine expenses and to ensure continuity of operations.

Ms Lim said yesterday that the two outstanding transfers had yet to be made. She said AHPETC has asked the ministry to deposit the grants for financial year 2014/2015 directly into the sinking fund.

Though unusual, the ministry told The Straits Times yesterday it informed AHPETC on May 2 that it was prepared to consider the suggestion.

It asked for the reason for the request and information on its cash flow position, "to ensure its proposal - if acceded to - will not affect its delivery of essential services to residents", its spokesman said.

"However, AHPETC has to date not replied to MND."

This article was first published on June 5, 2015.
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