The Aljunied-Hougang-Punggol East Town Council (AHPETC) is running out of funds but has not taken enough steps to clean up its house, said the Ministry of National Development (MND) yesterday.
Despite the town council appointing an external auditor and financial consultant in March to help it iron out its accounts and look into its internal processes, this was "lukewarm assurance" as its finances remain "shrouded in uncertainty".
This emerged at the start of a two-day High Court hearing to determine if independent accountants should be appointed to AHPETC. MND made a court application to do so on March 20, after accounting and governance lapses were discovered during a special audit into the town council's books.
The Workers' Party-run town council, represented by lawyers Peter Low and Terence Tan, has framed the matter as a "political dispute".
They also said the court application contradicted the Government's stance, over three decades, to adopt a "light touch approach" and provide "much latitude" in regulating and enforcing town councils.
Attorney-General's Chambers deputy chief counsel for litigation Aurill Kam, in arguing MND's case, said calling it a "political dispute" was a "very serious assertion" that overlooks the legal questions involved.
It also emerged yesterday that AHPETC has missed two of four payments into its Sinking Fund, which is used for long-term cyclical maintenance, for the last financial year.
While AHPETC chairman Sylvia Lim said in March at a closed-door hearing before Justice Quentin Loh that it had sufficient funds to last "the next three months" - that is, until June - this was "premised on them not making Sinking Fund transfers", said Ms Kam.
Ms Kam said the town council had stressed the urgency for MND to disburse grants to it last year given its financial position - but had a "change in tune" when MND offered an olive branch to give half the grants, but with conditions attached.
If the court gives the nod for the application, MND will release about $14 million in grants to AHPETC - money that is disbursed to all town councils, but which has been withheld from AHPETC for a year. MND is also asking for "adequate safeguards" such as having segregated accounts, and for payments above $20,000 from this account to be co-signed by the accountants.
The hearing continues today.
Get MyPaper for more stories.