'Big difference' in findings on public sector and AHPETC

One house needs some repairs, but is safe and stable, while the other has multiple defects and is structurally unsound.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam painted this picture in Parliament yesterday, to explain the fundamental difference between the Auditor-General Office's (AGO) findings on the public sector and the Workers' Party-run town council.

In both instances, lapses were found. But the key difference, he said, is the AGO had given the accounts of the government agencies a clean bill of health, but had found the Aljunied-Hougang-Punggol East Town Council's (AHPETC) accounts unreliable.

The minister was replying to Mr Liang Eng Hwa (Holland-Bukit Timah GRC), who wanted to know how the AGO's routine audit of ministries and agencies differed from its year-long audit of AHPETC.

Mr Tharman said the AGO had found "there can be no assurance that AHPETC's accounts are accurate and reliable or that public funds are properly spent, accounted for and managed".

On the other hand, "there's no remotely similar problem in Government", he said.

"There's also full visibility, the curtains aren't drawn," he said in an apparent comparison to WP's lack of transparency on AHPETC.

He urged the WP to focus on resolving AHPETC's problems instead of "whitewashing" them: "When the house is structurally unsafe, one doesn't just go and put a new coat of paint on the front walls. I think it means a very hard look - the foundations need to be put in place. It's hard work but you've had a lot of time to do so."

WP chairman Sylvia Lim (Aljunied GRC) told reporters before her Meet-The-People session last night that "the DPM's characterisation of AHPETC as a house in danger of collapse is a gross exaggeration".

Rather, she said, it is "a house in need of repairs", adding that improvements have been made and "Rome wasn't built in a day".

At the Parliament sitting earlier, Ms Lim, who is AHPETC's chairman, had said of the 13 disclaimers that caused the town council's accounts to be given a qualified opinion, only three remain unresolved.

"Our auditors actually made the observation that except for certain specific issues, the town council has actually complied with the (Town Councils) Act in terms of keeping proper accounts and books," she said of its latest audited accounts for FY 2013/14.

But Mr Tharman said the accounts were still qualified and the new auditors AHPETC appointed had also flagged significant areas of concern. These include non-compliance with legal and regulatory requirements, like late transfers to its sinking fund, he said.

On this, Ms Lim said it is "public knowledge" the Ministry of National Development (MND) had withheld $14 million in grants from AHPETC for FY2014 and FY2015.

Mr Tharman said this was because AHPETC had refused to accede to an "entirely reasonable request" by MND for more information on its cash flow situation, because the town council made "a rather unusual request" for all the grants to be transferred into its sinking fund. As this was against the rules, MND wanted to be sure AHPETC would still be able to deliver its essential service, but AHPETC has not answered the questions.

He added: "The amount that is owed to the sinking fund from the operating fund would not be solved by MND grants. There's a more fundamental problem."

He called on Ms Lim to focus on the substance of the problems at AHPETC.

"The examples that are given of the areas the auditor has qualified do strike me, as a finance minister, as being fairly serious examples. They are not minor infractions, which you put a coat of paint over... They are very serious matters to be taken seriously by everyone up and down the line."

In a statement yesterday, AHPETC disputes this, saying Mr Tharman "is incorrect", and only $6.81 million is needed to be transferred to its sinking fund for FY2014/2015. The $7.2 million in MND grants withheld "would more than fulfil" this obligation, it added.

Ms Lim also said that since the financial year had ended in March, "there's no reason for MND to ask these questions".

But a joint statement by MND and the Finance Ministry said Mr Tharman was not referring only to the sinking fund obligations for FY2014/2015. "By focusing only on FY 2014/2015, AHPETC has not provided the full picture," it said.

In addition, it also has to transfer $18 million for FY2015/2016. Of this sum, AHPETC has missed the first transfer of $4.5 million, due by July 31, said the statement. Another $4.5m will be due each quarter: by this October, January and April next year.

Meanwhile, the MND grants withheld for both financial years total $14 million.

The statement, quoting a High Court judge, said AHPETC had itself to blame for failing to make the sinking fund transfers on time, as it had refused to accept MND's conditions for disbursing the grants.

The MND had applied to the High Court earlier this year for independent accountants to be appointed to the town council to oversee its grants, but this was rejected. It is appealing against the decision.

MND also said it was prepared to accede to AHPETC's "unusual request" about the grants.

It made the offer along with the request for the town council's cash flow position, on four occasions last year and this year, but MND never heard back from AHPETC, it said.

Additional reporting by Chong Zi Liang

This article was first published on Aug 18, 2015.
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