If lapses of the kind uncovered in the Workers' Party-run town council were found in a listed company or charity, there would be calls for the removal of the top decision-makers and directors, National Development Minister Khaw Boon Wan said yesterday.
"In Japan, the chairman and chief executive would call a press conference and take a deep bow. In the good old days, they may even commit hara-kiri," he said.
Punishments are prescribed in the Companies Act and the Charities Act for those who breach rules, he said, but town councils are not under such laws.
Instead, they come under the Town Councils Act, which deliberately takes a light-touch approach to regulation and enforcement.
He said MPs were given more authority and responsibility over the HDB estates in their constituencies:
"The strategic intent was to bring home to the MPs that how they manage and run their town council will affect their electoral fortunes at the next election, and to voters, that the MPs they elect will be responsible for looking after their housing estates.
"This would enhance accountability, push MPs to focus on what mattered to residents and... encourage voters to scrutinise more closely the capabilities and track record of election candidates."
He was highlighting the seriousness of the findings in the Auditor-General's Office's report on Aljunied-Hougang-Punggol East Town Council (AHPETC).
The report, which found lapses in governance and compliance with financial rules, confirmed that "something is seriously wrong at the AHPETC".
It painted a picture of financial mismanagement, incompetence and negligence in corporate governance.
Its MPs were also "evasive, unresponsive and misleading", and stone-walled, deflected and made false claims in response to questions from auditors and others.
He criticised AHPETC in four areas: its lack of transparency, its appointment of a related party as its managing agent, paying the managing agent "abnormally high fees" and its failure to deal with problems quickly.
On transparency, he said AHPETC failed repeatedly to submit reports and when reminded, came up with excuses.
This led to concerns over whether critical cyclical maintenance works could be carried out on time.
On conflicts of interest, he asked why AHPETC did not disclose that its secretary Danny Loh and general manager How Weng Fan owned the managing agency company. Mr Loh and Ms How are married to each other.
He cited the agency's high fees - 20 per cent more than the previous agent's, and 50 per cent higher than a town council of comparable size.
While AHPETC said the higher rates included services previously contracted out, Mr Khaw asked if claims of an upgraded financial system were true.
"Apparently, it could not even track and make simple monthly arrears reports," he said, noting it resorted to tabulating accounts manually.
He criticised its MPs' failure to deal with issues quickly: "What we have consistently gotten from (them) is side-stepping... Finally, last month, AHPETC declared they had 'embarked on a road map to enhance its aggregated arrears reporting module some time in November 2014'.
"This is their response to a problem in June 2013 - 17 months earlier! It is simply astounding."
This article was first published on February 13, 2015.
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