Town councils must abide by financial rules: MND

THE Ministry of National Development (MND) has every right to seek redress in court against errant town councils, which must still observe financial rules even if they have wide freedom in their other operations, lawyers for the ministry said yesterday.

Wrapping up a two-day hearing on its bid to appoint independent accountants in Aljunied-Hougang-Punggol East Town Council (AHPETC), MND rejected arguments made on Monday by the town council, which claimed that the court was not the right authority to settle disputes between the ministry and a town council.

The ministry had applied on March 20 for the independent accountants to be appointed, after accounting and governance lapses were found following a special audit of AHPETC's books by the Auditor-General's Office (AGO).

Throughout the hearing, AHPETC argued that under the Town Councils Act, only the Housing Board or a resident of the town council could take it to court.

But Ms Aurill Kam, the Attorney-General's Chambers' deputy chief counsel for litigation who argued MND's case, countered that as MND hands out grants and has regulatory oversight, it too is entitled to legal recourse.

AHPETC's failure to take concrete steps to address gaps made it necessary to have independent accountants appointed, she said, adding that it treated its "mandatory obligations as malleable and that is a matter of concern".

These included a failure to make quarterly contributions to the sinking fund, which is for long-term cyclical maintenance.

Since AHPETC acknowledged it would not have enough money had it made the required transfers for the second half of last year, Ms Kam said "it would not be an overstatement to say that the defendant is technically insolvent".

She also suggested that AHPETC chairman Sylvia Lim had been "economical with the truth" about sinking fund transfers.

In February, Ms Lim told Parliament: "We have taken steps and made good the transfers... (We) have been making transfers for financial year 2014/2015."

But AHPETC had made only two out of three transfers that were due at that time for the financial year 2014/2015.

Justice Quentin Loh pressed AHPETC's lawyer Peter Low about Ms Lim's speech in Parliament, saying: "If I had heard that, I would have thought three transfers were already done by then."

Mr Low replied: "There was no intention to mislead Parliament."

Speaking after the hearing, Ms Lim said she swore an affidavit on Saturday in which she said that her words in Parliament were "true and correct". She told reporters: "It is still my position today that what I said was factual."

This article was first published on May 6, 2015.
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