WP chief: KPMG report on AHTC did not say anything new or conclusive

PHOTO: The Straits Times

KPMG's latest report on Aljunied- Hougang Town Council's (AHTC) accounts do not draw any new conclusions beyond what the Auditor- General's Office (AGO) found in February last year, Workers' Party chief Low Thia Khiang said yesterday.

When asked about the independent auditor's observation that governance lapses could amount to criminal conduct, if found to be deliberate, he added that the report was "inconclusive" on this issue.

"KPMG has camped at the town council for eight months... deployed at least 72 staff, who ploughed through millions of accounting entries... examining documents," he told reporters at his Meet-the-People Session in Aljunied GRC.

"The report has not said anything about conflict of interest between the MPs, town councillors, staff and managing agent we appointed, or any contractors who are working for the town council," he said.

"The report also found no fictitious, fraudulent nor duplicate payments. So that is what is important for the public to know," he added.

"They have talked about improper payments, but it's important to look into the definition of improper - what do you mean by improper?"

The latest KPMG report, released on Tuesday, said payments amounting to at least $23 million were approved by town council members with a conflict of interest.

The direct owners of two companies - FM Solutions and Services (FMSS) and FM Solutions and Integrated Services (FMSI) - AHTC had appointed as managing agent and providers of essential maintenance services, held key management and financial control positions in the town council at the same time.

Two key individuals were Mr Danny Loh, the town council's secretary who died while on holiday in Japan last June, and wife How Weng Fan.

The couple formed FMSS, where both were majority owners, shortly after WP won Aljunied GRC in the 2011 elections. Mr Loh was also the owner of FMSI, a contractor the town council had hired to provide lift maintenance and rescue services.

The AGO, in its report, singled out governance lapses and conflicts of interest involving FMSS - but WP said it made sure transactions with FMSS were given greater scrutiny.

KPMG's report said improper payments of $1.5 million had been made to FMSS and FMSI, of which $600,000 should be recovered.

KPMG defined improper payments as those made in breach ofprocedure, the Town Council Act, Town Council Financial Rules or other duties imposed on councils by the law. It also regarded overpayment and payment for work or services not done satisfactorily, or not sufficiently delivered, as improper.

Asked about the report's finding that the lapses could amount to criminal conduct on the part of town councillors if done deliberately, Mr Low said the report "seems to be inconclusive in that sense".

KPMG had said AHTC's "failed control environment" exposed public funds to, among others, "the potential for actual misappropriation or civil or criminal breach of trust".

It added its findings "may give rise to personal claims against the town councillors, or disclose the finding of criminality", but said these findings are not meant to "conclusively" decide if the town councillors had broken the law.

But Mr Low said: "The report seems to have a lot of answering (to do), despite the fact that they have deployed so (much) manpower, public money is used, and eight months spent, and the town council also spent a lot of manpower in response to their queries.

"The town council has studied the report. To me, the report is simply more detailed than the AGO's report, in terms of the framework and the kind of lapses that they found," he added. "But in more detail, because they've spent a lot of time going through the records."

This article was first published on Nov 03, 2016. Get a copy of The Straits Times or go to straitstimes.com for more stories.