Wednesday, 6 May 2015

Workers' Party Town Council "technically insolvent"

By Kimberly Spykerman, Channel NewsAsia, 5 May 2015

The Aljunied-Hougang-Punggol East Town Council (AHPETC) is "technically insolvent", according to the Ministry of National Development (MND), which wrapped up its case on Tuesday (May 5), following a court hearing into whether independent accountants should be appointed to, among other things, safeguard Government grants.

This charge was not challenged by the town council.

The court heard on Monday and Tuesday that the town council had failed to make two mandatory payments to its sinking fund, which is used for long-term estate maintenance. With about S$14 million in Government grants currently being withheld, the town council does not have sufficient income from its service and conservancy charges to make those payments.

"If the defendant (AHPETC) had complied with the mandatory obligation to make their 2014 Q3 and Q4 quarterly transfers, they would not have sufficient monies," said MND's legal counsel Aurill Kam.

Ms Kam said that from that point of view, it would not be an overstatement to say that the Workers' Party-run town council is "technically insolvent". She also charged that the town council had been "economical with the truth", when its leaders told Parliament in February that it had been making transfers to the sinking fund for 2014.

Payments to the fund are made quarterly, but at that time, the town council had already missed the payment for the third quarter.

Ms Sylvia Lim, Chairman of AHPETC, maintained that what she said in Parliament is factual. "When it comes to what I said to Parliament, I filed an affidavit to explain, and it's still my position today that what I said is factual,” she said.

In her affidavit, Ms Lim said her statement to Parliament that the town council had been making transfers to the fund was true and correct, as two payments totaling about S$8 million had already been made.

The court also heard that the town council has sufficient funds to last till June, but this would mean not making the mandatory payments to the sinking fund.

Ms Kam said these breaches took place despite the town council's public assurances and statements that it was aware of this obligation and was complying with it.

"Does the defendant (AHPETC) view its obligations to comply with the Town Councils Act and the Town Councils Financial Rules seriously? They treat their mandatory obligations as malleable and that is a matter of concern," she told the court.

MND maintains that unless independent accountants are appointed, fresh grants that are disbursed to the town council will not be protected, and there can be no assurance that serious steps will be taken to credibly review whether there have been any wrongful payments, breach of duty, or unlawful conduct so far.

 AHPETC OBJECTS TO MND'S NOMINATED INDEPENDENT ACCOUNTANTS

The town council also objected to MND's nomination of individuals from major accounting firm PricewaterhouseCoopers (PwC) as the court-appointed independent accountants. This was because PwC was the accounting firm that helped the Auditor-General's Office produce the report that flagged major lapses in the town council's books. The town council said this could give rise to a possible bias.

AHPETC's lawyer Peter Low said PwC had already made findings in the AGO's report that it was "not fully satisfied" with the validity and propriety of the town council's transactions with its managing agent. AHPETC also had disagreements with PwC during the course of the AGO audit.

Responding to a series of questions from Justice Loh, Mr Low acknowledged that there was no evidence of bias, but maintained that there could be the perception of bias. He said the town council hoped that the Court would consider a more neutral third-party – such as a retired Judge or Senior Counsel – to nominate the independent accountants, if MND's application is granted.

Justice Loh noted that the town council's leaders had stated in Parliament that they had accepted the professional and integrity of the AGO's report, and therefore could not have grave suspicions about PwC's work. Justice Loh assured the town council that if independent accountants were indeed appointed and they showed bias, they would be answerable to the court.

 The town council also told the court that it is on track to meet new deadlines to submit two sets of audited accounts, which are already overdue.

 Justice Loh will deliver his judgement at a later date. And Ms Lim told reporters that the town council looks forward to a fair outcome.





* Town council insisted it didn't need grants: MND
The Straits Times, 15 May 2015

THE Ministry of National Development (MND) last night issued the following response to the statement released by the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC):

"All town councils (TCs) are entitled to operating grants, but they must be able to safeguard these grants, which are public funds, and channel them to the purpose for which they are given.

MND has given AHPETC much latitude, as far as grants were concerned. In the first year when their own auditors qualified their accounts and had four disclaimers, MND still gave AHPETC the grant, because the TC assured MND that they would rectify their shortcomings. However, the following year's audit showed that not only did AHPETC not rectify the situation, it had gotten worse; the TC's accounts continued to be qualified and the number of disclaimers increased to 13.

The Auditor-General's Office (AGO) had to be called in to do a special audit of the TC's accounts. Under the circumstances, it would be unconscionable for MND to continue to give AHPETC the grants, which are public moneys, without proper safeguards.

Notwithstanding this, MND, in response to Ms Sylvia Lim's appeal, offered to disburse half of the grant, even while the AGO audit was ongoing, on the condition that the TC complies with the law. However, Ms Lim never responded to this offer.

Her latest statement still doesn't explain clearly why AHPETC did not disclose to the court as late as March 27 that it needed these grants. Indeed, it had insisted it did not.

In the latest press release, Ms Sylvia Lim gives the impression that AHPETC is not making transfers to the sinking fund and contravening the law, because MND has withheld the grants. The fact is AHPETC also did not make mandatory transfers to the sinking fund in FY11/12 and FY12/13, while receiving grants from MND.

This latest press release by AHPETC is another example of why MND had to go to court to seek the appointment of independent accountants. This is the only way to depoliticise the issue: AHPETC deals directly with the courts, and not engage in endless argy-bargy with MND."







AHPETC needs govt grants and hopes to get the $7.1 million soon: Sylvia Lim
By Lim Yan Liang, The Straits Times, 15 May 2015

THE town council run by the Workers' Party (WP) needs the government grants that have been withheld from it and hopes to receive the $7.1 million soon.

The grants are needed for the Aljunied-Hougang-Punggol East Town Council (AHPETC) to meet its operating expenses and to make transfers to its sinking fund, WP and AHPETC chairman Sylvia Lim said yesterday.

She also explained why AHPETC did not accept an offer of half the grants, with conditions attached, from the National Development Ministry (MND) last year.

MND had withheld the grants during a year-long special audit of AHPETC's accounts by the Auditor-General's Office (AGO), which ended in February. It continued doing so after the audit unearthed accounting and governance lapses at AHPETC.

The ministry said it would disburse the grants if the High Court appoints independent accountants to oversee the use of the money by AHPETC. The court decision is pending.

Yesterday, Ms Lim said that by the time the ministry made its half-grant offer last October, AHPETC believed the completion of the AGO's audit was "imminent", and that the entire grant might be disbursed after that.

That was why AHPETC did not accept the offer, she explained, responding to a statement the ministry had issued on Tuesday.

The ministry, in disputing online reports that it was withholding the grants for no good reason, had revealed that it made the half-grant offer. But AHPETC rejected it, despite having earlier asked for the grants to meet its cash flow needs and sinking fund obligations, MND added.

Yesterday, Ms Lim said AHPETC had been deferring its sinking fund transfers in order to pay its routine expenses and "ensure continuity of operations".

It made the quarterly transfers when it could, but its priority was to ensure it had enough cash for daily operations, she said.

She also said AHPETC had earmarked all the withheld grants for its sinking fund payments for the financial year 2014/2015.

"News reports have generated concern about AHPETC's ability to continue to operate. AHPETC hopes to receive the operating grants soon. In the meantime, AHPETC will continue to prioritise its operations to avoid disruption of services to residents," she said.




Workers' Party town council rejected National Development Ministry's grant offer, which came with some conditions attached. str.sg/3CC
Posted by The Straits Times on Tuesday, May 12, 2015





* WP town council 'rejected MND offer of half the grants'
This was despite AHPETC asking for grants withheld amid audit: Ministry
The Straits Times, 13 May 2015

EVEN before a special audit of the town council run by the Workers' Party (WP) was completed this year, the Ministry of National Development (MND) offered to disburse some grants to the financially struggling town council, it said yesterday.

But its offer, which came with some conditions attached, was rejected, the ministry added.

It said the Aljunied-Hougang-Punggol East Town Council (AHPETC) had asked the MND last year for grants that were being withheld from it because of the ongoing audit by the Auditor-General's Office (AGO) that was wrapped up in February this year.

AHPETC chairman Sylvia Lim, who is also the WP's chairman and an MP for Aljunied GRC, had written to the MND in June last year saying the withholding of the grants "is likely to critically and adversely affect the town council's cash-flow position".

This would result in "a disruption of essential services... because the town council would not be able to pay its contractors", she added.

But the MND said that when it offered to disburse half the grants - provided the town council met certain conditions, including making all scheduled transfers to its sinking fund - Ms Lim did not take up the offer.

It said this in a statement issued yesterday in response to media queries over reports on sociopolitical sites last week saying the MND was withholding grants from AHPETC for no reason.

One website's report asked whether this was being done "to cripple the WP-run town council", adding: "The PAP is playing up the bogeyman that AHPETC is insolvent and will have no money by June. (It is) probably hoping that it will instigate residents in Aljunied, Hougang and Punggol East to rise up as a collective mass and condemn the WP.

"But it is clear for most residents that the WP-run town council would not have become insolvent if not for the PAP withdrawing two years' worth of government grants."

The MND's statement outlined its dealings with the town council. This included a reply on June 20 last year informing Ms Lim that it was prepared to "reconsider the withholding of grant, to take into account the impact, if any, this may have on the (town council's) provision of essential services to the town".

Then in October, it said it was "deeply concerned" about AHPETC's financial situation based on information Ms Lim had provided and sought to work on a solution with the town council.

This included, "as an exceptional measure, releasing half the operating grant to AHPETC while the AGO audit is still ongoing", subject to conditions. But the MND did not receive any reply from Ms Lim. It said in yesterday's statement that on Nov 5, WP secretary-general Low Thia Khiang told the media that the town council had no cash-flow problem.

Ms Lim, just a week later, told the MND, among other things, that figures she had provided the ministry earlier were correct and that she would reply "should we wish to take the option of the half-grant while awaiting the conclusion of the AGO audit".

The MND said Ms Lim had not got back to it since then.

Parliament has since debated the AGO report on AHPETC's accounting and other practices, while the MND in March applied to appoint independent accountants to oversee government grants given to AHPETC and to examine its past payments.

The MND noted yesterday that during the court hearing of its application earlier this month, AHPETC admitted that it would need the grants in order to operate in accordance with the law. This was contrary to what Ms Lim told Parliament and what she had said at a pre-trial hearing in March.



SEQUENCE OF EVENTS

 In 2014, Ms Sylvia Lim had appealed to MND twice to disburse the (service and conservancy charges) operating grant, even though the AGO audit was ongoing, stating that the town council would not be able to pay its contractors and make sinking fund transfers otherwise. Yet, when MND, in response to her appeal, offered to disburse half of the grant to the town council, she did not take up the offer.

MND has now applied to the court to appoint independent accountants to enable the grant to be securely disbursed to AHPETC. But again, despite repeated questions from the judge, AHPETC told the court that it does not need the grants.

 - MND in a statement last night
Town councils must abide by financial rules: MND
Ministry says it has oversight duty over councils' running of estates
By Chong Zi Liang, The Straits Times, 6 May 2015

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.


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."









WP objects to PwC being chosen to manage its finances
By Walter Sim, The Straits Times, 6 May 2015

THE Workers' Party (WP)-run town council yesterday objected to accounting firm PwC being chosen to help manage its finances, should the court decide to appoint independent accountants to the town council.

 Its lawyer Peter Low said using PwC may lead to perceptions of bias, as the firm helped in a recent special audit of the town council done by the Auditor-General's Office (AGO). The audit found accounting and governance lapses.

If PwC was again appointed to inspect the town council's books, the firm might be seen to have preconceived notions of AHPETC's wrongdoing, Mr Low said.

The town council was in court to argue against the Ministry of National Development's (MND) request for independent accountants to be appointed to AHPETC.

MND had suggested the High Court appoint PwC partners Ong Chao Choon and Chan Kheng Tek to oversee government grants to the Aljunied-Hougang-Punggol East Town Council (AHPETC), and to examine its past payments.

But AHPETC believes PwC would be "constrained" if it were appointed, Mr Low said.

He referred to a court statement made by AHPETC chairman Sylvia Lim on April 17: "(PwC) had already made findings contained in the AGO report that it was not 'fully satisfied' with the validity and propriety of the town council's transactions with its managing agent.

"AHPETC also had disagreements with PwC during the course of the AGO audit."

Also, MND's offer to pay for the work done by the independent accountants, on top of suggesting whom to appoint, may also lead to suspicions of bias, said Mr Low.

Instead, AHPETC wants a neutral party - like a retired judge - to select the accountants.

Responding to Mr Low's argument, Justice Quentin Loh noted that the WP's MPs had fully accepted in Parliament the AGO's audit findings and had acknowledged its integrity.

"It can't be (you) accept what the AGO said but (you) have grave suspicions about PwC's work," he said.

"Is an auditor doing something unprofessional or doing something wrong, if it comes to related-party transactions or checking on processes, to follow the trail? You can't say they are being unreasonable," Justice Loh said.

In any case, if the independent accountants show bias, they would be answerable to the court, he said.

"They are no longer part of the AGO team, they are no longer part of anybody's team; they are officers of the court."

At yesterday's hearing, AHPETC's lawyers also said for the first time that the town council would submit two overdue financial reports by new deadlines that had earlier been set by the Government.

AHPETC's financial consulting firm, Business Assurance, is now ironing out accounting issues flagged by previous auditors, so AHPETC can submit an unqualified set of accounts, they said.

AHPETC has until June 30 and Aug 31 to submit its accounts for the 2013 and 2014 financial years respectively.

Its lawyers' assurance yesterday comes after they dithered on Monday when asked by Justice Loh how likely AHPETC was to meet the deadlines.





WP town council 'running out of funds', MND warns
It says actions taken are not enough to address the problem
By Walter Sim, The Straits Times, 5 May 2015

THE town council operated by the Workers' Party (WP) is running out of funds and yet it has not taken enough steps to put its house in order, the Ministry of National Development (MND) said yesterday.

Questions remain over the cash flow position and accounting practices of the Aljunied-Hougang-Punggol East Town Council (AHPETC), which has recently missed two sinking fund payments as it needs the money to keep its daily operations going, MND revealed. That is why the High Court should appoint independent accountants to oversee government grants to AHPETC and examine its past payments, MND argued at the start of a two-day hearing to decide if such a move is necessary.

MND had applied to the court on March 20 to appoint independent accountants to AHPETC, after accounting and governance lapses were discovered following a special audit of its books by the Auditor-General's Office.

But the town council, represented by lawyers Peter Low and Terence Tan, countered yesterday that the court should not intervene in what it called a "political dispute" between the WP and the ruling People's Action Party.

The lawyers also argued that the Town Councils Act does not give the High Court the power to grant MND's request, adding that such a move would contradict the Government's stance to adopt a "light touch" in regulating town councils.

If there is any mismanagement of town council funds, only the Housing Board or the residents have the right to complain, Mr Low said in response to questions by Justice Quentin Loh, who is presiding over the case.

And if the town council runs out of funds, nothing can be done until the next general election, when voters can register their dissatisfaction, he added.

Attorney-General's Chambers deputy chief counsel for litigation Aurill Kam, representing MND, responded that calling this a "political dispute" is a "very serious assertion" that overlooks the legal questions involved.

"The leadership of the town council being WP members is not the point," she said. Rather, the accountants, if appointed, would look into whether payments were properly authorised, and if there was any breach of duty.

Key AHPETC staff are co-owners of its managing agent, FM Solutions and Services (FMSS), giving rise to potential conflicts of interest. FMSS' contract is also due to expire in July, which reinforces the urgency of MND's application, said Ms Kam.

She noted that AHPETC had missed two out of four payments into its sinking fund for the last financial year. The money is for long-term cyclical maintenance.

While AHPETC chairman Sylvia Lim had said at a hearing in March that it had enough funds to supply essential services until June, this was "premised on them not making sinking fund transfers", Ms Kam said. Although AHPETC has appointed an external auditor and financial consultant to help clean up its books, the move is a "lukewarm assurance" as its finances remain "shrouded in uncertainty".

She also said AHPETC had initially stressed its urgent need for MND grants but changed its tune when MND offered to give half the grants, with terms attached.

MND has withheld about $14 million in grants to AHPETC, which it will disburse only if its court application is successful.

Near the end of the hearing, Justice Loh asked twice if AHPETC would meet the deadlines for the submission of its past accounts. Mr Low replied: "It is work in progress... We're working towards the deadlines."

The hearing continues today.





Ministry flags 4 concerns over AHPETC
MND makes case for independent accountants to oversee govt grants
By Chong Zi Liang, The Straits Times, 5 May 2015

THE Ministry of National Development (MND) yesterday outlined four areas of concern when urging the High Court to appoint independent accountants to oversee government grants given to a Workers' Party-run town council and examine its past payments.

The ministry's main concerns centred on Aljunied-Hougang-Punggol East Town Council's (AHPETC) current cash flow position, its state of account-keeping, questions about related-party transactions, and steps taken to remedy its accounting lapses.

The MND cited AHPETC chairman Sylvia Lim as saying in previous correspondence that the town council had sufficient funds to last until June this year.

But in an April 17 affidavit Ms Lim filed, the adequacy of such funds was "premised on them not making sinking fund transfers", said Attorney-General's Chambers deputy chief counsel for litigation Aurill Kam, who is representing the MND.

AHPETC made just two transfers to the sinking fund - which is for long-term cyclical maintenance - instead of the four required for the 2014/2015 financial year. Both were also made late.

Ms Lim told Parliament in February that AHPETC was taking steps to make good the sinking fund transfers.

Yesterday, Ms Kam said it was clear AHPETC was "in need of fresh service and conservancy charge grants to deliver essential services to residents".

And while the AHPETC accepted that the National Development Minister could impose conditions for disbursing grants, it opposes having these grants subjected to payment controls and safeguards.

Ms Kam also said that while AHPETC hired two external companies in March to manage its finances, these were "lukewarm assurances". The firms are Audit Alliance, which will audit past accounts; and Business Assurance as its financial consultant.

But Business Assurance was registered just a year ago and has "no track record" of dealing with town council matters, Ms Kam said. It also has no prior experience in advising on internal controls, nor a good understanding of systems governing town councils.

It will also not look at related-party transactions or whether any money was lost. She added that AHPETC's failure to get professionals with the right experience showed "a lack of willingness and appetite to independently and properly inquire into and rectify the grave oversights that have and are apparently still continuing".

Also, the independent accountants MND wants the court to appoint will not duplicate the work of AHPETC's own auditors, said Ms Kam: "Even if their auditors complete their work in June or August, which is what we understand the estimated timeline to be, it's not going to shed light on any unlawful payments, breach of duty or unlawful conduct."

MND referred repeatedly to the Auditor-General's Report, which cited the potential conflicts of interest arising from key town council staff being co-owners of its managing agent, FM Solutions and Services. The report added that an overpayment of more than $122,000 was recovered only after the findings of the report.

Ms Kam dismissed AHPETC's claim that the case was a political dispute between the People's Action Party and Workers' Party. It was a legal matter between MND, which gives grants and has regulatory oversight, and AHPETC.

The case involved the public accountability of a town council, its responsibilities in handling its funds, and the necessary remedies it must make when it fails to meet its obligations, she added.

"The mere fact that the leadership of a town council comprises members of a political party neither makes the present case a 'political dispute' nor confers on the defendant any peculiar political immunity," she said.




AHPETC: Issues that MND highlighted

 1 Uncertain financial position: It is running out of funds and has missed two sinking fund payments

2 Gaps in financial management and account keeping

3 Possible incorrect or improper payments in related-party transactions

4 Inadequate steps taken to address weaknesses identified during special audit



Who are MPs accountable to?
The Straits Times, 5 May 2015

JUSTICE Quentin Loh asked Aljunied-Hougang- Punggol East Town Council lawyer Peter Low about his comments that elected Members of Parliament are accountable only to residents if there is mismanagement.

Mr Low had said the Town Councils Act provides only for residents or the Housing Board to apply to the High Court for an order to compel town councils to perform a duty.

Justice Quentin Loh: So who is the right person to complain about the breaches that have been accepted as breaches, which were accepted as significant in Parliament and a commitment has been made to put things right?

Mr Peter Low: Only Housing Development Board or a resident voter.

Justice Loh: All these arguments are for matter of degree, type of situation. You want to appoint someone who is not fit for managing agent, that is fine. I am working out your submissions to your logical conclusion. Is your answer clear that nothing can done (until) the next general election (GE)?

Mr Peter Low: Yes. That is the underlying reason why the Town Councils Act is fashioned in this way...

Justice Loh: I follow. So your submission therefore is that if you elected someone (who is) not capable, you live with that choice, even if your lift doesn't get mended until the next GE.





Courts not right venue to settle dispute: WP
By Chong Zi Liang, The Straits Times, 5 May 2015

THE High Court is not the right authority to settle disputes between the National Development Ministry (MND) and a town council, lawyers for the Workers' Party (WP)-run town council said yesterday.

This is because the Town Council Act allows the National Development Minister to set conditions for the use of disbursed funds, said Mr Peter Low, representing Aljunied-Hougang-Punggol East Town Council (AHPETC).

This means it is unnecessary for the MND to ask the court to appoint independent accountants to oversee government grants given to AHPETC, he added.

Also, National Development Minister Khaw Boon Wan told Parliament in February that the Act would be given more bite, with a system of enforcement and penalties, he noted.

These proposed amendments would give the MND more power, and eliminate the need for the ministry to seek authority from the court, Mr Low said.

Even if someone were to seek redress in the courts, he argued that the Act allowed only the Housing Board or a resident living in an area under the town council's purview to do so.

Justice Quentin Loh asked Mr Low if he read the Act to mean that residents, faced with a breakdown in services, would have "to live with it until the next election" if the town council did nothing.

Responding, Mr Low said: "Yes, unless they can invoke some other legislation or power."

AHPETC also characterised the case as a "political dispute".

In arguing against the MND's bid to have independent accountants appointed, it said in a document: "The High Court should also not intervene in the political dispute between the People's Action Party and the WP concerning alleged mismanagement of monies of AHPETC arising out of the report of the Auditor-General."

Yesterday, Mr Low referred to ministerial speeches which he said were government pledges to stay out of town councils' affairs.

He cited a 1988 parliamentary speech by then National Development Minister S. Dhanabalan saying that the Government would not bail out a town council even if "a bunch of crooks" emptied its coffers.

And he noted that Mr Khaw told Parliament in February about a "light-touch approach to regulation and enforcement" when it comes to town councils.

Mr Low said these showed "Parliament intended to give elected MPs and town councillors as much latitude as possible to run town councils".





Judge questions courts' role in appointment of accountants
By Walter Sim, The Straits Times, 5 May 2015

JUSTICE Quentin Loh yesterday questioned the need for the courts to be involved in the appointment of independent accountants to the town council run by the Workers' Party.

The proposed accountants are partners of major accounting firm PwC, Mr Ong Chao Choon and Mr Chan Kheng Tek, who he said are experienced professionals who can make their own judgment call.

This was among the questions he raised to test the strength of the legal arguments made by the Ministry of National Development (MND) in its application for independent accountants to be appointed to the Aljunied-Hougang-Punggol East Town Council (AHPETC).

Responding, the MND argued that having the court act as an arbiter in the appointment will prevent an impasse should disagreements arise. Also, one of the conditions for the release of $14 million of grants to AHPETC was "payment controls", said the deputy chief counsel for litigation at the Attorney-General's Chambers, Ms Aurill Kam, who is arguing the case for the MND.

In its court application, the MND wants the independent accountants to co-sign payments above $20,000 taken from the grants, which must also be kept in a separate account.

Said Ms Kam: "A court-appointed officer to carry out that control is in the interest of all parties. If there are issues... there is an independent party - the court."

She cited a hypothetical example of an instance in which the accountant decides not to sign off on a specific payment, which both the defendant and MND might find unreasonable. "There is no way to resolve that implementation difficulty, and it also wouldn't be in the interests of the town council or residents."

As the independent accountants will be officers of the court, they will be empowered to compel AHPETC and its managing agent, FM Solutions and Services, to produce documents, so long as permission has been sought and granted by the judge. The judge may also ask for more information if the evidence provided is deemed insufficient, she said.

What if the accountants discover wrongdoing and suggest taking legal action, Justice Loh asked.

Ms Kam replied they may then "step in the shoes" of the town council to sue the relevant third parties who owe money, or who have received wrongful payments.

 "This is an arrangement that works and ensures justice for all parties concerned," she added.





WP town council appoints external accounting firm
By Chong Zi Liang, The Sunday Times, 3 May 2015

The Aljunied-Hougang-Punggol East Town Council (AHPETC) has hired an external accounting firm to help it clean up its past accounts, said its chairman Sylvia Lim in a statement yesterday.

The firm will also advise AHPETC, which is run by the Workers' Party (WP), on internal audit matters and how to strengthen its internal controls and processes, added Ms Lim, who is also WP chairman.

The move comes after a special audit by the Auditor-General's Office (AGO) found accounting and governance lapses at the town council, including potential conflicts of interest arising from key AHPETC staff being co-owners of its managing agent FM Solutions and Services.

Yesterday, Ms Lim revealed that AHPETC engaged the accounting firm on March 3 - about a month after the AGO's audit findings were released, and two weeks after Parliament held a heated debate over the lapses at the only opposition-run town council.

 Her statement, posted on AHPETC's website, comes as the High Court deliberates over whether to allow an application by the Ministry of National Development (MND) to appoint independent accountants to oversee government grants given to AHPETC.

Only if the court gives the nod will the ministry release about $14 million in grants to AHPETC - money disbursed to all town councils but which MND has withheld from AHPETC for a year now due to its governance and compliance lapses.

MND's application, which was made on March 20, also asks the court to look at past AHPETC payments and take appropriate action to recover any losses suffered by AHPETC and its residents.

Political observer Eugene Tan said it was puzzling that the WP waited two months to announce the appointment of the external accounting firm.

"It's baffling because the move is a positive one and would have been welcomed by residents and the MND," Prof Tan, an associate professor of law at the Singapore Management University, told The Sunday Times yesterday.

"But it's a clear attempt not to be dictated to. They want the courts to see that they recognise that accountants are needed and they can run their own show."

Media queries directed to Ms Lim about the name of the external accounting firm and the tenure of its engagement were not answered by press time yesterday.

In Ms Lim's statement yesterday, she also reassured residents that AHPETC is "working hard" to file its FY 2013/14 accounts by June 30 and its FY 2014/15 accounts by Aug 31 - deadlines that had been set earlier by the MND.

In addition, the town council will soon send letters to its residents providing details of key points from the AGO report and parliamentary debate, as well as "clarifying some misconceptions that have been circulated", she said.

"Due to the importance of the subject, we have taken some time to prepare this letter," Ms Lim said. "The past months have been challenging, but AHPETC remains undaunted," she added.

The MPs of AHPETC "are mindful of our duty to be accountable to you, the residents who have put us in office to serve", said Ms Lim.

"You have supported us, and we will do our best despite the challenges we face."





Firm hired by AHPETC a one-man outfit
By Fiona Chan, The Straits Times, 5 May 2015

ONE of the two accounting firms that the Workers' Party-run town council has engaged to help it manage its books is a one-man outfit that was started last year.

Business Assurance, which will act as financial consultant to the Aljunied-Hougang-Punggol East Town Council (AHPETC), is a sole proprietorship run by Mr Chai Chon Fatt, 44, according to its Accounting and Corporate Regulatory Authority (Acra) profile.

 He is also financial controller of Singapore-listed Transcorp Holdings, a role he has held since November last year, according to a Transcorp filing with the Singapore Exchange. Mr Chai, who set up Business Assurance in February last year, was also head of audit and advisory at business advisory firm One Partnership from April 2012 to July last year.

He has also held positions including that of independent director at Ziwo Holdings, audit manager at Grant Thornton and chief financial officer at New Toyo International Holdings.

AHPETC also said in the High Court yesterday that it had appointed another firm, Audit Alliance, to audit its past accounts. Both firms were hired in March.

Audit Alliance is a limited liability partnership with two owners, Mr Lee Tai Wai and Ms Chiew Shang Hui, according to its profile with Acra. The firm's website lists several clients, including companies belonging to Japan's Mitsui Group.

Last Saturday, AHPETC and Workers' Party chairman Sylvia Lim said the town council had engaged an accounting firm to help it clean up past accounts and strengthen internal controls, after a special audit found accounting and governance lapses at AHPETC in February. She did not name the firm.





WP must now walk the talk, take action

AHPETC paid Managing Agent estimated S$1.6m a year more than other TCs: MND

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