Saturday 18 July 2015

AGO Report FY 2014/15: Auditor-General flags conflicts of interest

Lapses uncovered in handling grants, tenders; NLB's e-book procurement referred to police
By Lim Yan Liang, The Straits Times, 16 Jul 2015

Singapore's Auditor-General Willie Tan has signalled his concern over the way government agencies handle conflicts of interest, or related-party transactions, in business matters.

Also, some ministries and statutory boards were found to have been lax in the way they administered grants. They failed to ensure that the correct amount was paid out and conditions adhered to.

Lapses were uncovered as well in the handling of tenders for contracts and purchases.

These weaknesses in governance were set out in the latest annual report of the Auditor-General's Office (AGO) released yesterday. It focused on the failings at four ministries and 11 statutory boards.

Most notable among them was the National Library Board (NLB), which comes under the Ministry of Communications and Information.

The way it procured electronic resources such as e-books and databases has led the ministry to refer the matter to the police for further investigation.

The AGO noted that in all seven cases of procurement, no documentary evidence could be found on why NLB chose one vendor over another. Its subscription to an e-resource was also renewed twice, although its evaluators had recommended its termination and NLB's guidelines found usage to be too low for renewal.

"By procuring the e-resources without going through a proper process of sourcing, selection, evaluation and justification, NLB may not have availed itself of the best offer from the market and may be subject to allegations of bias, unfair and inappropriate procurement processes," said the report.

As for related-party transactions not carried out at arm's length, it noted that substantial sums of money were involved.

These related parties were not charged or were charged below market rate for goods and services provided by the public-sector agencies, said the AGO. "In effect, they were given hidden subsidies."

The three organisations cited were People's Association (PA), Institute of Technical Education (ITE) and Singapore Polytechnic.

At the PA, there were seven instances in which the chairman of the Citizens Consultative Committee of Admiralty ward approved his own claims, totalling more than $114,000. But PA investigations found no dishonesty on his part.

In the ITE's case, it made a $2.43 million interim payment for construction work its consultants had certified as completed, even though no work had been done. Since the audit, ITE has excluded the item from its final account.

Singapore Polytechnic leased a plot of land to a related party for $12 a year when it was leasing it from the Land Office at $2.19 million a year. The lease was to the polytechnic's Graduates' Guild for its alumni and industry leaders to network.

The school said it would consult the Education Ministry on this arrangement.

Those found to have been slack in administering grants and handling tenders included the Education Ministry, Health Ministry, National Population and Talent Division, National Research Foundation and Infocomm Development Authority.

Another is the National Parks Board (NParks). The AGO found that managers of the Gardens by the Bay project had awarded contracts of more than $20 million that waived competition without compelling reasons. NParks cited a tight timeline as the main reason for the waiver, but there was no evidence that it was caused by unforeseen events, said the AGO.

"Among other things, NParks had breached the government procurement principle of open and fair competition for consultancy services contracts and there was no assurance that value for money was achieved for the services procured," it said.

NParks admitted that it should have called for an open tender.

Some of the lapses discovered
By Lim Yan Liang, The Straits Times, 16 Jul 2015

The Health Ministry had wrongly computed the amount of rental subsidy it gives to restructured hospitals and institutions, resulting in overpayment of $2.07 million in the last three financial years.

The reason for the error is that it included an empty building and a carpark in its computation, when the policy is to give discounted rent only for land and buildings used by subsidised patients.

Research space in 13 institutions was also funded by two departments in the ministry, resulting in one department disbursing $7.05 million and the other $28.3 million in the same three years.

The ministry could not show proof there was no overpayment. It informed the Auditor-General's Office (AGO) that the errors have been corrected and action has been taken to ensure the research space would not be double-funded.

Recurring lack of price checks

The National Population and Talent Division (NPTD) organised two overseas events in 2013 and last year that cost $6.79 million. However, it did not ensure $1.51 million worth of goods and services procured on its behalf by vendors were priced reasonably.

Such a lapse was flagged in the 2012 AGO report, and NPTD said then that it would carry out market checks for future events.

The latest failure is thus a recurring lapse.

However, NPTD said it was not feasible to require its vendor to source every item through competitive bidding and that prices had also been compared across various bidders at the tender evaluation stage.

The AGO pointed out that there was no indication of this in the tender report.

Projects funded by grants meant for other uses

Two projects under the Infocomm Development Authority (IDA) were paid for using $9.3 million from the Ministry of Communications and Information (MCI) and the Ministry of Finance without the approval of either ministry.

The i-Space project to revamp an exhibition in the Singapore Science Centre, and an initiative to develop the Singapore e-Government Leadership Centre were funded using unused grants that had earlier been disbursed to IDA for other projects. This showed a lack of accountability in the use of funds by IDA, said the AGO.

IDA said it would seek MCI's advice on the approving authority for future changes of funding source.

Subsidised charging for carparks

Three educational institutes either did not charge or charged below market rate for the use of their carparks.

Institute of Technical Education carparks were free, while Singapore Polytechnic (SP) did not charge for motorcycle parking. Both SP and Temasek Polytechnic (TP) capped the daily amount paid by some users such as staff. Such practices amount to giving hidden subsidies and are not in line with government rules. The estimated licence fee foregone at SP was $120,000 a year. At TP, the parking fee foregone was $590,600 for a six-month period.

The institutes are reviewing their parking charges.

PA probe finds no dishonesty but action taken over CCC lapses
By Wong Siew Ying, The Straits Times, 16 Jul 2015

Shortly after the Auditor-General's Office (AGO) released its report on lapses in public bodies, the People's Association (PA) said it had completed its own investigation into a case of conflict of interest at a grassroots organisation.

Its investigation found no evidence of dishonesty at the Citizens Consultative Committee (CCC) in Admiralty ward in Sembawang GRC. Still, the PA said it will take action to set right the lapse and prevent such mistakes in future.

The AGO had found seven instances in which the CCC chairman had approved his own claims totalling $114,767, and there were no supporting documents for three of the payments.

It also found lapses in the management of related-party transactions.

The CCC chairman was involved in approving the award of two contracts worth $32,000 and payments to a company where he held a senior management position.

Another CCC member involved in the approval process for one of the contracts was also director and shareholder of the same company.

"The chairman and the CCC member did not declare their interests in the transactions," the AGO said.

"As a result, there was no assurance that the transactions were conducted at arm's length."

The AGO did not name the CCC in its report, but National Development Minister Khaw Boon Wan identified it as Admiralty CCC in Sembawang GRC, where he is an MP. Mr Khaw said it had cooperated with the PA investigation panel.

"I am glad that the investigation panel found no evidence of dishonesty. Nonetheless, it was a related- party transaction that was not declared," he said. "The CCC will study the investigation report and review its procedures to ensure that such lapses do not recur."

PA said the chairman voluntarily stepped down on July 5. It accepted his resignation yesterday, the day after its investigation ended.

The CCC chairman involved was not named by the AGO, PA or MPs, but he is Mr Tonic Oh. He could not be reached yesterday.

MP Vikram Nair, who oversees Admiralty ward, said he was "saddened to learn of the findings by the AGO in relation to the unreported related-party transaction".

The grassroots leader had served with distinction for many years, he added.

PA said the constituency staff preparing payments should have been more conscientious in complying with financial rules by getting the vice-chairman, secretary or treasurer to approve the claims, instead of the chairman himself.

It added that the CCC chairman and member should have recused themselves from the evaluation process involving their company.

The CCC member has been reminded to comply with procedures and the staff involved will be reprimanded, PA added.

The AGO also found that 35 of the 91 community club/centre management committees (CCMCs) checked did not get approvals from the relevant authorities for 53 tenancy contracts totalling $17.78 million.

Checks on grassroots bodies also found they did not seek approval before awarding contracts or making direct purchases, or invite quotations in writing.

The PA said it has taken action on getting the right approvals and correcting all the lapses.

It has set up a hotline to guide grassroots organisations on the correct procurement procedures, and will step up training for them. It has also set up a grassroots finance review committee and will strengthen supervision to ensure these bodies comply with financial regulations .

Steps taken at Admiralty CCC

July 1: After being notified of the findings by the Auditor-General's Office, the People's Association (PA) convenes an investigation panel to establish facts and investigate wrongdoing, review processes and recommend steps to prevent a repeat of the lapses.

July 5: Citizens Consultative Committee (CCC) chairman Tonic Oh voluntarily steps down.

July 14: Investigation completed. Panel finds no evidence of dishonesty, but non-declaration of conflict is a serious lapse.

July 15: The People's Association accepts the resignation of the

CCC chairman. It says CCC member involved has been reminded to comply with proper procedures and staff involved will be reprimanded.

PA sets up panel to review rules and procedures
Committee to make recommendations after three-month review is completed
By Wong Siew Ying, The Straits Times, 17 Jul 2015

A new committee set up by the People's Association (PA) to review the rules and procedures of grassroots bodies will hold its first meeting next Tuesday, and is expected to complete its review, with recommendations, in three months. 

This grassroots finance review committee will be chaired by Mr Timothy de Souza, who told The Straits Times yesterday that the review is to make sure everything is above board. "It is an exercise in maintaining and improving public confidence in the PA," said the grassroots leader, 68, who is a trustee of the Eurasian Association.

"The moral tone has to be so correct that the PA, as the main public face in touch with the citizens, is beyond reproach," he added.

The Auditor-General's Office (AGO) had noted procurement lapses, tender irregularities and conflicts of interest at grassroots organisations, in its latest annual report released two days ago.

Yesterday, the PA issued a statement on the three-man panel, saying its four tasks include recommending refinements to financial and procurement rules and procedures, especially those highlighted by the AGO, and proposing ways to improve compliance of financial rules. It will also suggest ways to strengthen monitoring by PA staff and better training for the staff and grassroots leaders.

The PA also wants it to come up with measures to enable its 37,000 grassroots leaders and volunteers to continue to "serve the community's best interest while maintaining good governance and sound financial practices".

Mr de Souza said one important consideration is that the changes must not be so onerous on grassroots leaders that these volunteers no longer want to serve the community.

The two other men on the panel are Mr John Teo Woon Keng, chief financial officer at Singapore Pools, and Mr Chiang Heng Liang, director of wealth management at Deutsche Bank. Both are grassroots leaders like Mr de Souza, who is the auditor of Mayfair Park Neighbourhood Committee. Mr Teo is treasurer of Kampong Glam Citizens Consultative Committee (CCC) and Mr Chiang is chairman of Kolam Ayer CCC.

They will be supported by senior PA officers and can seek advice from the Finance Ministry.

Meanwhile, the PA has a hotline for grassroots bodies to get correct procurement procedures and it will step up their training.

The PA move was welcomed by Tampines GRC MP Baey Yam Keng, chairman of the Government Parliamentary Committee for Culture, Community and Youth. "Even though grassroots organisations are run by volunteers, they are still using public money. It is important to have the right level of governance and checks," Mr Baey said.

NEA addresses report on pest control
It responds to observations in AGO report; action taken in areas under agency's purview
By Janice Heng and Yeo Sam Jo, The Straits Times, 17 Jul 2015

Pest control contractors engaged by the National Environment Agency (NEA) will continue to tackle only rat burrows that fall under the agency's purview. But to address observations in the Auditor-General's Office (AGO) report on Wednesday, the NEA will spell out the "contract specifications on the scope of work" more clearly, the agency said in response to queries from The Straits Times.

In its report, the AGO said it found "gaps" in the programme.

The statutory board paid its contractor $4.19 million over two years to perform routine surveillance on rodents in public areas. The contractor was required to treat rat burrows in areas under the agency's purview.

This meant some burrows were detected but left untreated, which could lead to higher costs, said AGO. Between September 2013 and January 2014, some 115 active rat burrows were not treated as they were in areas outside NEA's purview. This led to a rise in the number of burrows, from 17 burrows in seven locations to 32 burrows, in the two to six months after being detected.

Under the surveillance programme, which began in 2011, the NEA gives other public agencies information about rat burrows in areas under their charge.

"The respective stakeholders will then follow up to inspect and control the rat population in their areas," said the NEA yesterday.

The AGO observed that NEA "had not actively followed up with the public agencies on actions taken to treat the active burrows detected".

Said an NEA spokesman: "NEA will also review our procedures to improve coordination with other premises owners and public agencies to ensure that rat-control efforts from all stakeholders are conducted effectively."

But the chairman of the Government Parliamentary Committee for Environment, Ms Lee Bee Wah, said she was "disappointed" that public agencies draw such boundaries.

"I think the system should change," said Ms Lee.

"Diseases know no boundaries."

Ms Lee also pointed to the Municipal Services Office, which was set up to improve government coordination and delivery of municipal services, including pest control.

"I believe they should look into how the NEA interprets its responsibilities," she added.

Separately, Singapore Polytechnic (SP) issued a statement saying it acknowledged and accepted the AGO's findings and was taking immediate steps to address them.

The AGO took issue with related-party transactions that were not carried out "at arm's length".

To the Singapore Polytechnic Graduates' Guild (SPGG), SP had sub-leased land at nominal rent and waived a substantial amount that was due, without proper evaluation.

SP also failed to recover significant costs for seconding staff to fully owned subsidiary Singapore Polytechnic International (SPI). SP said it was reviewing the land lease to SPGG and will work with the guild to review the loan repayment arrangement.

SP and SPI are also taking action to formalise the secondment.

What the AGO does
By Rachel Au-Yong, The Straits Times, 17 Jul 2015

The Auditor-General's Office (AGO) is an independent body that checks the financial accounts and records of Singapore's government ministries and departments, organs of state and statutory boards.

"We play an important role in enhancing public accountability in the management and use of public funds and resources through our audits," it states on its website. "Our independence allows us to carry out our audits without fear or favour."

The current Auditor-General is Mr Willie Tan Yoke Meng, who was Deputy Secretary (Administration) in the Defence Ministry before taking up the post in February 2013.

The AGO highlights financial lapses in public agencies in its annual report. It essentially looks at how public funds and resources are used and managed, identifies areas of concern and which need to be corrected.

The AGO's report is submitted to the President, who will then present it to Parliament.

The AGO's mandate is provided for in the Constitution and the Audit Act.

In cases of serious accounting irregularities, the Auditor-General can notify the Ministry of Finance to take action.

"Unlike the situation with AHPETC, MND has been open on the matter and has held the officers involved accountable....
Posted by Fabrications Led by Opposition Parties (FLOP) on Thursday, July 23, 2015


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