The Workers' Party-run town council has agreed to appoint a third party to recover improper payments it made between 2011 to 2015.
The Sunday Times understands that the Aljunied-Hougang Town Council (AHTC) had, on Friday, replied to the Housing Board's letter asking the town council to appoint a suitable third party "to recover the monies which have been lost".
The HDB letter was sent to AHTC on Nov 4 after accounting firm KPMG determined that payments totalling $6.9 million were overpayments, payments for work or services without proof that they were performed, or payments in breach of the law or the town council's policies.
This included $1.5 million which AHTC paid to its then managing agent FM Solutions and Services (FMSS) and service provider FM Solutions and Integrated Services. The payments were approved by six of AHTC's key officers who were also shareholders of FMSS.
HDB and the Ministry of National Development (MND) had asked AHTC to take steps to recover the money, including taking legal action where necessary.
KPMG, hired by AHTC to review its accounts, had also said that if the payments were made intentionally, it could amount to criminal wrongdoing. The MND had said that given these concerns raised by KPMG, the Government is considering what other steps are necessary.