Report on Aljunied-Hougang Town Council's accounts

WP MPs 'have not shown integrity'

Mr Shanmugam (top) criticised AHTC chairman Pritam Singh (above) "for suppressing the truth (designed to mislead) both in Parliament and in Court".
Mr Shanmugam (above) criticised AHTC chairman Pritam Singh "for suppressing the truth (designed to mislead) both in Parliament and in Court".
Mr Shanmugam (top) criticised AHTC chairman Pritam Singh (above) "for suppressing the truth (designed to mislead) both in Parliament and in Court".
Mr Shanmugam criticised AHTC chairman Pritam Singh (above) "for suppressing the truth (designed to mislead) both in Parliament and in Court".

Shanmugam urges party's elected MPs to come clean on irregular payments flagged by KPMG in ongoing audit

Workers' Party (WP) leaders have not shown integrity or ethics in managing their town council's finances and fixing lapses, Home Affairs and Law Minister K. Shanmugam said yesterday.

In a strongly-worded Facebook post, he called on WP's six elected MPs to come clean on millions in irregular payments in its "dark corners", sums that were flagged by independent auditor KPMG in its report on WP-run Aljunied-Hougang Town Council (AHTC) last week.

KPMG found "pervasive" control failures in AHTC's accounts and processes over the past five years, spanning governance, financial control, financial reporting, procurement and records management.

The lapses were a systemic problem and town councillors had to "reset the tone at the top of AHTC" to emphasise competence and accountability, KPMG's report said.

Yesterday, Mr Shanmugam said the report underlined the key issue: "AHTC's leadership has neither upheld nor enforced integrity and ethical values. The rot is at the top."

  • CALL FOR AHTC TO COME CLEAN

  • Home Affairs and Law Minister K. Shanmugam had three questions for the Workers' Party over what auditors had found wrong in its town council chaired by MP Pritam Singh:

    • Many of the problems KPMG identified deal with payments - running into millions of dollars - which have already been made. What is Mr Singh and his colleagues going to do about them?

    • Who received the payments and for what purpose? How many of them were genuine? Who among your friends benefitted? Why did you use dummy codes for payments - that is, who really received the payments?

    • For four years, your auditors have been asking for supporting documents. Are you finally going to produce them or admit that they do not exist?

    Aljunied-Hougang Town Council chairman Pritam Singh, responding to Mr Shanmugam's post:

    The review of past payments is still ongoing and KPMG expects a full report to be released to AHTC at the end of August. Therefore, it is not helpful to speculate or jump the gun.

    The public can be assured that AHTC will publish the past payments report, like all previous KPMG reports for scrutiny in full, and AHTC will take any necessary action thereafter.

This, he added, was no surprise, citing how the High Court and the Court of Appeal had criticised WP chairman Sylvia Lim and AHTC chairman Pritam Singh "for suppressing the truth (designed to mislead) both in Parliament and in Court". Mr Shanmugam said: "To them, the truth is a tradable commodity."

The report by KPMG is part of its ongoing audit of AHTC following significant lapses in governance flagged by its own auditors and by the Auditor-General's Office (AGO) in a special report in February last year.

Mr Shanmugam said the latest report was "a damning litany of highly irregular and suspicious financial practices, poor governance structures and extensive leadership failures".

KPMG, he added, had "uncovered even more faults than the AGO and AHTC's statutory auditors". AGO and AHTC's auditors found 115 failures. KPMG uncovered 70 more - making 185 failures in all, he said.

"Since the AGO audit, the situation has not gotten better. It has gotten far worse," he added.

KPMG had flagged highly irregular shortcuts used by AHTC to process $60 million to pay related parties and "suppliers" over five years. AHTC also used "dummy" vendor codes for over $270,000 of payments without naming suppliers.

"These practices could have concealed duplicate or fraudulent payment. Obviously, WP's leadership thought they could play Aljunied residents - and Singaporeans - for dummies," Mr Shanmugam added.

He also criticised AHTC's finance and audit committees for being "not bothered" over issues flagged as they did not meet regularly.

He said AHTC's attitude in dealing with its problems is telling, adding that chairman Pritam Singh "breezily" said it accepted KPMG's recommendations fully without "apologies, explanations, clarifications".

Mr Singh had also said AHTC MPs would immediately lead an exercise to review the key areas flagged.

But Mr Shanmugam called for a fuller explanation from AHTC, listing three sets of questions over rectifying past payments, coming clean and producing documents (see sidebar).

"They went to court to oppose, tooth and nail, the appointment of an independent accountant.

"We know now why: They don't want any light shone into their dark corners, of which there are many," he said, adding: "Mr Singh and his colleagues can't keep Singaporeans in the dark so easily."

KPMG is continuing to also look at AHTC's past payments, and if needed, their recovery.

Mr Shanmugam said: "More facts will emerge, which will show what actually happened to the monies, and what the WP has been up to in Aljunied, Hougang and, for two years, Punggol East."

Last night, Mr Singh said Mr Shanmugam's response was "surprising" as KPMG's report was "a stock-take on AHTC's internal controls". AHTC had published all KPMG's monthly reports that began in April, though it was not obliged to do so, and asked KPMG to publish the 70 more lapses identified, said Mr Singh.

Remedial measures AHTC has undertaken since the additional lapses were identified were also highlighted in the July report, he added.

Mr Singh also said the review of past payments is ongoing and a full report is expected to be made to AHTC at the end of next month.

AHTC will make it public and take actions that are needed, he said.

A version of this article appeared in the print edition of The Sunday Times on July 24, 2016, with the headline 'WP MPs 'have not shown integrity''. Print Edition | Subscribe