Audit of AHTC finds series of improper payments

The Workers' Party-run Aljunied-Hougang Town Council (AHTC).
The Workers' Party-run Aljunied-Hougang Town Council (AHTC). PHOTO: TIFFANY GOH FOR THE STRAITS TIMES

Governance failures at Aljunied- Hougang Town Council (AHTC) put public funds running into millions of dollars at risk of improper use. If these lapses were deliberate, they could amount to criminal conduct, said a report by independent auditor KPMG yesterday.

Payments with a total value of at least $23 million were approved by town council members who had a conflict of interest, KPMG added in the 68-page report submitted to the Housing Board and Workers' Party-run AHTC.

Citing widespread control failures, the report homed in on two companies - FM Solutions and Services (FMSS) and FM Solutions and Integrated Services (FMSI) - that were appointed as the town council's managing agent, as well as providers of essential maintenance services.

The direct owners of these companies also held key management and financial control positions in the town council at the same time.

This meant FMSS shareholders working in the town council effectively approved and made payments to themselves when they paid FMSS, said KPMG.

 

The report by KPMG, appointed by the town council to look into its books, is part of the ongoing audit of AHTC following lapses flagged by its own auditors as well as by the Auditor-General's Office in a special report in February last year.

KPMG's report listed improper payments - through overpayment or payment without proper certification - amounting to $1.5 million made to FMSS and FMSI. Of these, $600,000 should be recovered, KPMG said. The report also pointed out AHTC's improper payments to third-party vendors, including an extra $2.8 million by engaging the pricier of two consultants on its panel for seven projects, without inviting them to submit a tender.

The scope of the auditor's work was not focused on identifying criminal acts, KPMG said. But if the lapses were found to be committed deliberately, they could amount to criminal conduct, it warned.

AHTC last night said the report did not find any duplicate or fictitious payments. The town council is now studying the report in detail.

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A version of this article appeared in the print edition of The Straits Times on November 02, 2016, with the headline 'Audit of AHTC finds series of improper payments'. Print Edition | Subscribe