Workers' Party-run town council has enough funds till June and missed two Sinking Fund payments: MND

Sylvia Lim (in blue) and Muhamad Faisal Manap (centre) arriving at the High Court on May 4, 2015. The Ministry of National Development (MND) on Monday cited Aljunied-Hougang-Punggol East Town Council (AHPETC) chairman Sylvia Lim saying that the town
Sylvia Lim (in blue) and Muhamad Faisal Manap (centre) arriving at the High Court on May 4, 2015. The Ministry of National Development (MND) on Monday cited Aljunied-Hougang-Punggol East Town Council (AHPETC) chairman Sylvia Lim saying that the town council has sufficient funds to last until June 2015. -- ST PHOTO: ONG WEE JIN 

SINGAPORE - The Ministry of National Development (MND) on Monday cited Aljunied-Hougang-Punggol East Town Council (AHPETC) chairman Sylvia Lim saying that the town council has sufficient funds to last until June 2015.

The ministry also indicated that the town council missed two transfers to the Sinking Fund, which is used for long-term cyclical maintenance.

This came as the ministry laid out four central issues of concern at the start of a High Court hearing on Monday to decide whether independent accountants should be appointed to oversee government grants given to the town council.

The four areas cited in court were:

* The town council's current cash flow position;

* Its state of account-keeping;

* Whether there are serious questions concerning related part transactions; and

* The steps taken to date to remedy its failure to meet obligations.

The ministry applied to the court on March 20 to appoint independent accountants, after a special audit by the Auditor-General's Office (AGO) found accounting and governance lapses at the Workers' Party-run town council.

The town council opposes the move.

Attorney-General's Chambers deputy chief counsel for litigation Aurill Kam, representing the ministry, said on Monday: "The Town Councils Act mandates AHPETC to do all things necessary to ensure that payments are correct, proper and lawful, and to ensure adequate control over their assets."

But this did not appear to have been done, she said, noting that the AGO report said there was no assurance the accounts were accurate and reliable, and that there was no assurance that public funds were properly spent, accounted for and managed.

"The position of the town council's finances is a matter that remains shrouded in uncertainty even till today," she said.

She also pointed out that the town council was evasive and inconsistent in its correspondences with the ministry, as well as in Parliament, where the AGO's report was debated in February.

Also of concern, is that the town council appeared to have missed Sinking Fund payments due in January this year - despite the town council saying otherwise in Parliament, Ms Kam said, citing private correspondence between the ministry and the town council in which the ministry offered to disburse half the grants for FY2014 as the AGO audit was ongoing.

The ministry, in a letter dated April 28 last year, told the town council that it was considering withholding its grant, which would have amounted to $7 million.

Despite asking for a response by May 14 the same year, the town council replied only on June 16 saying that "the continued withholding of grants is likely to critically and adversely affect the town council's cash flow position" resulting in an inability to pay contractors and affect essential services.

It then asked the ministry to "appreciate the consequences" and called on the ministry "to disburse, without further delay, the grants".

It also said that it was unable to transfer a sum exceeding $4 million into the Sinking Fund by July 31 as the money was needed to pay for essential services.

The ministry expressed its surprise over the town council's cash flow position, and offered to disburse half the grants.

But this would be subject to the town council explaining a $8.4 million decrease in its accounts within 16 months, and ensuring that all necessary transfers are made to the sinking fund for the financial year, among other conditions.

"But AHPETC replied that it will reply should we wish to take the option of the half grant," Ms Kam said. "There was a change of tune here."

Ms Kam also disclosed that on March 27 this year, at a closed-door court hearing, Ms Lim indicated that the town council had sufficient funds for "the next three months" - that is, until June 2015.

But Ms Kam noted that in a April 17 affidavit filed by Ms Lim, the sufficiency of funds was "premised on them not making sinking fund transfers".

She added that while Ms Lim said in Parliament that the town council had been "keeping up with sinking fund transfers", it was emerging that the town council had missed one transfer - due in January this year.

"April 30 has also come and gone, and we don't believe the transfer has been made."

Added Ms Kam: "It is important to recognise that the requirement to make the Sinking Fund transfers is not a mere technical requirement but a substantive requirement.

"There is the temptation when financially-strapped, to postpone savings and to put one's hand into a cookie jar to draw on savings to satisfy the immediate need. It sounds appealing but it would simply be drawing on reserves and mortgaging the future of residents away."

The hearing is continuing.

Earlier on Monday morning, Ms Lim, who is WP chairman and an MP for Aljunied GRC, told reporters as she arrived at the High Court that while it would be inappropriate for her to make any comments on the merits of the case, "suffice to say that we'll be mounting a vigorous defence".

She added: "We're doing this in the interest of our residents. We believe that this court case is wholly unnecessary."

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