MND v AHPETC: All you need to know about the High Court hearing

The High Court is hearing an application by MND to appoint independent accountants to the Aljunied-Hougang-Punggol East Town Council (AHPETC), which is run by the Workers' Party. -- ST PHOTO: KUA CHEE SIONG 
The High Court is hearing an application by MND to appoint independent accountants to the Aljunied-Hougang-Punggol East Town Council (AHPETC), which is run by the Workers' Party. -- ST PHOTO: KUA CHEE SIONG 

1. What is the hearing about?

The High Court is hearing an application by the Ministry of National Development (MND) to appoint independent accountants to the Aljunied-Hougang-Punggol East Town Council (AHPETC), which is run by the Workers' Party (WP).

The job of these accountants would be to oversee government grants given to the town council. The grants would be held in segregated accounts and the accountants would have to co-sign any payments from these accounts that exceed $20,000.

They may also be empowered to examine past AHPETC payments and take appropriate action to recover any losses suffered by the town council and its residents.

MND's court application comes after a special audit by the Auditor-General's Office (AGO) found accounting and governance lapses at AHPETC, the only opposition-run town council here. The audit's findings were released in February and Parliament held a special two-day debate over the lapses.

AHPETC has opposed the appointment of the independent accountants. It has engaged two external accounting firms to help it manage its books.

The hearing, which is presided over by Justice Quentin Loh, started on Monday and will continue on Tuesday.

2. What were the lapses found at the town council?

In its February special audit report, the AGO identified five main lapses in AHPETC's accounting and governance practices. These were:

- Failures to make timely payments to AHPETC's sinking fund for long-term maintenance projects, as required by the law;

- Potential conflicts of interest resulting from insufficient oversight and disclosure of related party transactions, as key AHPETC staff were revealed to be co-owners of the town council's managing agent FM Solutions & Services;

- Poor monitoring of overdue service and conservancy charges;

- Problems with internal controls and procurement; and

- Lack of a proper record management and accounting system.

3. What is MND's argument for appointing the independent accountants?

MND says AHPETC has not taken enough steps since the AGO audit to rectify the lapses.

The town council is also in danger of running out of funds and has missed two scheduled sinking fund payments, the ministry adds.

It believes the two external accounting companies engaged by AHPETC represent only a "lukewarm assurance", adding that one of the firms, Business Assurance, was registered only last year and has no experience advising on town council matters.

MND also says the work of the two external companies - the other is Audit Alliance - will not overlap with that of the independent accountants the ministry is seeking to appoint, as the companies will not be shedding light on "any unlawful payments, breach of duty or unlawful conduct".

4. What is AHPETC's argument against appointing the independent accountants?

AHPETC lawyers have argued that the court should not intervene in what it calls a "political dispute" between the WP and the ruling People's Action Party.

The lawyers, led by Mr Peter Low, also say the Town Councils Act does not give the High Court the power to grant MND's request.

Such a move would contradict the Government's stance to adopt a "light touch" in regulating town councils, they add.

If there is any mismanagement of town council funds, only the Housing Board or the residents have the right to complain, Mr Low said on Monday in response to questions by Justice Loh.

And if the town council runs out of funds, nothing can be done until the next general election, when voters can register their dissatisfaction, he said.

5. Why is this hearing significant?

It is the first time MND has made such a court application with regard to a town council. If its application is granted, the ministry will pay for the appointment of the independent accountants.

Only if MND succeeds in its application will it disburse $14 million in government grants that it has withheld from AHPETC, due to concerns over the town council's accounting practices.

The town council has said it urgently needs the money to continue providing essential services to residents.

MND has proposed two names for the accountants - PwC partners Ong Chao Choon and Chan Kheng Tek - or any others whom the court deems fit and proper.