SINGAPORE - The Auditor-General's Office (AGO) has flagged several lapses, including conflicts of interest over payments, at various grassroots organisations under the purview of the People's Association (PA).
In its report released on Wednesday after auditing various government agencies for financial year 2014/2015, the AGO found irregularities in procurement and payment at Admiralty Citizens' Consultative Committee (CCC).
The CCC chairman had approved his own claims, amounting to $114,767 on seven occasions. There was also no supporting document for three of the payments, exposing the CCC to the risk of paying for "invalid expenditure", the AGO added.
The chairman was also involved in approving the awards of two contracts worth $32,000 and corresponding payments to a company where he held a senior management position.
In one of the contracts, another CCC member who took part in the approval process, was both a director and a shareholder of the company.
In addition, the chairman also approved payment for a $1500 purchase from another company where he was a director and shareholder.
"The chairman and the CCC member did not declare their interests in the transactions. As a result, there was no assurance that the transactions were conducted at arm's length," the AGO report said.
The AGO did not name the CCC in its report, but National Development Minister Khaw Boon Wan, in his capacity as MP for Sembawang GRC, said in a statement that Admiralty CCC fully cooperated with the PA Investigation Panel.
"We treated the AGO finding seriously. The Admiralty CCC fully cooperated with the PA Investigation Panel," Mr Khaw said.
He added that the MP in charge of Admiralty ward, Mr Vikram Nair, told him that the grassroots leader involved had stepped down to facilitate a full investigation.
PA said in a separate statement that the panel had been convened on July 1 to establish the facts and investigate any wrongdoing, as well as review its processes.
The CCC chairman voluntarily stepped down on July 5 and the investigation was completed on July 14.
"I am glad that the Investigation Panel found no evidence of dishonesty. Nonetheless, it was a related party transaction that was not declared," Mr Khaw said.
"The CCC will study the investigation report, and review its procedures to ensure that such lapses do not recur," he added.
Mr Vikram Nair said he was saddened to learn of the findings. He said the grassroots leader concerned had "served with distinction for many years", and was relieved to note there was no dishonesty found on his part by the investigation.
In its statement, the PA said the investigation panel verified that all quotations for works and services were handled by the staff in a confidential manner.
The bids were then submitted to the CCC for evaluation and the tender was awarded to the lowest bidder, which was about 30 per cent lower than the next lowest bid. These tender procedures were in accordance with the rules.
"However, the CCC chairman and a CCC member were related to the company which submitted the bids, which were also the lowest and winning bids in both cases. According to the rules, the CCC chairman should have declared his interest and excused himself from the evaluation and approval process. Likewise, although the CCC member did not know beforehand that the bid from his company would be presented at the meeting for approval, he should have excused himself when he realised it," PA said.
"Regarding approval of own claims, the Panel noted that the amounts claimed by the CCC chairman were subsequently verified by supporting documents. However, the staff responsible for preparing the payments should have been more conscientious in ensuring compliance with the financial rules by requiring that the vice-chairman, secretary or treasurer approve the claims instead of the CCC chairman himself."
Added the PA: "While the panel found no evidence of dishonesty, the non-declaration of conflict of interest is nonetheless a serious lapse. The panel noted that the chairman involved has apologised for the lapse and had already stepped down from his position.
"With the completion of the investigation, PA has since accepted his resignation on 15 July 2015. The CCC member has been reminded to comply with proper procedures. Staff involved will be reprimanded."
Meanwhile, the AGO also found lapses in management of tenancy contracts and procurement at Community Centre/Club Management Committees (CCMCs).
The AGO reported that 35 of the 91 CCMCs that were test-checked did not obtain approvals from the relevant approving authorities for awarding 53 tenancy contracts amounting to $17.78 million. Among the 35 CCMCs - which oversee activities and operations at their respective community centres and clubs across the island - 10 did not seek the relevant approvals for the direct award of 13 tenancy contracts without competition.
"This undermined the role of the approving authorities and the CCMCs did not adhere to controls that ensure competition was waived only under exception circumstances," the AGO noted.
Furthermore, test checks of procurement by nine grassroots organisations revealed that they have flouted PA's financial rules. They either did not seek approval for direct purchases from suppliers, or had obtained approval after the contracts were awarded or did not invite quotations for purchases. Taken together, these lapses involved contracts with a total value of nearly $960,000.
The AGO said that the common lapses in procurement found in most of the grassroots organisations that were test-checked indicate that they may not be familiar with PA's financial rules and also "reflect a lack of oversight" by PA on the grassroots organisations' compliance with its financial rules.
Adding to the list of lapses and irregularities, the AGO also found "numerous errors and omissions in the updating of disbursements" from the Citizens' Consultative Committee ComCare Fund (CCF) by seven of the eight CCCs checked.
In addition, it noted that five CCCs did not take into account cancelled and expired cheques to reflect the actual CCF utilised. As a result, these errors led to the submission of inaccurate CCF utilisation reports to the Ministry of Social and Family Development, which in turn led to PA obtaining excess CCF funding amounting to $84,394 over a two-year period.
Addressing each case in the AGO report, PA said it has since obtained covering approvals for awards of the tenancy contracts in question and would review its procurement and financial rules.
"The PA takes the findings of the AGO seriously," it said. "We have taken immediate action to rectify the lapses observed."