Prime Minister Lee Hsien Loong has asked the Ministry of National Development to review the sale of computer systems by PAP town councils to Action Information Management and its subsequent lease back.

In a statement released on Tuesday, PM Lee said: "In the interest of transparency and maintaining trust in the system, I have asked the Ministry of National Development (MND) to review this transaction fully, and satisfy itself that public funds were safeguarded and residents' interests were not compromised."

He noted that the transaction, now at the centre of an ongoing dispute between AIM and the Workers' Party-run Aljunied-Hougang Town Council, was not raised as an issue by any of the external auditors who audited the FY2010 accounts of these TCs.

PM Lee added that the ministry will review the fundamental nature of town councils (TCs).

"With a view to ensuring high overall standards of corporate governance in TCs, MND will take a broad-based approach, including re-examining the fundamental nature of TCs. MND has begun the review, which is expected to take a month or two."