Court of Appeal tells WP-run Town Council and HDB to resolve issue of accountants by Friday

Workers' Party member of parliament Pritam Singh arrives at the Supreme Court on Jan 20, 2016.
Workers' Party member of parliament Pritam Singh arrives at the Supreme Court on Jan 20, 2016. ST PHOTO: KEVIN LIM

SINGAPORE - The Court of Appeal has directed the Housing Board and the Workers' Party (WP) town council to decide by Friday which accountants to hire to look into the town council's books.

The two firms that the Aljunied-Hougang Town Council (AHTC) had wanted to hire, including one it had worked with on two annual audits, have withdrawn themselves from consideration.

Chief Justice Sundaresh Menon, noting that the court had sat on Jan 7 for an urgent hearing on the issue, said on Wednesday he had expected matters would be "expeditiously resolved".

It has been been eight weeks since the apex court ruled in November that AHTC had to hire accountants to address its financial lapses.

If both parties have not come to an agreement by Friday, said Chief Justice Menon, the court will make a final decision on the appointment of a suitable firm of accountants.

He also said: "Common sense would seem to suggest the Town Council should now appoint the most suitable and qualified candidate for the engagement... so that the issues raised in our judgment may be expeditiously addressed. The HDB has indicated it would agree to any Big Four firm, hence the matter can be swiftly resolved with common sense and commitment."

AHTC had wanted to appoint Business Assurance, a firm it hired in March last year to help manage its finances, for the job.

But the HDB had raised concerns about the firm's experience and expertise, and asked for more information, such as its experience in auditing public institutions and in conducting forensic work. HDB also suggested that the town council hire one of the Big Four accounting firms, or a firm with the requisite track record.

It emerged on Wednesday that Business Assurance had withdrawn itself from consideration, partly because it did not want to make public some of the information the HDB had asked for.

A second firm, MRI Moores, also pulled out after it was initially named as an alternative, the court heard. The town council's lawyer, Mr Peter Low, said MRI Moores did not reveal its reasons for pulling out.

AHTC chairman and Aljunied GRC MP Pritam Singh had said in court documents that Business Assurance withdrew due to "intense media scrutiny" and calls from concerned clients.

However, Mr Low said on Wednesday that the firm's managing partner Alex Chai also did not want to reveal his grading in a regulatory Practice Monitoring Programme (PMP) review. Mr Low said Mr Chai considered it "a private matter" and so withdrew his team.

The HDB had asked for this information, among other things, to determine if the firm was suitable for the job, and AHTC had agreed to provide the information during the Jan 7 hearing.

Ms Aurill Kam of the Attorney-General's Chamber, acting for HDB, said it was a "very disturbing" development, and asked that the PMP findings for both accounting firms be submitted as additional evidence.

She also said the AGC had asked for the information from Acra, through a subpoena.

The PMP is a regulatory instrument used by the Accounting and Corporate Regulatory Authority (Acra) to ensure that certain qualities and standards are met by auditors.

Given that both firms "mysteriously recused themselves", Ms Kam argued, it was important for the PMP findings to be made known to determine if AHTC was nominating people with sound credentials.

But Mr Low countered: "This is all water under the bridge because these two sets of accountants no longer want to be considered."

Town council chairman Pritam Singh told the three-judge court, which also included Justice Andrew Phang and Justice Chao Hick Tin, that he had not taken the PMP status of accounting firms into consideration when selecting them.

He said this was because the PMP applied only to auditors, and the court-ordered appointment was for accountants to clean up the identified financial lapses, and not for auditors to conduct another round of audit.

During the proceedings, Ms Kam pointed out that though MRI Moores had dropped out on Sunday, there had been no mention of the development in two affidavits filed by Mr Singh on Monday. In fact, it had seemed from the affidavits that AHTC was still nominating MRI Moores for the job, she said.

Chief Justice Menon, referring to her point, said: "Ms Kam invites us to infer that in fact MRI withdrew not on Sunday but rather on Jan 19 after the town council had been told that evening that Acra had been subpoenaed."

He added: "There remain concerns as to whether the court has been apprised of all the facts in a candid and forthright manner and whether the town council has in place a system to ensure due diligence in selecting candidates to do this work."

Noting how Mr Low had filed a request for the court's guidance on a number of points - such as whether the accountants hired by AHTC must be public accountants; they should have prior experience in regulatory investigations; whether their PMP gradings are necessary - Chief Justice Menon said that it is "neither appropriate nor helpful to draw the court into a consideration of these questions", which the court considered to be "a matter of common sense".

He also said that the HDB had suggested the town council hire one of the Big Four accounting firms, and had agreed to pay for the additional costs incurred, since AHTC had cited costs as one of the reasons it wanted to hire Business Assurance.

Both sides will meet again in court at 9.45am on Friday (Jan 22), when the court will make a "final decision" on whether to allow evidence from Acra, and on the appointment of suitable accountants, if a decision has not been reached.