NLB exceeded renovation budget by $1.72 million, JTC potentially sublet to 26,000 unapproved entities: AGO

The National Archives of Singapore building revamp was found to have gone over budget by $1.72 million owing to a lack of scrutiny from approving officers.
The National Archives of Singapore building revamp was found to have gone over budget by $1.72 million owing to a lack of scrutiny from approving officers.PHOTO: ST FILE

SINGAPORE - The revamp of a National Library Board (NLB) building was found to have gone over budget by $1.72 million due to a lack of scrutiny from its officers, the Auditor-General's Office (AGO) said.

In its annual audit of government accounts, the AGO also flagged that leased and tenanted premises of the Jurong Town Corporation (JTC) may have been sublet to 26,000 entities without approval. Spot checks further uncovered the illegal storage and sale of diesel at four of its industrial premises, which could pose environmental and safety risks to the public.

The AGO detailed these findings, among others, in a report released on Monday (Sept 7) on government accounts for the 2019/2020 financial year.

In its report, the AGO said that the NLB had an approved budget of $20.53 million for the revamp of the National Archives of Singapore (NAS) building, which reopened its doors last year in April after an 18-month makeover.

The NAS, an institution under the NLB, archives materials of national and historical significance.

The AGO found that the management of this revamp was "inadequate on several fronts" owing to a lack of scrutiny from approving officers.

In particular, the AGO noted that over half of contract variations were given in-principle approvals (IPAs), even though no ballpark cost estimates were provided.

"This meant that NLB had given approval for works to commence even though it did not know the magnitude of the costs involved," said the AGO. In one case, the variation was as high as $370,000.

Such a lack of proper monitoring caused the cost of the revamp to increase by more than 8 per cent, to more than $22 million.

"Giving approval and making financial commitments without clarity on the costs involved meant that the project would run a high risk of project cost overrun," said the AGO.

It also found that NLB only sought approval from its approving authority for exceeding approved project costs five months after it became aware of the cost overrun. Seeking retroactive approval undermined the role of the approving authority and indicated a weakness in financial controls, the AGO said.

 

In a statement on Monday, NLB said it introduced the IPA process in Sept 2018 to allow urgent variation works to be carried out without delay.

While these approvals are then reviewed by NLB-approved consultants before any payment is made, the board said that it would be reviewing its processes to ensure timely and well-documented approval - including all urgent renovation works.

In JTC's case, the AGO's checks on the firm's lease and tenancy management found that it could have potentially sublet to entities without approval, owing to lapses in operations management.

JTC, an industrial land and infrastructure agency, allows lessees and tenants to sublet part of their premises to related or other entities, provided it grants approval. When subletting, lessees or tenants are required to comply with conditions such as the maximum sublet area and payment of sublet fees.

But about 26,000 business entities had indicated JTC premises as their registered addresses, even though these entities were neither JTC's lessees or tenants, nor subtenants approved by JTC, said AGO.

"This could mean unauthorised subletting by the lessees or tenants to these business entities without JTC's approval," it added.

 
 

Such subletting would expose JTC's premises to unauthorised or illegal activities and financial loss due to under-collection of sublet fees, the AGO warned.

JTC collected $13.61 million in sublet fees in the 2018/2019 financial year.

Between last November and January, the AGO conducted site visits and found 41 suspected unauthorised subtenants in 12 out of 15 JTC premises.

Notably, in four of these premises, the AGO found illegal storage and sale of diesel to the public, which pose environmental and safety risks to the public.

Following this, JTC performed a quick investigation on 2,792 of the 26,000 business entities and discovered that 2,010 of these were suspected cases of unauthorised subletting.

Out of these, 1,260 cases were related entities of lessees and tenants.

JTC said on Monday that it has strengthened its inspection regime to detect and reduce such unauthorised subletting.

It has also stepped up inspections and worked with the authorities to take action against tenants who store or sell diesel illegally, and worked out an agreement with the Singapore Civil Defence Force to grant licences to store diesel only if lessees had obtained prior consent for the installation of diesel tanks on their premises.

"JTC takes a serious view of unauthorised subletting and will take legal action to repossess the site from recalcitrant occupants found in breach of the authorities' and agencies' Acts and regulations," the agency said.