A review of the controversial sale of People's Action Party (PAP) town council software to PAP-owned company Action Information Management (AIM) has found no conflict of interest nor any misuse of public funds.

In a report submitted to the Prime Minister on April 30 and made public on Friday, the Ministry of National Development's review team said the AIM deal has complied with the Town Councils Act and the Town Council Financial Rules.

Noting that the law does not prohibit transactions between town councils and affiliates of political parties, the team said that the issue was whether there was a conflict of interest in terms of pecuniary or direct interest in the deal, whether residents' interests were protected, and whether there was misuse of public funds.

It found that no town council members had pecuniary or material interests in AIM or in the contract awarded to AIM in 2010, and that the town councils had complied with the open tender process. Though there was only one bid in the tender, accepting a single bid is allowed under the Town Council Financial Rules, as long as it satisfies the tender.

The review further found that AIM did not profit from the deal, and in fact made a loss during the one-year sale and leaseback arrangement. It added that there was no misuse or loss of public funds, with the PAP and town councils having acted "in good faith in the interests and the benefit of their residents".

The team also recommended that the Government "consider a strategic and comprehensive review" of town councils because of the party political nature of town councils operating in a competitive context.

PM Lee said in a statement that the Government accepts the findings and recommendations of the MND review. He said that MND Minister Khaw Boon Wan will deliver a Ministerial Statement on the MND Review, including the AIM transaction and overall governance of town councils, when Parliament sits on May 13.