SINGAPORE - The Workers' Party (WP)-run town council is in need of the government grants being withheld from it and hopes to receive them soon, it said in a statement on Thursday.
Chairman Sylvia Lim also explained why the Aljunied-Hougang-Punggol East Town Council (AHPETC) did not accept an offer from the National Development Ministry (MND) to disburse half the grants - with conditions attached - last October.
The grants had been withheld from the town council due to an ongoing special audit by the Auditor-General's Office (AGO). The audit, completed in February, unearthed accounting and governance lapses at AHPETC.
MND has continued to withhold the grants since then, pending a court decision to appoint independent accountants to oversee the use of the grants at the town council.
On Thursday, Ms Lim said that AHPETC had "decided to defer the decision on the half-grant" last year as it understood that MND would consider releasing the entire operating grant when the AGO finished its audit. The audit was completed in February this year.
"By then, much progress had been made on the AGO audit, and it appeared that the conclusion of the audit was imminent," she said.
Ms Lim added that, in order to "ensure continuity of operations", AHPETC had decided to earmark the entire sum of the grant for its sinking fund payments due in FY 2014/2015. Town councils are required by law to set aside some monies in the sinking fund for long-term cyclical maintenance.
The town council continued to make the quarterly sinking fund transfers when it could, but its priority was to ensure that it had enough cash on hand for daily operations, Ms Lim said.
This meant that it had to defer sinking fund transfers in order to retain more money in its operating funds and manage its cash flows in the short term.
"It was the utmost priority that essential services to residents not be disrupted while the grant was withheld. AHPETC thus prioritised the continuity of operations and ensuring cash flow for routine activities," she added.
But Ms Lim also said that despite this cash flow management strategy, AHPETC still requires the operating grants to fulfil its obligations under the Town Councils Act, for instance to make the quarterly sinking fund transfers as required by law.
The WP statement comes after MND said on Tuesday that Ms Lim did not take up its offer to disburse half the grants last year if the town council met certain conditions, including making all scheduled transfers to its sinking fund.
The ministry's statement was in response to media queries over reports on sociopolitical sites last week that said the MND was withholding grants from AHPETC for no reason.
In response to AHPETC's latest media release, a Ministry of National Development (MND) spokesman said:
1. All Town Councils (TCs) are entitled to S&CC Operating Grants, but they must be able to safeguard these grants, which are public funds, and channel them to the purpose for which they are given.
2. MND has given AHPETC much latitude, as far as grants were concerned. In fact, in the first year when their own auditors qualified their accounts and had 4 disclaimers, MND still gave AHPETC the grant, because the TC assured MND that they would rectify their shortcomings.
3. However, the following year's audit showed that not only did AHPETC not rectify, the situation had gotten worse; the TC's accounts continued to be qualified and the number of disclaimers increased from 4 to 13. AGO had to be called in to do a special audit of the TC's accounts, the first time in the history of TCs. Under the circumstances, it would be unconscionable for MND to continue to give AHPETC the grants, which are public moneys, without proper safeguards.
4. Notwithstanding this, MND, in response to Ms Sylvia Lim's appeal, offered to disburse half of the grant, even while the AGO audit was on-going, on the condition that the TC complies with the law. However, Ms Lim never responded to this offer. Her latest statement still doesn't explain clearly why AHPETC did not disclose to the Court as late as 27 March 2015 that it needed these grants. Indeed, it had insisted it did not.
5. This latest press release by AHPETC is another example of why MND had to go to Court to seek appointment of Independent Accountants. This is the only way to depoliticise the issue: AHPETC deals directly with the Courts, and not engage in endless argy-bargy with MND.