With the independent accountant hired by the Aljunied-Hougang Town Council (AHTC) finding that millions in improper payments had been made by the town council, the ball is now in the court of the authorities to investigate if there was criminal wrongdoing, said corporate governance and legal experts yesterday.
They added that accounting firm KPMG raising the possibility of criminal conduct in its report underscores the seriousness of the lapses at the town council, as it is unusual for accountants to do so.
Speaking to The Straits Times, Institute of Singapore Chartered Accountants president Gerard Ee said: "Things cannot be left hanging at this stage. By doing that, you're telling the public, 'There're no working controls, something serious could have happened but whether it did is anyone's guess.'
"That cannot be. Residents will want to know for sure."
KPMG had found after a review of AHTC's past payments that at least $23 million of payments to the town council's managing agent, FM Solutions and Services (FMSS), had been approved by the owners and shareholders of FMSS in their capacity as key officers of the town council.
Of this amount, about $1.5 million have been determined as improper payments including overpayments, payments for work or services that were not performed, or payments in breach of the law or the town council's policies.
The town council also made another $5.4 million of improper payments through the use of a higher- priced consultant panel and overpaying a town councillor, among other things. KPMG had said in its report that, if the payments were made intentionally, it could amount to criminal wrongdoing.
Yesterday, experts zeroed in on how unusual and serious it was for the auditor to raise the possibility of criminal conduct.
Singapore Management University accounting associate professor Themin Suwardy said: "It's a pretty strong word. Errors happen, companies pay wrong amounts, make mistakes with decimal points. But the moment you raise the word, you have to look at whether there was intent."
Nanyang Technological University accounting associate professor El'fred Boo, noting that "accountants normally operate conservatively and do not normally say more than they need to", said that the lapses uncovered so far "do provide opportunities for criminal breach of trust".
A natural next step would be to commission a detailed investigation into the town council's accounts to reassure residents that nothing criminal took place, said Mr Ee, who chairs the Charity Council and is familiar with governance and regulation issues in the charity sector.
This could take the form of the Ministry of National Development and the Housing Board launching formal investigations under the Town Councils Act or the Penal Code, said Singapore Management University law don Eugene Tan.
Similarly, law enforcement agencies like the police or the Commercial Affairs Department will have to study the report and decide if further action is necessary, he said.
Among the things that would have to be determined is whether the improper payments were made deliberately. If so, KPMG had said in its report, it could amount to criminal breach of trust or a breach in fiduciary duty towards residents.
If investigations are launched, the town council and FMSS may be compelled to grant access to their books and records and may have to be interviewed, said Prof Boo.
Associate Professor Tan said AHTC will also have to think about whether it will mount an investigation, perhaps by independent third parties, into the various findings.
AHTC said on Tuesday that it is is studying the report in detail.