SINGAPORE - THE Ministry of National Development (MND) on Friday filed an appeal against the High Court's rejection of its application to appoint independent accountants to the Workers' Party (WP)-run town council.
It said that it would be unable to immediately disburse government grants to the Aljunied-Hougang-Punggol East Town Council (AHPETC) in the absence of these accountants.
The grants, amounting to $14 million over two financial years, had been withheld due to the gravity of accounting and compliance lapses by AHPETC, and critical questions raised by the Auditor-General's Office (AGO) over the state of its finances.
WP and AHPETC chairman Sylvia Lim said on Friday night that she was surprised by the MND's decision, "especially that they are not taking the advice of the judge that the MND and AHPETC should work together to arrange for the grants to be disbursed".
She added that the town council "will resist the appeal".
The MND, which filed the appeal on the advice of the Attorney-General's Chambers, said in a statement that the appointment of accountants would mean the immediate disbursement of public funds to the town council "in the interest of residents", and would also ensure that these funds "are adequately safeguarded".
"They will also be able to examine past payments made by AHPETC. They will be able to take steps to recover monies lost from financial mismanagement and questionable payments," the MND added, referring to the accountants' additional task.
The MND's decision comes despite the finding by Justice Quentin Loh that the law already allows the National Development Minister to impose conditions on grants disbursed to town councils - including the appointment of independent accountants.
He also urged both sides to reach a consensus on conditions, so grants can be disbursed soon.
But yesterday, in setting out why it was appealing, the MND noted that the High Court made serious findings against AHPETC:
"The Judge found that AHPETC had breached and continues to be in breach of its duties and obligations in law, and that there are critical questions about the state of its finances.
"The Government cannot disburse public funds to AHPETC in the current circumstances, given the very serious findings by the AGO and the High Court."
In further response on Friday night to The Straits Times on why it was taking the appeals route when the minister could impose conditions on the disbursement of grants, an MND spokesman said:
"Although the Judge found MND's conditions for the disbursement of the Service & Conservancy Charge (S&CC) grants to be reasonable, the Judge also agreed it was probably the case that any conditions imposed by the minister would be unacceptable to APHETC and this will result in further court proceedings.
"This will delay disbursement of the S&CC grants, which ultimately put at risk residents' interest.
"MND's appeal, if granted, will ensure that a court-appointed independent accountant takes appropriate steps to recover any monies that may have been lost through its financial mismanagement and questionable payments. It will also allow MND to immediately disburse the S&CC grants to AHPETC in the interests of residents while ensuring that these public funds are adequately safeguarded.
"The court appointed independent accountants will be officers of the Court acting in the interest of all parties, taking directions from the Court."
The MND applied to the High Court in March to appoint the independent accountants.
While Justice Loh agreed with AHPETC's lawyers that there was no legal basis for the court to appoint the accountants, his judgment released on Wednesday had harsh words for AHPETC, describing it as a "travesty" that it ignored its duties and obligations.
He was critical of the state of its accounts and the validity and propriety of payments previously made to related parties - a reference to its managing agent firms that were also owned by some key officials in the town council.
AHPETC's failure to make quarterly transfers to the sinking fund was also the "height of financial irresponsibility".
AHPETC's lawyer Peter Low confirmed on Friday that a notice of appeal has been served. He said MND is applying to have the appeal hearing expedited.