SINGAPORE - The Ministry of National Development (MND) has applied to Court to appoint independent accountants to safeguard Government grants to the Workers' Party-run Aljunied-Hougang-Punggol East Town Council (AHPETC) and to oversee its use of those grants.
MND said that the court documents were served on AHPETC on Friday.
This is a step that MND is taking before disbursing several million in government grants to AHPETC. Grants are disbursed to all town councils, but MND has withheld AHPETC's grants for FY2014 due to concerns over lapses in governance and compliance at Opposition town council.
In a parliamentary debate last month over these lapses, found by the Auditor-General's Office after a year-long audit, National Development Minister Khaw Boon Wan had said that AHPETC would not get the grants, which are about $7million annually, until it sets its house in order.
In a statement on Friday, MND noted that AHPETC had written to it in June 2014 to request disbursement of the Service and Conservancy Charges (S&CC) Operating Grant for FY 2014 without further delay, stating that 'the continued withholding of the grant to AHPETC is likely to critically and adversely affect the town council's cash flow position.'"
"But before MND does so, there must be adequate safeguards to ensure that AHPETC accounts for and manages these grants properly," said MND.
MND has therefore applied to Court to appoint independent accountants to safeguard the grants to be disbursed to AHPETC.
If the Court grants the order, MND will be able to disburse the S&CC grants for both FY14 and FY15 to AHPETC.
"AHPETC will have to keep the grants in segregated accounts, and payments out of these accounts exceeding certain thresholds will have to be co-signed by the independent accountants," said MND.
MND is also asking the Court to empower the independent accountants to look at past payments made by AHPETC and to "take appropriate action to recover losses suffered by AHPETC and its residents."
Government ministers have charged that AHPETC's managing agent, FM Solutions & Services, over-charged it by $1.6 million a year compared to what other town councils pay their managing agents.
"But the independent accountants will not take over the operations of AHPETC nor seek to remedy the problems identified at AHPETC. These remain the responsibility of AHPETC's WP MPs, the MND statement emphasised.