A COMMITTEE appointed by the Government has found that People's Action Party (PAP) town councils did not lose or misuse public funds in the controversial sale of their software to a PAP- owned company.
The sale was in line with the Town Councils Act and Town Council Financial Rules, the Ministry of National Development (MND) team said in its report yesterday, which was accepted by Prime Minister Lee Hsien Loong.
PM Lee had ordered a review of the transaction in January, "in the interest of transparency and maintaining trust in the system", after a war of words erupted over a Workers' Party (WP) claim.
He had also asked MND to re-examine the nature of town councils, to ensure high standards of corporate governance.
In its 37-page report, the team noted that town councils were set up in 1989 as political bodies to give more flexibility in the running of estates to MPs, who would be accountable to residents.
While the councils had largely met their objectives, the committee noted some public calls for them to be depoliticised. It thus called on the Government to consider a strategic and comprehensive review of town councils.
The committee was set up after complaints by WP chairman Sylvia Lim, who heads what was then the Aljunied-Hougang Town Council, that her council had failed to receive a grade for corporate governance in a regular government review because of the termination of its IT contract with PAP-owned firm Action Information Management (AIM).
Exchanges ensued between the WP and the PAP town councils as well as AIM over who was at fault. During the row last December, it came to light that the 14 PAP town councils had sold their software to AIM - the sole bidder in an open tender - in 2010.
The review team acknowledged public concerns over a conflict of interest, but noted that the law does not forbid town councils from doing business with or engaging those who share their political agenda or are affiliated to their parties. And the practice is not uncommon among elected MPs across parties, the team added.
Town council members also did not have a financial or commercial interest in the AIM contract. In fact, AIM suffered a loss in the initial one-year contract, the committee noted.
The councils "acted in good faith in the interests of their residents", and awarded the contract to AIM as the price was fair for software that was nearly obsolete, among other things.
As for the spat over who wanted the contract terminated, the team put it down to a "different understanding" between the parties of how a clause to end the contract was executed.
But the team cautioned that the disputed handover of town council functions between MPs from different political parties could have an impact on the continuity of services for residents.
It saw a "fundamental tension" between the objectives of delivering good public service and the political accountability of MPs.
"The current arrangement inherently bears the constant risk of politicisation of town council administration," it said.
At stake is the management of public housing estates, it stressed. "It impacts the value of the homes and the experience of day-to-day life for a vast majority of Singaporeans living in HDB estates."
The coordinating chairman of the PAP town councils, Dr Teo Ho Pin, welcomed the findings. AIM chairman Chandra Das said the report confirmed it had gone in to help the councils and not to make money. Ms Lim said a response would be given in due course.
National Development Minister Khaw Boon Wan will deliver a ministerial statement on the review when Parliament sits on May 13.
Additional reporting by Jessica Cheam