The key officers at town councils are often also employees of the companies hired to manage the estates.
This double-hatting by the staff of the managing agent companies allows for efficient operations and is a common practice, said observers, who added that robust safeguards must be in place to prevent conflicts of interest.
They were commenting on this overlapping of roles after The Straits Times reported on Thursday that Mr Victor Wong, the general manager and secretary of Ang Mo Kio Town Council, had been removed from his duties and was being investigated by the Corrupt Practices Investigation Bureau (CPIB).
Netizens discussing the case have drawn parallels with the governance and financial lapses at Aljunied-Hougang Town Council (AHTC), run by the Workers' Party.
Mr Wong, who is an employee of CPG Facilities Management, the town council's managing agent, was suspended after the town council received a complaint in September about "the way he handles contracts and dealings in the town council". Ang Mo Kio Town Council chairman Ang Hin Kee said on Thursday that Mr Wong had been removed from his roles last month.
The anti-corruption watchdog yesterday confirmed that it had received a report and was looking into the matter. A spokesman for CPG said Mr Wong had been "suspended from his duties, pending the outcome of the investigations".
National University of Singapore corporate governance expert Mak Yuen Teen said yesterday that the case appeared to be an isolated one so far, and did not seem to indicate a systemic failure.
"AHTC has more wide-ranging issues, while this case so far involves an individual," said Associate Professor Mak. But he noted that the current case was a criminal investigation, while the CPIB had not been involved in investigating AHTC.
In the case of AHTC, auditors found that the town council was exposed to serious conflicts of interest because the owners and shareholders of its managing agent company also held key positions in the town council.
Referring to this, Singapore Management University asssociate professor of law Eugene Tan noted yesterday that Mr Wong was a staff member of CPG and did not have an ownership stake in the firm. If he were an owner, he would have stood to gain directly through decisions made regarding tenders, for instance, said Prof Tan.
To fully eliminate conflicts of interest, said Prof Mak, town councils should not appoint employees of their managing agent companies as senior officers.
"The best safeguard is to separate the two sides and have a totally arm's length relationship," he said. But he added that this could drive up costs.
Of the 16 town councils here, 14 use managing agents. The two that do not do so now are Bishan-Toa Payoh Town Council and AHTC.
To guard against problems that could arise from double-hatting, staff are constantly reminded to declare any potential conflicts, said four chairmen of People's Action Party-run town councils - Mr Zaqy Mohamad, Mr Baey Yam Keng, Mr Lim Biow Chuan and Mr Ang Wei Neng.
Mr Lim said that tenders and bids must also always be evaluated by a group of people rather than an individual.
Ultimately, said Prof Tan, "no system is foolproof, (and) when people are involved, it is inherent in the system to have human frailties".
Mr Lim said it was important to "make sure that the penalty for dishonesty is severe". He added: "What is clear here is there is no cover-up; whatever the degree of wrongdoing, we will take action."
The Ministry of National Development said it would "determine the appropriate action that needs to be taken when the facts have been ascertained".