People's Association files police report over possible irregularities flagged by AGO

The possible irregularities are related to the People's Association's management of Our Tampines Hub and Heartbeat@Bedok. PHOTOS: LIANHE ZAOBAO, ST FILE

SINGAPORE - The Auditor-General's Office (AGO) has flagged several lapses and possible irregularities related to the People's Association's (PA's) management of two large development projects, Our Tampines Hub (OTH) and Heartbeat @ Bedok (HBB).

In a statement on Thursday (July 22), the PA said it has taken immediate steps to review the management of contracts at both developments, address the lapses identified and initiate rectification of any over- or underpayments. It also made a police report over the irregularities observed at OTH, including possible falsification of documents.

The PA had engaged contractors to carry out minor building works at OTH and a managing agent to manage the facilities and supervise the contractors.

The AGO checked a sample of payments totalling $1.27 million made between April 2018 and March 2020 and found possible irregularities in the supporting documents for 34 of the 36 payments.

The irregularities included possible falsification of quotations, alteration of hard-copy payment supporting documents and the creation and backdating of documents to give the false impression that proper processes had been followed.

"As the lapses relate to serious allegations involving falsification of documents, including in relation to claims by external parties, PA has lodged a police report and investigations are ongoing," the PA said, adding that it had suspended the staff involved pending the outcome of the investigation.

The PA also said it would set up a task force led by senior officers to strengthen processes in procurement, contract and facility management, raise staff capabilities, and improve oversight of contractors and managing agents.

It will also appoint an external consultant to conduct a thorough review of its governance system and oversight functions related to contract management of all development projects, the PA added.

The external consultant will be given a "broad mandate" to review such matters and provide recommendations to strengthen PA's oversight of contract management.

Other issues flagged by the AGO include lapses in the computation of adjustments for price fluctuations for the main construction contract at OTH and weaknesses in the management and oversight of contract variations for the main construction contracts for both OTH and HBB.

This means PA could have overpaid its contractors by an estimated $2 million for building materials for OTH, such as concrete and steel reinforcements.

The AGO also checked 465 contract variations amounting to $26.48 million and found lapses in 252 or 54.2 per cent of them. Contract variations are mutually agreed changes to the terms of contracts that are already in effect.

No evidence of approval was found for 109 contract variations, while approvals for 142 of them were obtained only one month to 5½ years after works had commenced or were already completed. There were also other issues such as the use of incorrect rates, resulting in over- and underpayments.

The PA said it would work with consultants to determine the amount of over- or underpayments and take the appropriate steps.

The AGO also noted that two critical tender requirements were not explicitly incorporated into tenancy agreements at HBB.

For one such agreement related to the provision of childcare services, the PA had stipulated a cap on full-day childcare fees in the first two years of operation, from August 2017 to August 2019, in order to provide residents in the vicinity of the HBB with lower fees.

But the PA failed to ensure this requirement was made explicit in the tenancy agreement. This resulted in the tenant charging fees that were 23 per cent higher than the cap specified for the first two years of its operation.

The PA said this was a "unique arrangement" and the condition was not part of its standard tenancy agreement template for development projects.

It added that the tenant had agreed to refund the difference to affected parents by the end of July.

Another tender requirement related to adjustments in rent and service and conservancy charges due to a revision of tenanted floor area. This resulted in tenants being charged incorrect amounts.

The PA said it has since made the appropriate adjustments and refunded affected tenants.

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