EVEN before a special audit of the town council run by the Workers' Party (WP) was completed this year, the Ministry of National Development (MND) offered to disburse some grants to the financially struggling town council, it said yesterday.
But its offer, which came with some conditions attached, was rejected, the ministry added.
It said the Aljunied-Hougang-Punggol East Town Council (AHPETC) had asked the MND last year for grants that were being withheld from it because of the ongoing audit by the Auditor-General's Office (AGO) that was wrapped up in February this year.
AHPETC chairman Sylvia Lim, who is also the WP's chairman and an MP for Aljunied GRC, had written to the MND in June last year saying the withholding of the grants "is likely to critically and adversely affect the town council's cash-flow position".
This would result in "a disruption of essential services... because the town council would not be able to pay its contractors", she added.
But the MND said that when it offered to disburse half the grants - provided the town council met certain conditions, including making all scheduled transfers to its sinking fund - Ms Lim did not take up the offer.
It said this in a statement issued yesterday in response to media queries over reports on sociopolitical sites last week saying the MND was withholding grants from AHPETC for no reason.
One website's report asked whether this was being done "to cripple the WP-run town council", adding: "The PAP is playing up the bogeyman that AHPETC is insolvent and will have no money by June. (It is) probably hoping that it will instigate residents in Aljunied, Hougang and Punggol East to rise up as a collective mass and condemn the WP.
"But it is clear for most residents that the WP-run town council would not have become insolvent if not for the PAP withdrawing two years' worth of government grants."
The MND's statement outlined its dealings with the town council. This included a reply on June 20 last year informing Ms Lim that it was prepared to "reconsider the withholding of grant, to take into account the impact, if any, this may have on the (town council's) provision of essential services to the town".
Then in October, it said it was "deeply concerned" about AHPETC's financial situation based on information Ms Lim had provided and sought to work on a solution with the town council.
This included, "as an exceptional measure, releasing half the operating grant to AHPETC while the AGO audit is still ongoing", subject to conditions. But the MND did not receive any reply from Ms Lim. It said in yesterday's statement that on Nov 5, WP secretary-general Low Thia Khiang told the media that the town council had no cash-flow problem.
Ms Lim, just a week later, told the MND, among other things, that figures she had provided the ministry earlier were correct and that she would reply "should we wish to take the option of the half-grant while awaiting the conclusion of the AGO audit".
The MND said Ms Lim had not got back to it since then.
Parliament has since debated the AGO report on AHPETC's accounting and other practices, while the MND in March applied to appoint independent accountants to oversee government grants given to AHPETC and to examine its past payments.
The MND noted yesterday that during the court hearing of its application earlier this month, AHPETC admitted that it would need the grants in order to operate in accordance with the law. This was contrary to what Ms Lim told Parliament and what she had said at a pre-trial hearing in March.