SINGAPORE: The Workers' Party's Aljunied-Hougang-Punggol East Town Council (AHPETC) has been in the spotlight over the state of its finances.
In the annual report card of town councils released in November 2014, the town council scored the worst in management of service and conservancy charges S&CC arrears and corporate governance.
On Monday (Aug 3), the Court of Appeal will hear the case after the National Development Ministry applied for the HDB to be added as a co-plaintiff.
Both sides will prepare and exchange submissions on the matter.
WHAT’S HAPPENED SO FAR
After the 2011 General Election, the Workers' Party town council took over the functions previously carried out by Hougang Town Council and Aljunied Town Council. It then merged with Punggol East after the party won a by-election in January 2013.
AHPETC manages the HDB estates including Aljunied, Bedok Reservoir-Punggol, Eunos, Kaki Bukit, Paya Lebar, Serangoon divisions - Hougang and Punggol East.
But the Auditor-General's (AGO) report in February found accounting and governance lapses at the town council - raising serious questions about its financial health.
Some lapses included potential conflicts of interest arising from key AHPETC staff being co-owners of its managing agent, FM Solutions and Services (FMSS).
The report's findings sparked a robust four-hour debate in Parliament in February this year, when Law Minister K Shanmugam called on the Workers' Party to come clean about the conflicts of interest in the running of the town council.
Mr Shanmugam accused the MPs of unlawfully setting up a structure that saw millions in public money collected from residents of areas run by AHPETC being channelled to "friends" in managing agent FMSS and contractor FMSI.
One of Mr Shanmugam's charges was that AHPETC had overpaid FMSS, which is owned by husband-and-wife pair Danny Loh and How Weng Fan, as well as Mr Yeo Soon Fei.
Mr Shanmugam noted that FMSS was set up by the couple on May 15, 2011, seven days after the WP won Aljunied GRC in the General Election. He noted that altogether, the town council gave FMSS the contract to be its managing agent in 2011, and three more contracts, worth about $27 million.
Speaking on the matter in Parliament for the first time, the Workers' Party's leaders said the Auditor-General's report found no evidence of corrupt practices or missing money, but merely lapses due to human error.
They also asked to de-politicise the transition process after an election, noting that the WP had to build a town management operation from scratch, when it took over Aljunied GRC in 2011.
National Development Minister Khaw Boon Wan then said the Town Councils Act will be amended to give his ministry greater powers to regulate town councils and take errant ones to task. The Ministry also set deadlines for AHPETC to submit its overdue accounts.
For the financial year 2013/2014, the deadline was Jun 30, which it adhered to, while accounts for financial year 2014/2015 are due by Aug 31. AHPETC said its delay was partly due to the special audit it had to undergo from the Auditor-General's Office.
MORE AREAS OF CONCERN FLAGGED
In February, the AGO was tasked by Finance Minister Tharman Shanmugaratnam to conduct the special audit after the town council's own independent auditor raised 13 issues of concern in the accounts of financial year 2012-13. This was up from the four areas of concern flagged in FY2011-12.
The Ministry then withheld S$14 million in grants from the town council as it remained concerned about the town council's financial processes.
To safeguard the money, the Ministry also applied to the High Court in March to appoint independent accountants to oversee the spending of government grants by AHPETC.
Only if the Court agreed to its application will the Ministry disburse the S$14 million. However, the town council opposed the appointment of the independent accountants and hired two accounting firms to help manage its books and clean up past accounts.
They are Business Assurance, which is its financial consultant, and Audit Alliance, which is auditing its past accounts.
In May, the Court turned down the Ministry's application to appoint independent accountants. Justice Quentin Loh ruled that the law allows only the HDB or residents to take legal action against a town council, if it fails to perform its duties.
Justice Loh also criticised the town council for its lapses in governance. The Ministry is now appealing against the Court's decision and has applied to add the HDB as a co-plaintiff.
The appeal is scheduled to be heard at the Court of Appeal on Aug 3.