SINGAPORE: Home Affairs and Law Minister K Shanmugam on Saturday (Jul 23) said accounting firm KPMG’s fourth monthly report on the Aljunied-Hougang Town Council (AHTC) paints “a devastating account of the Workers’ Party’s mismanagement of its town council”.
In a Facebook post, Mr Shanmugam described the findings as “a damning litany of highly irregular and suspicious financial practices, poor governance structures and extensive leadership failures”.
The KPMG report, which was made public by AHTC late on Wednesday night, uncovered lapses in its audit of the town council. KPMG had said AHTC would need "at least 18 months" to fix lapses uncovered by the firm. It also stated that it found a further 70 control failures within the town council, in addition to the 115 control failures earlier identified by the Auditor-General's Office.
The Housing and Development Board (HDB) had said in a statement on Thursday that AHTC needs to take “immediate steps” to “reset its tone” from the top, strengthen its control environment, improve oversight of its financial management function and address the “pervasive” control failures noted by KPMG.
In his post, Mr Shanmugam said that KPMG, which is AHTC’s own independent accountants, had uncovered even more faults than the Auditor-General’s Office (AGO) and AHTC’s statutory auditors. He said the AGO and AHTC’s statutory auditors found 115 failures, and KPMG uncovered another 70 – making a total of 185 failures. “Since the AGO audit, the situation has not gotten better. It has gotten far worse,” he wrote.
“THE ROT IS AT THE TOP”
Mr Shanmugam added that the report underlines a key issue: that AHTC’s leadership has neither upheld nor enforced integrity and ethical values. “The rot is at the top,” he wrote. “This should come as no surprise.”
He said the High Court and the Court of Appeal have already criticised the Workers' Party's Ms Sylvia Lim and Mr Pritam Singh for suppressing the truth (designed to mislead) both in Parliament and in Court. “To them, the truth is a tradable commodity,” he said, adding that he would elaborate further on this in another post.
Mr Shanmugam also referenced the KPMG report, saying that KPMG also found that AHTC’s lapses were not isolated, but rather “pervasive” and “systemic”.
“'There is an issue larger than the sum of individual lapses at AHTC’, it says, ‘a failure in the control environment’, which ‘includes the governance and management functions and the attitudes, awareness and actions of those charged with governance and management’."
KPMG said that AHTC used highly irregular shortcuts to process millions of dollars in payments to related parties, and “suppliers”. It used “dummy” vendor codes for payments, without specifying who the suppliers were. Mr Shanmugam said these practices could have concealed duplicate or fraudulent payments. “Obviously, WP’s leadership thought they could play Aljunied residents – and Singaporeans – for dummies, he added.”
NO LIGHT SHONE INTO THEIR DARK CORNERS
Mr Shanmugam also described AHTC’s attitude in dealing with its “severe problems” as “quite telling”.
“In response to KPMG’s report, Mr Pritam Singh breezily says: ‘AHTC accepts all the recommendations in full’,” he wrote. “That’s it. He seems to think that suffices. No need for apologies, explanations, clarifications.”
“He does not explain why AHTC indulged in “highly irregular” practices. He does not explain why there was “failure in (its) control environment”. He doesn’t apologise for the mess, nor account for the “attitudes, awareness and actions of those charged with governance and management” – i.e., AHTC’s political leadership, WP’s six MPs. Is he himself (having already misled the Court of Appeal) in a position to enforce ethical values?,” he wrote.
He also described Mr Singh’s attitude as “consistent with what KPMG in essence said about them”: that AHTC’s management has not acted responsibly in dealing with its failings. “Where is their sense of responsibility to put things right? Where is their sense of duty, honour and integrity?”
“They went to court to oppose, tooth and nail, the appointment of an independent accountant. We know now why: They don’t want any light shone into their dark corners, of which there are many,” he wrote, adding that he would deal with this subject in another post.
He added that despite auditors – including the AGO – flagging concerns over four years, AHTC’s Finance and Investment Committee and Audit Committee were “not bothered”, saying that “they didn’t even meet regularly to deal with the issues”.
STILL EARLY STAGES IN THIS “PAINFUL SAGA”
“Mr Singh and his colleagues can’t keep Singaporeans in the dark so easily,” added Mr Shanmugam.
He said many of the problems KPMG identified deal with payments that run into millions of dollars which have already been made. “What is Mr Singh and his colleagues going to do about them?” he wrote.
“Who received the payments and for what purpose? How many of them were genuine? Who amongst your friends benefitted? Why did you use dummy codes for payments – i.e. who really received the payments?”
He added: “For four years, your auditors have been asking for supporting documents. Are you finally going to produce them, or admit that they do not exist?”
“We are still at the early stages in this painful saga,” he wrote. Mr Shanmugam said so far, KPMG has only looked at aspects like the control environment and accounting systems. And the Court of Appeal had also directed that the accountants look into the actual payments that AHTC has made over the years, identify their lawfulness and, where necessary, take steps to recover the payments.
“Much work remains to be done,” he added. “More facts will emerge, facts which will show what actually happened to the monies, and what the WP has been up to in Aljunied, Hougang, and for two years Punggol East.”
MINISTER'S RESPONSE "SURPRISING": AHTC CHAIRMAN
AHTC Chairman Pritam Singh said Mr Shanmugam’s response was “a surprising one”, considering how the KPMG report was a stock-take on AHTC”s internal controls.
In a release, Mr Singh said AHTC chose to publish all the KPMG reports released since Apr 15, even though it was not obliged to do so. AHTC had also specifically requested KPMG to publish the 70 additional lapses it had identified in the course of its engagement, even though KPMG had not intended to detail them in its report. He added that the remedial measures AHTC has undertaken since the 70 additional lapses were identified are also highlighted in the July report.
AHTC has also made the KPMG report available on its website since Jul 20.
Mr Singh also said that the review of Past Payments is still ongoing, and KPMG expects a full report to be released to AHTC at the end of August. “Therefore, it is not helpful to speculate or jump the gun,” he wrote.
“The public can be assured that AHTC will publish the Past Payments Report, like all previous KPMG reports for scrutiny in full, and AHTC will take any necessary action thereafter.”