SINGAPORE: There was no fraud involved in the waivers of contractual provisions, which amounted to S$13 million, for the National Gallery development project, said Minister for Culture, Community and Youth Grace Fu in Parliament on Monday (Aug 5).
She was responding to a question from Opposition Member of Parliament (MP) Png Eng Huat, who had asked why the Auditor-General’s Office (AGO) concluded in its annual audit report that “it may be too late to recover the overpayment of S$13 million” from the contractor of the project.
In her response, Ms Fu reiterated that the S$13 million refers primarily to “waivers of penalties for additional time taken by the contractor to complete construction works”, and was not an overpayment.
The Ministry of Culture, Community and Youth (MCCY) has reviewed the AGO’s findings and "is satisfied that there was no fraud involved" in the waivers, she said.
Last month, the AGO released its audit of government accounts for the financial year 2018/2019, in which it pointed out weaknesses in the financial governance of the National Gallery development project, among other things.
READ: Auditor-General highlights weak IT controls, lapses in management of contracts and grants for social programmes
The National Gallery development project is owned by the MCCY and managed by the National Gallery of Singapore (NGS), a company limited by guarantee under the supervision of MCCY through a funding agreement.
AGO wrote that test checks revealed “weaknesses, such as waivers of contractual provisions involving S$13 million without due scrutiny by MCCY, and inadequate monitoring (including the lack of timely audits) to ensure that the final sum to be paid for the main construction contract was properly supported”.
AGO added that MCCY only raised questions with NGS on the basis for the waivers in September 2018 - one year after the final account for the main construction contract had been issued and after final payments had been made to the contractor.
“This may be too late for any recovery from the contractor,” its report said.
In her reply, Ms Fu said MCCY provided funding for the National Gallery development project to be directly managed by NGS “so as to achieve greater efficiency and savings from aligning the design and construction to its operational requirements”.
She said: “NGS duly executed all contracts under its purview to deliver the project on time and below budget."
The project was completed in 2015 within the approved budget of S$532 million.
During the course of the project, NGS addressed all findings from the ministry’s progressive audits, Ms Fu added.
“MCCY’s fifth and final audit has been resumed after being suspended due to the AGO audit," she said.
"Arising from the AGO audit and MCCY’s final audit, MCCY will work with NGS to enhance their financial processes and procurement policies."
In a supplementary question, Mr Png, the MP for Hougang SMC, asked if the Government will look to recover this S$13 million.
Ms Fu replied that based on her understanding at this point and after having gone through the AGO’s report extensively with the NGS, “there is no reason … to believe that there’s any need for major recoveries” and the ministry is “satisfied that the claims or the variations orders have good basis”.