Ex-director of childcare chain colluded with parents to misuse S$133,000 from Child Development Accounts

SINGAPORE: Over almost four years, a director in charge of 11 childcare centres colluded with the parents of 34 children to make more than S$133,000 in unauthorised withdrawals from their kids' Child Development Accounts (CDAs).

Former Sweetlands Childcare director Chan Chew Shia, 58, was fined S$90,000 for 30 counts of breaking Child Development Co-Savings Regulations by making unauthorised withdrawals. Another 124 charges were taken into consideration.

She paid half the fine upfront and will have to pay the rest by Jul 25 this year.

The Child Development Co-Savings Scheme, also known as the Baby Bonus Scheme, is administered by the Ministry of Social and Family Development and aims to support parents by reducing financial costs of raising children.

As part of the scheme, parents can open special savings bank accounts for their children, known as CDAs. The Government matches savings deposited into these accounts on a dollar-to-dollar basis up to a specified amount depending on the child's birth order, the court heard.

The money can be used for child-related expenses such as education and medical treatment.

Chan was the approved person for 10 of the 11 childcare centres under the Sweetlands Childcare brand, and was authorised to make withdrawals from a child's CDA for authorised purposes.

Sometime in 2011, Chan came up with a matching scheme to extend loans to parents who owed outstanding school fees or other childcare expenses to Sweetlands Childcare.

She would make deposits into a child's CDA in order to attract the matching contribution by MSF.

She did this by withdrawing funds from the childcare centres' bank accounts via cash cheques, and depositing them into the CDA accounts. The amount deposited depended on the outstanding fees the family owed the childcare centre.

After this, Chan would prepare the deduction forms, before making deductions from the Child Development Accounts personally or through her clerk.

The matching contributions from MSF would be used to pay the outstanding school fees owed to the childcare centres, and Chan made the decisions for all matters relating to this scheme.

In total, S$133,674 was deducted from 34 children's CDAs across seven childcare centres between August 2011 and March 2015 for the purpose of loan repayment.

MSF'S INTERACTIONS WITH CHAN

Initially, Chan spoke to an MSF customer service employee over the phone on Sep 7, 2010 and was "erroneously advised that the matching scheme was permissible", the prosecutor said.

However, MSF officers conducted an audit of Sweetlands Childcare in March 2011 and learned from Chan about the matching scheme she offered to parents, as well as the phone call.

The officers told Chan that she should not make CDA deductions for loan repayments.

Months later in May 2011, an MSF officer spoke to Chan over the phone telling her again that she should not make such withdrawals, and that loan repayment was not an approved use of the CDA funds.

Another parent complained and MSF officers conducted another audit of Sweetlands Childcare in April 2014. They discovered that Chan was still offering the matching scheme to some parents, with deductions from the accounts for loan repayments, and told her again to stop doing so.

MSF sent Chan a letter on Jul 29, 2015, stating that unauthorised deductions were made from the CDAs of various children and were in breach of regulations.

MSF lodged a police report in May 2015, and Chan has since made S$5,880 in refunds to the CDAs.

The court heard that this was the first such prosecution of its kind, and the offences are fine-only offences.

MUCH PUBLIC RESOURCES EXPENDED

Deputy Public Prosecutor Cheng Yuxi asked for a fine of S$90,000, saying Chan abused a Government scheme for her own benefit, compromising the structure of the CDA and its purposes.

Much public resources were expended, said Ms Cheng, saying that MSF had to closely monitor CDA deductions and childcare subsidy claims by Sweetlands centres, keep parents of the children studying there abreast of the developments, and send more than 20 workers from MSF and the Early Childhood Development Agency to their centres to look into the issues and protect the students' interests.

Questions were also raised in Parliament on what the Minister for Social and Family Development intended to do to tighten control over the CDA, with Ms Low Yen Ling stating that MSF took a "very, very serious view of any breaches of the use of CDA funds".

The offences also caused public disquiet, with then-Nee Soon GRC MP Lee Bee Wah saying the incident caused "a lot of anxiety among the young parents" in her constituency.

Chan claimed that her motive for offending was to help the families of students who could not afford school fees, but Ms Cheng said the offences "in fact resulted in personal gain for the accused".

"The purpose of the accused's deposits was to trigger MSF's matching contribution, which could be used to pay the school fees of her childcare centres which were in deficit," said Ms Cheng.

Chan's lawyer highlighted how his client was on the brink of bankruptcy after the news first came out, and how she suffered mentally in the period up to her prosecution.

For each charge of making unauthorised withdrawals from a Child Development Account, Chan could have been fined up to S$20,000