Wednesday, 13 May 2015

MND vs AHPETC: The facts of the case

MND details exchange it had with Sylvia Lim over financial status of AHPETC.

The National Development Ministry says even though it had offered to disburse half of the FY2014/15 Service and Conservancy Charge Operating Grant to Aljunied-Hougang-Punggol East Town Council, the town council chairman Sylvia Lim did not take up the offer.


SINGAPORE: Earlier in April, the Ministry of National Development (MND) stated in court that the Aljunied-Hougang-Punggol East Town Council (AHPETC) is "technically insolvent". This charge was not challenged by the town council (TC).

The court hearing was to decide if independent accountants should be appointed to safeguard government grants. When asked if the town council had become insolvent because the ministry had withheld funding, the ministry released the exchange it had with Workers' Party chairman Sylvia Lim, over the financial status of AHPETC.

MND said in response to media queries that even before the Auditor-General's Office (AGO) audit was completed it had offered, in response to Ms Lim's appeal, to disburse half of the FY2014/15 Service and Conservancy Charge (S&CC) Operating Grant to AHPETC. However, AHPETC "failed to take up the offer", MND said.

"In 2014, Ms Sylvia Lim had appealed to MND twice to disburse the S&CC Operating Grant, even though the AGO audit was ongoing, stating that the TC would not be able to pay its contractors and make Sinking Fund transfers otherwise. Yet, when MND, in response to her appeal, offered to disburse half of the grant to the TC, she did not take up the offer," an MND spokesperson said.

"MND has now applied to the Court to appoint Independent Accountants to enable the grant to be securely disbursed to AHPETC. But again, despite repeated questions from the judge, AHPETC told the Court it does not need the grants," the spokesperson added.

The ministry said the sequence of events is as follows:

• On April 28, 2014, MND wrote to Ms Sylvia Lim: “MND is considering to withhold the FY14/15 S&CC Operating Grant until the conclusion of the audit by the Auditor-General. Right now, we do not have reasonable assurance of proper financial management and keeping of accounts by AHPETC. Before we do so, we want to know whether AHPETC has any views or concerns as regards the proposed withholding of the above S&CC Operating Grant. If there are, you must let us have AHPETC’s views or concerns in writing for our consideration no later than 10 working days after you have received this letter (i.e. by May 14, 2014).” Ms Sylvia Lim did not reply to MND by May 14, 2014.

• More than a month later, on June 16, 2014, Ms Sylvia Lim wrote to MND, stating: “the continued withholding of the grant to AHPETC is likely to critically and adversely affect the TC’s cash flow position, resulting in a disruption of essential services to the town because the TC would not be able to pay its contractors…We call on the Ministry to disburse without further delay the Operating Grant it has withheld from AHPETC.”

• On June 20, 2014, MND replied to Ms Sylvia Lim that it was prepared to “reconsider the withholding of grant, to take into account the impact, if any, this may have on the TC’s provision of essential services to the town.” Following this, MND and AHPETC had a series of exchanges to clarify AHPETC’s cash flow position.

• On Oct 7, 2014, MND informed Ms Sylvia Lim that MND was “deeply concerned about the TC’s financial situation based on the information you provided and we would like to work with you to see how we can help the TC sustain its operations and avoid disruption of essential services to residents. We are prepared to consider, as an exceptional measure, releasing half the operating grant to AHPETC while the AGO audit is still on-going”. This would be subject to conditions such as Ms Lim ensuring that the TC makes all the necessary transfers to the Sinking Fund for the entire Financial Year as required under the Town Councils Act and the Town Councils Financial Rules, and Ms Lim confirming and declaring that the statements on AHPETC’s financial accounts she earlier provided to MND was true. MND did not receive any reply from Ms Sylvia Lim.

• On Nov 5, 2014, Mr Low Thia Khiang told the media that the TC had no cash flow problem.

• A week later, on Nov 12, 2014, Ms Sylvia Lim informed MND: “I would like to inform you that the figures given in my letters of July 30, 2014 and Aug 13, 2014, while correct based on information at the time, will need updating. We are assessing the situation and will reply substantively to your letter of Oct 7, 2014 should we wish to take the option of the half-grant while awaiting the conclusion of the AGO audit.” Ms Sylvia Lim had not gotten back to MND since then.

• On Feb 12, 2015, Ms Sylvia Lim told Parliament: “The Town Council accepts that it should have transferred the full amounts due to the sinking funds each quarter and should have paid sinking fund expenses directly from the sinking fund accounts. We have taken steps and made good the transfers… We have also done the transfers for FY2013 and have been making transfers for FY2014.”

• On Mar 27, 2015, during the Pre-Trial Conference, Ms Sylvia Lim repeatedly assured the Judge that AHPETC did not urgently need fresh grants from MND, as AHPETC had sufficient funds for at least the next 3 months. Ms Lim’s lawyer also told the Judge, after checking with Ms Sylvia Lim: “I have spoken to my client … they have not pursued the MND to release … the grants … because they don’t need the funds. They are okay … they can manage.”

• Yet, on May 4 and 5, it was revealed in Ms Sylvia Lim’s sworn affidavit, signed Apr 17, and in front of the Judge, that AHPETC had not made two out of the four mandatory quarterly transfers to the Sinking Fund for FY14/15, and even the two transfers it did make (for 1Q/2QFY14) were late. AHPETC also admitted that the TC would need the S&CC grants in order to operate in accordance with the law, and to make its Sinking Fund contributions. This was contrary to what Ms Sylvia Lim had told Parliament during the February 2015 Parliamentary debate on the AGO report, and what she and AHPETC’s lawyer told the Judge on Mar 27.

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