Confused by the confusion: the AHPETC saga (updated)

How time flies, it’s General Election time again. I still remember 2011 when I was a big supporter of Worker’s Party. I was dazzled by Chen Show Mao’s credentials, and thought we finally had a potential future PM or minister from the opposition party. There was much euphoria when WP won Aljunied GRC, and I thought WP would develop into a viable alternative party for us. How wrong was I! WP did not even bother to put up any alternative policy papers at all, other than an ill-thought out population white paper, not worthy of parliament, in response to the one published by the ruling party. (At least Singapore Democratic Party, SDP, made the first step in proposing well thought out alternatives to healthcare, education and housing etc, despite not being in parliament.)

So, over time, I became more disappointed with WP for its passiveness. Then came the Aljunied Hougang Punggol East Town Council (AHPETC) saga. I had written my thoughts about this in an earlier post dated 26 February this year “A follow-up to Unsupporting You – It’s worse than I thought”. Basically WP has shown very poor corporate governance and terribly weak financial management.

I want to state here that I will not mention any numbers, as I did not analyse WP’s audited statements, which by the way, have never been unqualified since 2011. Instead I read the opinions given by their appointed auditors to get an overview of the corporate and financial governance.
Since 2011, the auditors have not provided any opinion on the TC finances in the annual reports. Basically they couldn’t say if the numbers were a fair representation of the financial status within the town council – as a result there can be no assurance that public funds have been properly spent and accounted for. The reason they couldn’t verify the numbers is because the TC management could not (whether voluntarily or otherwise is open to question) provide documentation evidence to back them up. There were repeated mentions of AHPETC not putting money into sinking funds, as a result millions are owed to the sinking fund. In the FY13/14 report, the auditors also raised the concern of conflict of interests because the employees at the TC were shareholders of the company that provided services to the TC. These TC employees were signing off payment vouchers issued to their own company (or basically themselves). As of today, remarkably, all AHPTEC’s financial statements since 2011, continues to be qualified, accountants and investors will tell you, is not worth the paper it is printed.
If I am an investor and looking at AHPETC, I would drop it like a hot potato since I do not know what the hell is going on within the TC. AHPTEC is also fighting in the High Court to avoid a definitive forensic audit with more legal powers to follow the money trail unlike a normal audit. Why would they want to prevent an audit which could clear their name, if they had nothing to hide? So far, because AHPTEC is governed under the Town Council Act, the High Court judge had to disallow the audit; the Ministry of National Development is appealing the judgement with HDB. Let me quote the judgement of the presiding High Court judge, Quentin Loh, on the mismanagement at AHPETC:
“…travesty for AHPETC to have ignored their duties and obligations imposed on them by the Town Councils Act and Town Council Financial Rules.”
“They owe a duty and a heavy responsibility to their constituents to run AHPETC properly and it is incumbent on them to put their house and finances in order.”
“If AHPETC was a managing corporation … I have no doubt that AHPETC or its officers will be exposed to to the possibility of civil liability or, in an extreme scenario, criminal liability,”.
Let me try a Q&A here to answer the confusion over the whole saga.
Q: What did Justice Loh mean by “If AHPETC was a managing corporation”?
A: Town councils function similarly to private condo managers called “management corporations” that manage the operations of private estates. Also, like the TC, the management corporation has to manage a sinking fund for capital projects. But there is one big difference between them; the management corporation is governed under the Companies’ Act whereas the TC is governed under the Town Council Act. Contraventions of the Companies Act by condo managers are very serious offenses and will result in investigations by the enforcement agencies, sometimes leading to civil and even criminal prosecutions.
Q: If that’s the case, how come there is no investigation into AHPETC?
A: As mentioned earlier, AHPETC (and other town councils) are governed under the Town Council Act which, unfortunately, is rather loosey goosey. There are only three offences listed under the law: a) misuse of town council funds, b) Contraventions of lift upgrading rules, c) wilful withholding of information from auditors. The first two attract fine of not more than $5,000, while the third has a fine of not more than $1,000. No jail terms, believe it or not. Note that it is not even an offense for not putting money into sinking fund. In fact, when I looked at the offences in the law, it doesn’t look like they are easy to prove. For instance, the Sinking fund can be used for a variety of projects, including “any other works… prescribed from time to time.” In other words, anything goes. The Town Council will work only if the managers are ethical as it gives them wide latitude. Having unethical people running the Town Council, no matter how nice, helpful and responsive they are to Town Council residents, will be like allowing wolves to guard the henhouse.
Q: If it is hard to prove to prove misuse or contraventions, why still harp on it?
A: There are actions which are unethical but not punishable by the weak law. Using an extreme example, say I make my parents sleep in the balcony or corridor. I don’t think there is any law that says I committed a crime, but you will certainly agree that my actions are terrible and morally wrong. Or perhaps the law states “children must let parents sleep in a sheltered area. Otherwise there is a fine of $1000.” I can argue the balcony or corridor is sheltered, and since it can be interpreted that way, the authorities will be hard-pressed to sue me. But I’m sure you will agree that something needs to be done about it, since it’s wrong of me to make my parents sleep in the balcony. So you see, this is the issue we have with the the Town Council act. Something needs to be done about AHPTEC. Lets hope MND and HDB succeeds in launching a forensic audit – it is in the public’s interest.
Q: What’s the big deal with the AHPETC’s accounts? So what if they didn’t put in money into sinking fund and the numbers cannot be verified?
A: The money belongs to taxpayers, yours and mine. Don’t you want to know that your money is properly accounted for? I certainly don’t want mine to go into wasteful projects, grossly overpriced projects meant for profiteering,or worse, disappear for no reason at all. The money in the Sinking fund is used for capital projects like upgrading works for HDB flats. If there is not enough money, how can the estate be maintained? Wouldn’t the estate fall into disrepair? Wouldn’t a taxpayer bailout be necessary eventually?
Managing a TC is a good little test of the ethics, management and operational skills of the people running it. Don’t forget it is much less complicated than running a country.
Q: But government service, stat boards, People’s Associations also have lapses. Why is the PAP targeting WP?
A: Please remember that the civil service is a big organization, and of course there will be some bad eggs around. We should be worried if such lapses are not reported with claims from the government that everything is fine. In fact, the audit reports on government service and statutory boards are tabled before parliament for debate. So warts and all are revealed to the public and the opposition MPs can demand for explanation from the government.
There is no government in the world that dares to claim it is 100% corruption free or lapse-free. There will be always be people trying to take short cuts or flout the regulations or take advantage of loop holes. What matters is whether the corruption/lapses are widespread or are mere exceptions. The fact that Singapore has been consistently ranked as one of the least corrupt countries in the world should tell you something.
Also, think very carefully before you say we should put in check and balance in every step. The bureaucracy will burden all of us, as well as kill the economy. For instance India has one hell of a bureaucratic system and it’s almost impossible to get anything sensible done. Does it help to reduce lapses? No, people will just grease the palms to speed things up, encouraging more not less corruption.
Besides, let me quote a wise adage “two wrongs don’t make a right”. Let’s say an opposition MP was caught having extramarital affairs. A short while later, a PAP MP was also caught doing the same. What would you say if the PAP gave the excuse, “the opposition MP also made the same mistake. Plus, he had affairs with more than one woman; and I only had it with one. So I am not as bad.” Does the argument make sense?
This is the same argument used by a number of WP supporters. Why are we resorting to pandering to the lowest common denominator? Why are we not aiming for the better party, which sets higher ethical and competence benchmarks? When we insist on the PAP having integrity, honesty and transparency, we should apply the same to the opposition parties. There should not be double standards here. If you insist on voting in opposition regardless, you are basically “cutting off the nose to spite the face”. As for those who think that since we have an efficient civil service, it doesn’t matter who is in power, that is a fallacy. The civil service requires direction and leadership to operate, and it does not have the mandate of the people. The political leadership is given the mandate to provide direction, and set policies. It is very important that we get the policies right because the civil service cannot change course for the country. Who is in the leadership role is vital to this country!