Corrections regarding false statements of fact in Facebook posts published by Mr Yee Jenn Jong on 25 July 2024 and 27 July 2024

The following false statements of fact are contained in the Facebook post published by Mr Yee Jenn Jong on 25 July 2024:

1. Ministry of National Development (MND) was wrong to call in external auditors because it was Action Information Management Pte Ltd (AIM)'s termination of the Town Council Management System (TCMS)[1] on insufficient notice and handover issues with the previous Aljunied TC (ATC) that led to Aljunied-Hougang Town Council (AHTC)[2]'s failures in reporting to MND and its audit findings;

2. MND’s decision to withhold grants from AHTC, to call in external auditors, and to call for an independent panel (IP) were politically motivated and not based on legitimate concerns; and

3. The IP members were decided by MND, and were not independent.
   
   The following false statement of fact is contained in the Facebook post published by Mr Yee on 27 July 2024:
   

4. MND withheld grants from AHTC in order to put pressure on AHTC to appoint an IP.

Updated on 30 August 2024: The false statements of fact contained in the Facebook post published by Mr Yee on 25 July 2024 were also reproduced in a YouTube video and an article posted by The Online Citizen on 26 July 2024.

Changes to the TCs at a glance:

May 2011 – AHTC was formed, after the May 2011 General Elections (GE) when the Workers’ Party (WP) won the Aljunied Group Representation Constituency (GRC) and Hougang Single Member Constituency (SMC). AHTC took over management of Aljunied GRC from ATC from 1 August 2011. This included all properties, rights, and liabilities, including contracts such as that for the TCMS provided by AIM.

February 2013 – AHTC was reconstituted and changed its name to AHPETC, after WP won a By-Election for Punggol East SMC.

October 2015 – AHPETC was reconstituted and changed its name to AHTC, after the September 2015 GE, where Punggol East SMC was won by the People’s Action Party (PAP) and grouped under Pasir Ris-Punggol TC (PRPTC). PRPTC took over management of Punggol East SMC from 1 December 2015. This included all properties, rights and liabilities, including directions given by the court[3].

July 2020– Sengkang TC (SKTC) was formed, following the July 2020 GE after WP won Sengkang GRC (including Punggol East SMC due to boundary changes). SKTC took over from PRPTC all properties, rights and liabilities, including directions given by the court, from 28 October 2020.

Falsehoods and Facts

#1 Falsehood: MND was wrong to call in external auditors because it was AIM's termination of the TCMS on insufficient notice and handover issues with the previous ATC that led to AHTC's failures in reporting to MND and its audit findings.

Facts: MND had legitimate and sufficient basis to call in external auditors. Many of the audit findings by AHTC’s own auditors and independent accountants, and the Auditor General’s Office (AGO) did not result from the termination of AIM’s TCMS and handover issues with the previous ATC in 2011. These failures and issues also persisted long after these events in 2011.

1. Mr Yee’s post was misleading because it omitted important context that it was the serious audit observations against AHTC by its own auditors that led MND to call for further audit checks:

   1. Before the audits by AGO in 2014 and an independent accountant in 2016, AHTC’s own auditor (Foo Kon Tan Grant Thornton) had submitted a disclaimer of opinion for AHTC’s Financial Statements for two consecutive years – FY2011/12 and FY2012/13. This was the first such occurrence in the history of TCs. Such disclaimers of opinion by auditors are highly unusual and serious matters. In this case, the disclaimer meant that AHTC’s own auditors could not say that the financial statements provided a true and fair account of AHTC’s financial position. Among other failures, AHTC did not provide the auditors its latest management of accounts and records of minutes, and details of project management service fees paid to a related party.

   2. A substantial portion of TC funds are public funds. TC funds include the S&CC collected from residents by the TCs and the S&CC Operating Grants disbursed by MND to the TCs. AHTC’s auditors’ disclaimer of opinion therefore raised questions regarding the usage of and accountability for the public funds managed by AHTC. Hence, it was in the public interest for MND to step in and request for the Ministry of Finance to appoint the AGO to carry out an audit.

   3. AGO found that AHTC had several lapses in governance and compliance with the Town Councils Act (TCA) and the Town Councils Financial Rules. These findings were related to AHTC’s financial governance processes and usage of AHTC funds, and are not related to financial information reporting to MND per se. AGO concluded that until AHTC addressed these weaknesses, there could be no assurance that AHTC’s accounts were accurate and reliable, or that public funds were properly spent, accounted for and managed.

   4. In light of AGO’s findings, MND called for AHTC to appoint independent accountants (IAs) in March 2015, and KPMG LLP (KPMG) was appointed by AHTC as part of a court order.[4] See Annex for a summary of the key findings from Foo Kon Tan Grant Thornton (FKT), AGO and KPMG.

2. Mr Yee’s insinuation that MND placed excessive and unnecessary pressure on AHTC paints a misleading picture. Contrary to Mr Yee’s claims, there is no reasonable basis to suggest that AIM’s termination of the TCMS contract on insufficient notice or handover issues had caused all the TC’s process and system weaknesses. The key reasons are summarised below.

   1. The observations in AHTC’s FY2012/13 Auditor Reports raised serious questions about the reliability and accuracy of the TC’s financial and accounting systems. As part of the Disclaimer of Opinion issued by FKT, several audit observations were raised relating to AHTC’s actions in 2012 and 2013, well after the handover in 2011.

   2. KPMG found in 2016 that AHTC’s control failures were pervasive, cutting across the key areas of governance, financial control, financial reporting, procurement and records managements over the course of five years, which shows that they persisted for a significant time. KPMG also assessed that the root causes of AHTC’s lapses were related to the TC’s governance framework and policy management, accounting practices, and accounting system used to record and account for the TC’s transactions, as well as the TC’s Finance Department’s capability and management personnel retention. The identified lapses and root causes show that several lapses were inherent to the TC rather than due to AIM’s termination of the TCMS or handover issues in 2011.

   3. Mr Yee’s assertion that AHTC’s reporting failures were due to AIM’s termination of the TCMS is groundless. In December 2014, AHTC blamed its failure to report its S&CC arrears to MND on not being able to use AIM’s TCMS. This ignores the fact that AHTC had submitted its monthly arrears reports for 19 months from October 2011 to April 2013 without using AIM’s TCMS. Furthermore, Hougang TC was able to submit its S&CC arrears reports to MND for years since 2008 without using AIM’s TCMS.

   4. In fact, Mr Yee’s claim that AIM’s TCMS was terminated on insufficient notice is false. The full circumstances and chronology of events are set out in MND’s 2013 Town Council Review Report which was debated in Parliament in May 2013. In June and August 2011, AHTC had requested to extend its use of AIM’s TCMS by one month (1 to 31 August 2011) and by nine days (1 to 9 September 2011) respectively. On both occasions, AIM had agreed to the extensions. Given that both requests for extension were acceded to and AHTC did not request for any further extension, there is no basis for alleging that the TCMS was terminated on insufficient notice.

#2 Falsehood: MND’s decision to withhold grants from AHTC, to call in external auditors and to call for an IP were politically motivated and not based on legitimate concerns.

#3 Falsehood: MND withheld grants from AHTC in order to put pressure on AHTC to appoint an IP.

Fact: MND’s actions against the TC were necessary to safeguard public funds.

3. MND acted because of the many audit concerns raised by AHTC’s own auditors and AGO as explained above.

4. MND was fulfilling its statutory responsibility under the TCA to ensure that TCs have adequate governance processes in place to safeguard public funds that are entrusted to them and to channel these funds to the purpose for which they are given.

5. Given the questions raised regarding AHTC’s financial governance processes during the various audits, it would have been irresponsible for MND to have disbursed the S&CC Operating Grants to AHTC without any safeguards. As such, MND offered on two occasions in October 2014 and August 2015 to disburse the grants to AHTC, with reasonable conditions such as (i) AHTC to declare that all earlier submitted statements were true; (ii) AHTC to put in place safeguards for the proper accountability of the disbursed funds; and (iii) AHTC to provide its latest bank account position. However, AHTC did not take up MND’s offer on both occasions.

6. The withheld grants were eventually disbursed to AHTC in April 2016, after AHTC had appointed KPMG as its IA and accepted MND’s conditions set in relation to the grants[5]. This was because as AHTC’s appointed IA, KPMG would help AHTC identify its non-compliances with the TCA, advise the TC on appropriate remedial steps, and establish whether any past payments made by the TC were improper and ought to be recovered.

Fact: The formation of the IP was not a pre-condition by MND for the disbursement of the withheld S&CC operating grants. Such funds were disbursed before the IP was even formed.

7. The formation of the IP was not a pre-condition by MND for the disbursement of the withheld S&CC operating grants. This is evident from the fact that the withheld grants were disbursed in April 2016, nearly a year before the formation of the IP.

8. KPMG’s Past Payments Review Report, submitted to AHTC and HDB on 31 October 2016, identified large sums of improper payments from TC funds. Therefore, HDB^[6] wrote to AHTC in November 2016, to request that the TC appoint a suitable third party to follow through to recover the improper past payments identified by KPMG.

9. After studying the KPMG Past Payments Review Report, AHTC decided to appoint an IP to review the findings made by KPMG and take such actions as deemed appropriate to safeguard AHTC and its residents’  interests. The IP was appointed by AHTC on 17 February 2017.

10. The appointment of an independent third party was necessary to avoid any potential conflict of interest. KPMG had found serious legal and regulatory breaches, large sums of improper payments made from TC funds, and the possibility of criminal conduct. KPMG also found that AHTC might potentially look to the Town Councillors for the recovery of losses arising from any breaches of their fiduciary duties. As the Town Councillors make decisions for AHTC, the appointment of an independent third party to represent the interests of AHTC was necessary in this case to avoid any potential conflict of interest.

#4 Falsehood: The IP members were decided by MND, and were not independent.

Fact: The IP Chairman was appointed by AHTC, and he in turn appointed the other members of the IP.

11. MND did not decide on any of the IP members.

12. The IP is an agent of AHTC pursuant to section 46(2) of the TCA.

13.  It was AHTC that appointed the IP Chairman in 2017 and allowed him to make the decision on the identity of the other two IP members as he deemed appropriate, or to pick one member from a shortlist by AHTC and the other from a shortlist by HDB. The IP Chairman only made his selection after confirming with AHTC that it had no objection to him making his selection from HDB’s shortlist. It is unclear whether AHTC itself provided any shortlist to the IP Chairman.

14. Per the IP's Terms of Reference, the IP did not take any direction or instruction from HDB, MND or any other person. The IP was independent and impartial, and as an agent for AHTC, was supposed to act in the best interests of AHTC.

Correction Notice

15. Mr Yee and The Online Citizen will be required to carry a correction notice on their Facebook posts, and YouTube video and article respectively, which states that the posts, video and article contain false statements of fact and provides a link to the Government’s clarification. This will allow readers to read both versions and draw their own conclusions.

^[1] AIM’s TCMS was an integrated system that TCs used to manage their resident and property data, and essential services such as S&CC collection, contractor payments, facility bookings, etc. TCs also used the platform to generate data used in their annual financial statements. 

^[2] Following the Punggol East by-election in 2013, AHTC was known as “Aljunied-Hougang-Punggol East Town Council” or AHPETC, until after the General Election in 2015, where it was reconstituted and changed its name to AHTC on 1 Oct 2015. For purposes of this article, we will refer to the Town Council as AHTC for simplicity.

^[3] This refers to the directions given by the Court of Appeal on 27 November 2015, which included the order that then-AHPETC must appoint Independent Accountants. See paragraph 1(d) for details. Following the takeover of Punggol East SMC from AHTC, PRPTC took over the obligation to comply with these directions.

^[4] Pursuant to the Court Order, AHTC appointed KPMG as the IA, to assist in identifying outstanding non-compliances with the TCA, advise the TC on appropriate remedial steps to be taken, and establish whether any past payments made by AHTC were improper and ought to be recovered.

^[5] The conditions included AHTC setting up segregated bank accounts to receive the grants, and getting the IAs to co-authorise and co-sign large payments out of these accounts.

^[6] In its Judgment on 27 May 2015, the High Court ruled that HDB (and not MND) was the proper party to seek a court order to compel AHTC to comply with its obligations under the Act. HDB then filed an application to be joined as a party to the proceedings, which was allowed by the Court of Appeal in its Judgment on 27 November 2015.