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    Jul 25, 2016

    Town Councils Act set to be amended by year-end

    CHANGES to the law on town councils to ensure public funds are managed properly are being finalised and should be ready by year-end, National Development Minister Lawrence Wong said yesterday.

    The amendments to the Town Councils Act will, among other things, ensure that town councils have a "proper governance structure", he told reporters after a ministerial visit to Kebun Baru ward in Nee Soon GRC.

    Mr Wong was responding to queries on what his ministry was doing after a report on Workers' Party-run Aljunied-Hougang Town Council (AHTC) by independent auditor KPMG last week flagged "pervasive" control failures in AHTC's accounts and processes.

    "All the more, the findings by the auditor give us the impetus to make sure that the Town Councils Act will be amended so that we can have a proper governance structure over the town councils," Mr Wong said.

    "The legislative changes are being studied and are in the process of being finalised, and we hope to make the legislative changes by the end of the year."

    The changes to the law have been in the works for some time.

    In February 2015, then-National Development Minister Khaw Boon Wan said the changes will address weaknesses in the current regulatory framework.

    Addressing Parliament during a debate on the Auditor-General's special report that month, which flagged major problems in the WP town council's finances, Mr Khaw noted that there was a need to ensure that proper systems, accountability and governance are in place to safeguard the interests of residents.

    The amended Act, when passed by Parliament, will cover three key areas, he said. It will make clear that town councils must comply with the law and agencies enforcing it.

    Governance and accountability will also be strengthened so town councils plan and use their finances in a sustainable way. The Ministry will also have stronger regulatory oversight with powers to get information and do investigations.

    Currently, the Ministry of National Development has no power to compel town councils to give information and there are no penalties if a town council refuses to do so.

    KPMG's latest report is part of its ongoing scrutiny of AHTC's governance and finances in the wake of the Auditor-General's report.

    KPMG highlighted lapses over the past five years spanning governance, financial control, procurement and records, among others, and said AHTC management had failed to set the foundation for discipline for its internal workings.

    These include irregular shortcuts used by AHTC to process $60 million of payments over five years.

    It also used "dummy" vendor codes for more than $270,000 of payments without naming suppliers.

    These practices, KPMG noted, could have concealed duplicate or fraudulent payment.

    AHTC chairman Pritam Singh had said that KPMG's review of AHTC's past payments is still ongoing, and a report is expected by end-August.

    "AHTC will publish the past payments report," he added, noting that the town council will take any necessary action after that.

    Yesterday, Mr Wong said the auditor's findings were "a very serious matter" and he awaited AHTC's response.

    Some of the lapses "pertain to the culture of management which has to change", he said.