MND should stop misrepresenting AHPETC’s position

By Carlton Tan

Late yesterday, March 14, the Ministry of National Development (MND) accused Sylvia Lim of politicising the ongoing dispute between MND and the opposition-held Aljunied-Hougang-Punggol East Town Council (AHPETC). Ms Lim is the chairman of AHPETC and of the Workers’ Party (WP).

MND called AHPETC’s latest press release “another example of why MND had to go to Court to seek appointment of Independent Accountants.”

“This is the only way to depoliticise the issue,” it added.

MND’s statement was made in response to Ms Lim’s press release, which was in turn made to rebut prior allegations made by MND in the media.

Now, MND wants AHPETC to deal directly with the Courts and not “engage in endless argy-bargy”.

The main issue in this dispute concerns the release of the Service and Conservancy Charge (S&CC) Operating Grants. Without the release of two years’ worth of Government grants, AHPETC will run out of money in June. When this happens, services to residents will be disrupted.

Despite this, both MND and AHPETC remain stuck on the question of whose fault this is (or will be).

Although the case is now before the Courts, both MND and AHPETC have sought to explain their decisions in the media.

Who’s playing the blame game?

It all started when MND called AHPETC “technically insolvent” on May 5. MND pointed out that AHPETC had failed to make two payments to its sinking fund in 2014 Q3 and Q4. MND’s reasoning: since these are mandatory payments, and since AHPETC does not have the funds to make these transfers, AHPETC is “technically insolvent”.

In response to this, a reader pointed out on The Online Citizen (TOC) that this was not entirely AHPETC’s fault because the Government had withheld 2 years’ worth of grants worth $14 million.

“The WP-run town council would not have become insolvent if not for the PAP withdrawing 2 years’ worth of government grants. This is a problem created by the PAP, so it is pointless to condemn the WP which is even now trying to think of ways to solve the problem and serve their residents rather than complain about the injustice inflicted upon them,” he said.

In an effort to shift the blame back to AHPETC, MND claimed that Ms Lim had told Parliament she did not need the grants and had said the same thing during a pre-trial hearing in March.

In response, Ms Lim released a statement late yesterday in an attempt to rebut these allegations. “I wish to state categorically here that there has not been any statement by me nor anyone on AHPETC’s behalf that AHPETC does not require the operating grant,” she said.

Soon after Ms Lim’s statement was released, MND responded with its own, saying: “Her latest statement still doesn’t explain clearly why AHPETC did not disclose to the Court as late as Mar 27, 2015 that it needed these grants. Indeed, it had insisted it did not.”

If you need money, why didn’t you just say so?

When two parties make contradictory claims, only one can be right. AHPETC claims that it has always told MND that it needed the grants. MND claims that AHPETC actually “insisted” that it did not need the grants.

Quite obviously, one of them is either lying or profoundly confused, and the other has essentially been unfairly called a liar in this banal dispute.

But before we look at the facts, we need to first recognise the absurdity of this dispute.

Why would anyone say no to a Government grant, much less one that involves $14 million? And why would anyone insist on not needing such a grant? Obviously AHPETC needs the money. It would be utterly idiotic of it to say no to the grants, only to turn around and blame MND for its plight.

At the same time, why is MND so eager to make it seem as if the grants would have been disbursed had AHPETC simply asked for it? This is utterly at odds with its own claim that it can’t trust AHPETC with the money without imposing extensive safeguards. It would be utterly idiotic of MND to say the problem is that AHPETC didn’t ask, only to turn around and blame AHPETC for not asking nicely enough when it does.

To avoid this absurdity, all we need to do is make a crucial distinction between long-term and short-term need.

AHPETC has always needed the grants in the sense that it cannot rely solely on S&CC fees, collected from residents and businesses. All town councils need the grants too, in this sense, since they do not want to impose a heavy tax burden on their constituents. This is a long-term need.

But AHPETC does not need the grants at the present point in time to operate because it still has enough funds to do so. All town councils are similar in this sense. This does not mean the MND should withhold grants from them. This merely represents a short-term calculus.

So in the long term, AHPETC needs the grants. In the short term, until June, it doesn’t need the grants. There is no contradiction.

However, when MND fails to make this distinction, we are forced towards absurd conclusions. Either AHPETC is being idiotic or MND is.

So who’s the liar?

When we consider the following facts, it is obvious that MND is either lying or it is profoundly confused when it claims that AHPETC had always “insisted” that it did not need the grants.

First, Ms Sylvia Lim wrote to MND in mid-June 2014 calling for the release of the grant but MND did not allow it. The reasons for MND’s decision are secondary at this point. What matters is the fact that Ms Lim did tell MND that AHPETC needed the grants. MND’s subsequent claim that AHPETC “insisted it did not [need the grants]” is thus patently false.

In fact, MND recognises this. In its timeline of the events, MND quotes Ms Lim as saying: “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.”

There’s nothing in this that says, “We don’t need the grants”.

Second, AHPETC has not “insisted” that it does not need the grants. It has merely said it does not need the grants now if it means having to agree to MND’s exceptional conditions, which are only being imposed on AHPETC and not on other Town Councils. Not needing the grants yet is not equivalent to not needing the grants ever. If you think this is just semantics, perhaps you’re right; but this is what happens in disputes involving absurd claims.

In fact, MND makes this distinction between short-term and long-term need in its timeline. It says: “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. [emphasis mine]”

Clearly, MND is either lying or it is profoundly confused.

What about the half-grant?

So what about the half-grant? Doesn’t AHPETC’s rejection of it indicate that they don’t need it? Not necessarily.

AHPETC rejected the half-grant because it wasn’t worth the strings attached to it at that point in time, and because they had expected MND to release the grant at the conclusion of the AGO audit. So the rejection of the half-grant represents a short-term calculus. It means AHPETC didn’t need the money urgently. AHPETC wasn’t saying that it would never need the grant. (As an analogy, a kid’s refusal to take candy from a stranger doesn’t mean she doesn’t want or need candy, it simply means she needs to avoid getting kidnapped more.)

Are the conditions reasonable?

Is AHPETC therefore no longer responsible for its own plight since it is MND that refuses to disburse the grants even though AHPETC has always, and is now, asking for it? Not necessarily too.

MND is not withholding the grants unconditionally. It is willing to give it out if AHPETC agrees to its conditions. The problem, however, is that AHPETC finds those conditions unreasonable. Thus, AHPETC tried to negotiate those conditions with MND first rather than simply give in to its demands.

AHPETC is only to blame for its plight insofar as the demands are actually reasonable and MND is doing all it needs to do to safeguard taxpayer’s monies and nothing more. If the demands are not, and MND is imposing unnecessary conditions, it is MND that is to blame.

So what are the conditions, why is AHPETC unwilling to agree to them, and is AHPETC being unreasonable?

First, MND wants to appoint independent accountants from the major accounting firm PricewaterhouseCoopers (PwC). These accountants will oversee the use of government grants which will be put in segregated accounts. AHPETC must then get the approval of these accountants before it can make any payment that exceeds $20,000.

This means that the accountants now have the power to say no to decisions, like building a playground, so long as they involve expenditures above $20,000. It’s not very clear how these accountants will make these decisions. Obviously, they must act professionally since the reputation of their firm is at stake. However, the line between a financial and a political decision is not exactly straightforward. How does one avoid turning Aljunied GRC into a technocracy where the bean counters call the shots?

For this reason, the independence of the bean counters is extremely important. AHPETC isn’t willing to go so far as to say that the accountants from PwC will be biased or unprofessional, but they are saying that there is that possibility because they were the ones who helped the Auditor-General’s Office with the unfavourable audit report.

There were also disagreements between AHPETC and PwC during the course of the audit. And AHPETC is concerned that even the mere appearance of bias could hurt the public’s faith in AHPETC. Ironically, MND is insisting on nominating the accountants even though it wants to depoliticise the issue by leaving the important decisions up to the Courts. It is arguably unnecessary for the accountants to be from PwC. So long as they are qualified, there should not be a problem.

Second, MND wants to allow the accountants to look into AHPETC’s accounts and go after people who owe AHPETC money. MND assures AHPETC that these accountants won’t interfere with the ongoing audit by other auditing firms which AHPETC has hired.

However, Ms Lim believes that because these accountants will be making inquiries as well, it will make everyone even busier. Now they “have to handle a few different sets of auditors at the same time.” “It will derail our work and we may not be able to file our accounts until the next elections,” she says.

Ms Lim also believes that this amounts to an “oppressive fishing expedition” since they can now inquire into past transactions. AHPETC’s position in the court case is that there is no legal basis for this.

Of the two conditions, the latter seems less necessary, though Ms Lim’s claims sound exaggerated too. While it is arguably important for AHPETC to recover money from those who owe it, this is not necessary for MND to safeguard Government grants that have yet to be disbursed. Arguably, MND should only impose conditions that are necessary to ensure taxpayers monies. It has no right to take the opportunity to impose additional conditions, no matter how noble the intention. Regardless, this is now a question for the Courts to decide.

Sylvia Lim, speaking in Parliament on the AGO audit report.
Sylvia Lim, chairman of AHPETC, speaking in Parliament on the AGO audit report.

Who’s politicising the issue?

It would be naïve to think that this issue can be depoliticised. The parties involved are by their very nature, political parties.

Both the MND (representing the ruling People’s Action Party) and AHPETC (representing the WP) have a desire to work in the best interests of the electorate (or at least they ought to). Whether this is merely to secure votes or this stems from an altruistic desire to serve does not matter. The nature of democratic politics, at least ideally, is such that both goals are complementary, not contradictory. Political parties ought to secure votes by serving, and they can only serve once they have secured enough votes.

In a flawed democracy, however, politics often turns into mudslinging—where there is an unhealthy, excessive, focus on the flaws of the opponent rather than on one’s own merits. It is a race to the bottom.

Unfortunately, this is what MND’s latest statement consists of. It is almost entirely filled with reiterations of AHPETC’s shortcomings and it attempts to lay the blame for AHPETC’s “insolvency” on AHPETC.

That sinking feeling

On the sinking fund issue, MND says:

In the latest press release, Ms Sylvia Lim gives the impression that AHPETC is not making transfers to the Sinking Fund and contravening the law, because MND has withheld the grants. The fact is AHPETC also did not make mandatory transfers to the Sinking Fund in FY11/12 and FY12/13, while receiving grants from MND.

First, MND misstates the case. Although they were late, AHPETC did make the transfers.

Second, there is no logical connection between the first and second statement. AHPETC’s failure to make the transfers on time in previous years was the result of a misunderstanding; its inability now to make the transfers on time is because it has no money.

Ms Lim explains in Parliament that AHPETC “thought that it was acceptable to keep the monies in the Operating Fund, pay Sinking Fund expenses out of there and then net the thing off.” Since then, AHPETC has realised that this is wrong and has made all the necessary transfers up to FY2014 Q2. However, it cannot continue to do so for Q3 and Q4. This is not because it still misunderstands the official procedures for sinking funds; now, it is because AHPETC simply doesn’t have the money to do so.

In other words, Ms Lim is not wrong to say that AHPETC can’t put the money into the piggy bank because MND doesn’t want to give it the money. Of course, AHPETC’s plight is not solely attributable to MND’s withholding of the grants; and the withholding of the grants is, arguably, not in itself entirely MND’s fault either.

MND’s simplistic view of causality leads it to believe that only AHPETC or itself is at fault—they can’t both share some responsibility for the situation. But this is not zero-sum game. It would be if it were only about winning votes, but resolving AHPETC’s problems is more than just a game; it concerns the well-being of residents of Aljunied GRC.

If MND wants to “depoliticise” the issue, the first thing it should do is to stop misrepresenting AHPETC and taking such an uncharitable view. For most Aljunied residents, little about the AHPETC saga makes sense. The bottom line for them has, and always will be, whether their estate is well managed and kept clean. They take an interest in the AHPETC saga only insofar as it makes sense to them. Few people actually understand this petty dispute over whose fault it is for rejecting the grant, and not because of the technicality involved; it is because it is an absurd dispute that makes little sense.

MND is asking all the wrong questions. The question it should be asking is whether or not its conditions are necessary, reasonable and beneficial. For the reasons cited above, I do not think it has a strong case for imposing the conditions that it has. However, I would much rather discuss this than the question of whodunit? This is the only way to end the argy-bargy.

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The above article was first published on Asian Correspondent.