Audits by AGO on People’s Association uncovers possible lapses and irregularities leading to police reports lodged

The Auditor-General Office (AGO) has released its report auditing report on government ministries and statutory boards for FY2020/21.

It was presented to the President on 2 Jul and tabled in Parliament yesterday (21 Jul).

One of the statutory boards audited again was People’s Association (PA), chaired by Prime Minister Lee Hsien Loong. A sum of $796 million was allocated to PA in FY2020.

The AGO has found serious lapses in PA during its recent audit.

AGO found “weaknesses in management of contract variations” for 2 development projects (value totaling $623.96 million) which it test-checked.

The lapses indicated inadequate oversight of the consultants by PA, criticised AGO.

“The high number of cases with no evidence of approval also pointed to poor documentary trails, which increased the risk of irregularities not being detected,” AGO said.

“The lack of independent sources to assess the cost reasonableness of star rate items and the failure to properly account for variation works also did not provide assurance that PA had obtained full value for the public funds spent.”

AGO did a sampling test and found that of the 465 contract variations it checked. More than half (252 or 54%) amounting to $13.62 million were found to have lapses:

  1. No evidence of approval for the 109 out of 465 contract variations, amounting to $8.06 million.
  2. Approvals for 142 out of 356 contract variations amounting to $5.44 million were obtained from the approving authority 1 month to 5.5 years after works had commenced or were already completed.
  3. No evidence that approval was sought for the increase in variation cost for six contract variations from the total approved amount of about $500 to $800K. The increase for each variation ranged from 21.6 per cent to 226.6 per cent.

AGO also found that assessments of cost reasonableness of star rate items totaling $1.26 million were not based on independent sources for 8 out of 14 contract variations it has test-checked. “The quotations obtained for these star rate items were all provided either by the contractor or the sub-contractor involved in the project,” noted AGO.

There was an estimated over-payment of $621,700, it added. AGO further found two instances where the contract was not adjusted to account for contract variation. These involved works that were not carried out in accordance with contractual provisions and the estimated over-payments amounted to $279,300.

Alleged irregularities found relating to payments

For one of its development projects, PA engaged contractors to carry out minor building works at the facility with contract value totaling $6.50 million. PA had also engaged a managing agent to assist it in managing the facility. For star rate items, three quotations were to be obtained to assess price reasonableness.

AGO test-checked 36 payments (totalling $1.27 million) made between 1 April 2018 and 31 March 2020 to two contractors and found possible irregularities in the supporting documents for 34 payments (or 94.4 per cent).

The 34 payments (totalling $1.17 million) with possible irregularities had each involved one or more star rate items (star rate items totalling $1.06 million, or 83.5 per cent of the total payment amount test-checked).

The possible irregularities include possible falsification of quotations, alteration of hardcopy payment supporting documents and creation and backdating of documents to give the false impression that proper processes had been followed.

Further, AGO obtained independent quotations for selected star rate items under eight payments and noted that PA might have been overcharged between 1.2 and 19.3 times the market rates for those items.

Possible lapses and irregularities in management of term contracts

AGO’s test checks of the same 36 payments (totalling $1.27 million) revealed other possible lapses and irregularities in 35 payments16 (totalling $1.26 million).

The possible lapses and irregularities include:
a. Splitting of purchase orders (POs);
b. Works carried out before issuance of POs;
c. Winning quotations approved by PA officers retrospectively;
d. Star rate items formed bulk of payment and possible inflation of the price of star rate items; and
e. Inappropriate use of contract rates and/or inflated quantities.

As AGO had concerns over the authenticity of the documents provided and observations made, AGO recommended that PA carry out an investigation.

PA informed AGO that it had since completed its investigation and lodged a police report,” AGO said. PA informed that it had also initiated “disciplinary proceedings” against the staff involved.

It’s not known what PA Chief BG (NS) Lim would do.

Serious lapses in past checks conducted by AGO on PA

This is not the first time AGO has found faults in PA’s internal financial processes.

In 2015, out of the 91 Community Club Management Committees (CCMCs) test checked by the AGO, 35 of them were found to have failed to obtain approvals from the relevant authorities for awarding 53 tenancy contracts worth a total of $17.78 million.

10 of the 35 CCMCs also did not obtain the relevant approvals for the direct award of 13 tenancy contracts worth a total of $3.67 million. These contracts were also given without competition, which can only be given under exceptional circumstances.

These are just part of the damning report on PA by AGO in 2015.

In 2018, 13 of 18 PA grassroots organizations checked by AGO were found to have recurring problems in award of tender contracts.

189 purchases amounting to $6.03 million made by PA’s 18 GROs were test-checked during this audit. Out of the 18 GROs, 13 (or 72%) were found not to have obtained proper approvals for award of contracts and variation for some 25 purchases totalling $619,900.

AGO also noted that failure to obtain proper approvals for award of contracts is a “recurring lapse”. A similar observation was raised in the Report of the Auditor-General for the financial year 2014/15.

These are just part of the similarly damning report by AGO in 2018.

In any case, PA does enjoy a close relationship with the People’s Action Party (PAP). At a public forum, the late Mr Lee Kuan Yew once commented on what some PRC officials had observed when they visited Singapore years ago.

He said, “They (PRCs) discover that the People’s Action Party (PAP) has only a small office in Bedok. But everywhere they go, they see the PAP – in the RCs (residents’ committees), CCCs (citizens’ consultative committees), and the CCs (community clubs).”

The CEO of PA is currently Lim Hock Yu. Lim retired as a Brigadier General from the SAF before joining PA as its Deputy Chief Executive. He was appointed to head PA last year.

“In his distinguished military career, Mr Lim has held various key appointments, including Commander 9th Singapore Division/Chief Infantry Officer, Commander of Army Training and Doctrine Command, and Chief of Staff (General Staff),” PA said.

PA is currently chaired by PM Lee who is also the Secretary General of PAP and seconded by PAP minister Edwin Tong. 8 out of its 14 board of management are from PAP.

For just US$7.50 a month, sign up as a subscriber on Patreon (and enjoy ads-free experience on our site) to support our mission to transform TOC into an alternative mainstream press in Singapore.
Notify of
Oldest Most Voted
Inline Feedbacks
View all comments

Trending posts

July 2021