How bad are Workers' Party leaders?

main story | audit findings explorer

#ahtc-trial. Let's compare the charges brought against WP leaders vs. audit cases reported by the Auditor-General's Office (AGO) from 2012 to 2017.

Impatient? Jump straight to the findings or the audit findings explorer.

The landmark Aljunied-Hougang Town Council (AHTC) trial centers around the alleged mismanagement of public monies by Workers' Party (WP) leaders. Since so much attention, effort and money that has gone into this matter since 2012, I couldn't help but wonder — what was the scale of WP's alleged mismanagement relative to AGO's audit findings for all government agencies?

As a Singaporean, I'd like to have an objective assessment of how much of our taxpayer's money was mismanaged, regardless of who mismanaged it.

Since AGO audit issues are published yearly, I took a data-driven approach and measured the size and scale of Worker's Party's audit lapses vis-a-vis all other audit cases listed by AGO from 2012 to 2017. (You can read about my data-gathering and data-processing approach in detail here)

This articles hopes to summarize 5 years' worth of AGO reports (and perhaps several weeks' worth of time of reading them) into a 5-minute article.

Note: All descriptions of non-WP audit findings are extracted word-for-word from AGO's annual audit reports. You can verify that by checking AGO's original reports (I've provided the report year and paragraph numbers for you). For WP-related audit findings, they are extracted from AHTC's statement of claim and from ChannelNewsAsia's coverage of the issue.

Quick recap: the gist of the AHTC trial

The accusations against WP leaders can be categorised as follows:

1. Procurement: Weak grounds for waiving competition. In FY2012-2013, FMSS was appointed without an invitation to tender. A total of $6.6 million was paid to FMSS in FY2012-13.

2. Procurement: Lapses in procurement process. LST Architects was engaged by AHTC for 10 projects, and was higher-priced than Design Metabolists in 7 of these projects without adequate justification. This caused AHTC to incur an additional aggregate amount of $2.8 million.

3. Lapses in related-party transactions WP leaders allegedly set up a flawed system of governance which facilitated improper payments made to FMSS. Of the $33.7 million, $6.6 million was paid to FMSS in FY2012-2013 (where no tender was called) and $27.1 million was paid in FY2013-2015 (where FMSS won the tender as the only vendor that bidded for the tender.)

In the next 2 sections, I do an apple-for-apple comparison of WP's lapses and AGO's audit findings for all government agencies in these 3 categories.

Findings

AGO audit cases on Procurement: Weak grounds for waiving competition

(Click on any bar to see details)

AGO audit cases on Procurement: Lapses in procurement process

(Note: One audit case in the procurement category (NRF, $283.4 mil) has been excluded from this bar chart as it makes all the other bars so small that it's hard to see. You can see it in the audit findings explorer.)

AGO audit cases on Related-party transactions

Observation #1: there are several audit cases of similar nature to that of WP's

In each of the 3 categories for which WP is being brought to court, there are between 6 to 20 government agencies who have also been called out by AGO for similar lapses in management of public monies.

You can click on the chart above to see the details of each audit case. For your convenience, I'll list some of the audit cases in each of the 3 aforementioned categories:

1. Procurement: Weak grounds for waiving competition

WP ($6.6 mil) . Appointing FMSS in 2011 without calling for tender.

. Appointing FMSS in 2011 without calling for tender. NPARKS ($20.8 mil) . AGO found another three consultancy services contracts that were awarded via waiver of competition without compelling reasons. NParks cited tight timeline as the main reason for waiving competition in the papers seeking approval. There was, however, no evidence to show that the tight timeline was caused by unforeseen and urgent events. (Source: AGO)

. AGO found another three consultancy services contracts that were awarded via waiver of competition without compelling reasons. NParks cited tight timeline as the main reason for waiving competition in the papers seeking approval. There was, however, no evidence to show that the tight timeline was caused by unforeseen and urgent events. (Source: AGO) NRF ($2.3 mil) . AGO found that a contract for project management services was awarded via waiver of competition to a vendor without reasonable grounds. [...] NRF had breached Government procurement principles of transparency and open and fair competition. (Source: AGO)

2. Procurement: Lapses in procurement process

WP ($2.8 mil) . Engaging LST Architects for 10 projects even though they were higher-priced than Design Metabolists in 7 of these projects without adequate justification.

. Engaging LST Architects for 10 projects even though they were higher-priced than Design Metabolists in 7 of these projects without adequate justification. HSA ($25.6 mil) . Five incumbent contractors were awarded contracts even though their tender proposals did not fully meet the tender requirements. There were also irregularities in the evaluation of the tenders. HSA did not uphold the Government procurement principles of transparency, open and fair competition and value for money for these five tenders. (Source: AGO)

. Five incumbent contractors were awarded contracts even though their tender proposals did not fully meet the tender requirements. There were also irregularities in the evaluation of the tenders. HSA did not uphold the Government procurement principles of transparency, open and fair competition and value for money for these five tenders. (Source: AGO) RP ($9.4 mil) . [T]ender evaluation was not carried out in a fair and objective manner. For example, the tender evaluation committee had justified that the recommended tenderer's prices were “fairly reasonable” although its price for the major cost component was three times that of the other shortlisted tenderer. No mention was made of the proposal submitted by the other shortlisted tenderer. [...] The contract was awarded to the recommended tenderer. (Source: AGO)

. [T]ender evaluation was not carried out in a fair and objective manner. For example, the tender evaluation committee had justified that the recommended tenderer's prices were “fairly reasonable” although its price for the major cost component was three times that of the other shortlisted tenderer. No mention was made of the proposal submitted by the other shortlisted tenderer. [...] The contract was awarded to the recommended tenderer. (Source: AGO) NPARKS ($2.37 mil) . NParks allowed a consultant to commence services before approval was obtained to call a limited tender for the consultancy services inviting only the consultant to bid. By doing so, NParks had prematurely communicated to the consultant that it had intended to award the contract to the consultant. (Source: AGO)

. NParks allowed a consultant to commence services before approval was obtained to call a limited tender for the consultancy services inviting only the consultant to bid. By doing so, NParks had prematurely communicated to the consultant that it had intended to award the contract to the consultant. (Source: AGO) (For more cases, click on the bars in the charts above, or check out the audit findings explorer.)

3. Lapses in Related-party transactions

TP ($40 mil) . AGO found lapses in Temasek Polytechnic (TP)'s evaluation of and approval for its investments in bonds. [...] AGO noted that for two of the five bonds (totalling $40 million), [...] TP's evaluation relied heavily on inputs sought from a person who had an interest in the company that issued the bonds. With these lapses, there was no assurance that the evaluation was robust. (Source: AGO)

. AGO found lapses in Temasek Polytechnic (TP)'s evaluation of and approval for its investments in bonds. [...] AGO noted that for two of the five bonds (totalling $40 million), [...] TP's evaluation relied heavily on inputs sought from a person that issued the bonds. With these lapses, there was no assurance that the evaluation was robust. (Source: AGO) NYP ($21.1 mil) . AGO found that NYP did not have a proper governance framework to manage transactions with its subsidiary, the Nanyang Polytechnic International Private Limited (NYPi). [...] NYP's practices reflect a disregard for financial controls and proper governance. [...] In addition, the provision of generous funding terms, excess funding and hidden subsidies lacked transparency , and also distorted NYPi's financial state of affairs, making it difficult for the Government to assess the true financial performance and viability of NYPi. [...] As at 31 March 2015, NYPi had received from NYP total funding amounting to $12.81 million [...] AGO’s checks revealed that NYP had either not charged NYPi rental or charged rental that was below market rate for using its premises. In addition, NYP did not impose secondment charges for the secondment of officers to NYPi for 7.7 years (August 2007 to March 2015), and only started imposing secondment charges from April 2015. NYP did not carry out the transactions at arm’s length and was effectively providing hidden subsidies to NYPi, which totalled $3.14 million as at 31 March 2015. Besides the improper manner of funding NYPi, AGO found that the funding (totalling $12.81 million) provided to NYPi was not computed in accordance with the basis approved by NYP’s BOG. For example, NYP had provided funding for part of NYPi’s revenue-generating activities, although the approved funding basis stated that such activities would not be funded. This resulted in excess funding totalling $5.24 million during the period August 2007 to March 2015. (Source: AGO)

Observation #2: Not all audit findings are born equal

WP's lapses has resulted in (i) further multi-year audits by PwC and KPMG, (ii) much (bad) public press and (iii) potential bankruptcy of its MPs.

In contrast, many of the non-WP-related audit findings did not have the same consequences. To give you a flavour of the government agencies' responses to the audit finding, let's see some agencies' follow-up responses as they were written in AGO's annual reports:

TP ($40 mil - Lapses in related-party transactions). TP informed AGO that it would improve its process and documentation. (Source: AGO)

TP informed AGO that it would improve its process and documentation. (Source: AGO) NYP ($21.1 mil - Lapses in related-party transactions). Following AGO’s audit, NYP indicated that it would inform its BOG of the excess funding and seek the BOG’s decision on the action to take. (Source: AGO)

Following AGO’s audit, NYP indicated that it would inform its BOG of the excess funding and seek the BOG’s decision on the action to take. (Source: AGO) NPARKS ($20.8 mil - Weak grounds for waiving competition). NParks acknowledged that the reasons cited for waiver of competition were not compelling and indicated that it should have called open tenders instead. (Source: AGO)

NParks acknowledged that the reasons cited for waiver of competition were not compelling and indicated that it should have called open tenders instead. (Source: AGO) RP ($9.4 mil - Lapses in procurement process). RP informed AGO that it has since revised its procurement processes to ensure compliance with Government procurement rules and documentation of all information pertinent to the evaluation of tender proposals. (Source: AGO)

Summary

As the AGO data shows, there were several similar lapses by government agencies (with some involving even larger amounts than the figures cited in the AHTC trial) that did not result in lawsuits and potential bankruptcy.

I'm not saying that these lapses by other government agencies excuse any lapses on WP's part. It certainly wouldn't. What I'm saying is that the following factual observations can be made from the data:

There are several audit cases that violate the principles and rules of public monies management, where a handful of cases involved larger sums than what WP's being charged for, and None of these audit findings led to the same outcome that WP is facing.

Conclusion

In the trial, WP leaders should account for and take responsibility for any actions that led to any mismanagement of public monies. But, why should other instances of mismanagement of public monies be treated any less seriously?

Why are the custodians of public monies not as concerned about other instances of lapses in public monies management? These are the same people who are investing years' of time and money (of AGO, Parliament, PwC, KPMG, and most recently the Courts, among others) to get to the bottom of WP's lapses.

If these two questions cannot be answered satisfactorily, it then follows to say that the pursuit against WP leaders on these audit issues is an unfair treatment towards opposition party leaders.

But don't take my word for it! Explore the data for yourself here and see what you think. It includes every single audit case in the category of lapses in procurement and related-party transactions found in AGO's annual reports from FY2012 - FY2017