http://theonlinecitizen.com/2008/11/toc-editorial-our-money-our-right-to-know/

TOC Editorial: Our money, our right to know

Thursday, 20 November 2008, 1:03 am 129 views

Choo Zheng Xi / Editor-in-Chief

Where does the buck stop?

Minister of State for National Development Ms Grace Fu stated in Parliament that the original rationale of the Town Council (TC) scheme was to 'devolve' responsibilities such as financial accountability to individual MPs.

"Devolution" is a term used to describe giving local government more autonomy. It is often used to describe the degree of self-government the United Kingdom permits Scotland, Northern Island and Wales.

In a country as small as Singapore's, has "devolution" become a euphemism for passing the buck of safeguarding $1bn worth of Singaporean money to TC managers?

A government that brands the country "Singapore Inc" can afford to take a page from corporate best practice. Sadly, the reality is that the level of TC probity is appalling.

In a company, the finance committee of the board of directors will seek out professional advice before making an investment. Unless authority is granted to make the investment, it has to report back to the full board for approval. The company's shareholders are also allowed to grill the board on the state of these investments in an annual general meeting (AGM).

Dr Teo Ho Pin, coordinating chairman for the PAP TCs, told Today newspaper that the TCs cannot reveal their investment strategy. We cannot imagine the chairman of a board of directors saying that at an AGM

The yardstick of transparency for TC funds is higher, especially because public funds are involved. Unfortunately, when it comes to municipal funds, the PAP has decided to take a laissez-faire approach to financial management.

In a global financial crisis whose roots can be found in a gluttonous appetite for financial market deregulation, why is the PAP taking its hands off the TC steering wheel?

Where is our money?

While Singaporeans know that TCs are allowed to invest up to 35% of the $1bn in sinking funds they hold, we have absolutely no idea how this money is being used.

If not for a Parliamentary question by Nominated Member of Parliament Ms Eunice Olsen, Singaporeans would still be in the dark about their TC's exposure to structured products.

A pressing question remains unanswered: where is the rest of our money invested, and how is it doing?

Published TC audits reveal next to nothing about where these substantial amounts are being invested. These documents are general audits running into an uninformative 3-5 pages. The 2004-2005 Sembawang TC, which managed $237 million sinking fund as of 2006, has a published audit that is 5 pages long, with no details as to where that money is being invested.

Why the hoarding?

The common refrain in this Parliamentary sitting was that hindsight is 20/20: no one could have foreseen the scale of the economic crisis.

However, this doesn't answer a very important question: why do TCs need to sit on so much money in the first place?

While budget surpluses are returned to Singaporeans in the form of tax rebates or Singapore shares, and listed companies pay out dividends, it is not unreasonable that surplus money from our TC's operational costs should go back to residents.

There are many ways to return the value of surplus TC funds. It could be in the form of a Town Council public assistance grant, to help the neediest in the constituencies who might not qualify for government public assistance. It could come in the form of Service and Conservancy rebates.

However, exactly the opposite is being done. In an article by Mr Leong Sze Hian last year, TOC asked why TCs need to sit on almost $1bn in sinking funds. While a freeze on S & C charges was announced for 2008, what the government did not highlight was how these charges have been increasing every year prior to this even as their funds have ballooned.

Full and frank disclosure

For now, public anger is at a high watermark. The best way to bring an end to this sorry episode quickly is full and frank disclosure. The TCs need to release full details of their investments: information should no longer be extracted by Members of Parliament like a dentist extracting teeth.

There is no rational basis for Dr Teo's refusal to tell Singaporeans where their money is going. We have a right to know.

And to the elected and nominated Members of Parliament, particularly Ms Eunice Olsen, who have helped to pierce the veil of secrecy, the people of Singapore owe you a debt of gratitude in bringing these unsavory truths to light.

Comments

3) alphaville on November 20th, 2008 5.15 am

Residents of Holland - Bukit Timah GRC and Bukit Panjang SMC, please forward the follow statement to the town council management.

Dr Teo please resign.

1) Holland - Bukit Panjang Town Council, hereon referred to as the town council of my constituency, recently disclosed a loss $8 million due to an investment partial to its sinking fund in structured products that financial experts have deemed to be of inordinate risk for the return in premiums.

2) I have judge that the elected member of parliament of my constituency as well qualified individual to have understood the risk involved in these products. And this qualification of character does not include me but also Minister Mentor Lee Kuan Yew, who has stated repeatedly, the integrity and caliber of the professionals hand picked to administer our government and this country.

3) Hence I do not doubt in any manner or way, such product has been mis-sold to this town council without full acknowledgment of its nature, as contrasted with the case of many private individual, whom has claims on such malpractise.

4) Hence I would like to rise my concern as a resident of this constituency about the mismanagement of the sinking fund that had been the accumulation of the Services and Conservancy Charges (S&CC) contribution for the maintenance of common property in this town council, amongst its source.

5) I am not in any manner or way, suggesting that any members of this town council committee are disreputable and held interest in the transaction of these investments. Namely Lehman Brother's Minibond Notes, DBS High Notes 5 and Merrill Lynch's Jubilee Series 3 Notes.

6) As evident to the risk of the invested structured products as referenced in 5), none of them is principal guaranteed, in any case, town council should not be allowed to invest the sinking fund in any vehicle that would likely incur a complete loss of principal, this is unfit for the purpose of preserving fund.

7) I am seeking the resignation of the Chairman, Dr Teo Ho Pin, in his leadership of this town council, demonstrated his incompetence in handling of the affairs of this town council, which has lead to significant monetary loss, counter to provision under the Town Councils Act, stating its constitution, that moneys not discharged to meet expenses and liabilities this town council, be used for the improvements to and the management and maintenance of residential property and of commercial property.

That an offence is committed with the consent and attributable to the negligence on the part of its chairman or secretary, or any person who was purporting to act in any such capacity, with respect to the loss of moneys contravening to the disbursement of town council fund.

9) I am seeking the full disclosure of the proceedings whereof a minute has been kept and authenticated in accordance with its standing orders, precipitating to the loss of public fund on this occasion, as part of an investigation on the failure of due diligence by the management of this town council.

10) I am seeking assurance of prudence in oversight be positioned, as a measure that such systematic failure of management should never manifest in future.