Updated: 4th December 2008, 1800 hrs
To what degree greater transparency on town council sinking funds?
It's been debated in Parliament, editorialised in the media and explained at length by various ministers and MPs.
Yet the case of the town councils sinking funds investments is far from closed for those who're still writing forum letters and holding grassroots meetings to clarify matters.
The disquiet seems to stem from what's perceived as a lack of openness on the part of town councils and MPs.
But exactly how much openness is enough, and can enough be too much, Geraldine Soh finds out.
If not for the media, Aljunied GRC resident Nicholas Subas says he wouldn't have known about his town council's exposure to fallen bank Lehman Brothers, let alone the losses it had incurred.
Aljunied town council didn't fare too badly compared with the others.
But Mr Subas, who says he's no time to read the annual reports, would have preferred to hear the bad news first from his Residents committee zone chairman instead of the media.
"They've to be a bit more open in the sense they should've at least notified the key personnel saying they've made such a loss and how it's going to affect or not going to affect the residents."
Last Thursday, Mr Subas met 15 other members from Paya Lebar zone to discuss their concerns and forward questions to their MP.
"No doubt our Aljunied Town Council was the lowest loser but even then, the question is why should be we be investing in something which there's a heavy risk involved? It's a question mark for us as to will there be anything that'll be cut down in terms of upgrading works. We're very very uncertain about that."
Elsewhere, the public is also uncertain about how the town councils plan to recoup their losses and how actual investment portfolios look like.
People are still asking questions as they feel recent attempts by ministers and MPs to address their concerns haven't been adequate.
As more questions are raised, it could get arguably nitpicky but they expose a growing sense of frustration best summed up thus: why can't town councils just be more open about their finances?
Assuming 'openness' is the crux of the matter, two questions arise: what's the best way to be open, and to what degree the level of openness?
Dr Teo Ho Pin, Co-ordinating chairman of the 14 PAP Town Councils, points to financial statements and annual reports as the means to openness.
He says residents can access these documents on the town councils' website or offices to get financial information.
A quick check with the 14 town council websites shows however that only 12 have uploaded their annual reports online.
Of these, only 9 of them are updated to reflect the financial year 2007 - 2008.
Jalan Besar Town Council was one of the two that had no annual report online.
When contacted, the staff mistook the request as one relating to conservancy charges and said to call back when a more senior staff member was around.
Even with the latest annual report in hand, it's not easy making sense of them.
Are they the best way therefore to be open about things?
Jeremy Hoon is a Financial Services Partner with KPMG and he advises on accounting and financial reporting matters across various industries.
"When we say a set of financial statement is transparent, what it means is that a knowledgeable user of financial statements can read and understand the state of affairs and the financial performance and maybe the cash flows for a specified period. In terms of a town council, obviously the readers will be the normal HDB dwellers. It's unlikely that most of them will ever understand a normal set of financial statements."
In place of annual reports, town councils could draft a separate set of financial statements relevant to and comprehensible to the average HDB dweller, Mr Hoon said.
The set of Frequently Asked Questions or FAQs that at least 2 town councils - Tanjong Pagar and Pasir-Ris Punggol - have drafted in the wake of this sinking funds revelations, is a starting point.
Townhall meetings, dialogue sessions and newsletters are other ways.
The next question then, to what degree the level of openness?
Town councils' annual reports are prepared in accordance with the Financial Reporting Standards.
Mr Hoon explains what that entails:
"Singapore financial reporting standards only require information to be provided in total so the details of investments are not there, the investment objectives, restrictions."
In the 2007/2008 annual report for Sembawang Town Council for instance, only the asset classes of investments are listed, that is, bonds, fixed or structured deposits.
What may be of more interest to residents now is a breakdown of the investments.
"How the fund is managed , controlled and monitored. Give readers a full list of investments by the name of investments, the amount that's being invested in it, what currency it's invested in. Perhaps something similar to what unit trust provide to their members."
But Sembawang Town Council Vice Chairman and MP for Sembawang GRC Dr Lim Wee Kiak is not for the idea.
The council, incidentally, bucked the average 3 percent returns on its investments to earn 6 percent returns which Dr Lim credited to astute members in the council's Finance Committee.
"You just have to make sure the information is available. I also don't quite agree with printing the information and giving it to every household. In the first place, not everybody wants to read all this so it'll be a waste of resources. If residents need more details, they can refer to the town councils. Very seldom I see a fund manager report will go into the specifics as to which share and which bond then it'll be a very long list. What happens if the fund managers sell and buy at the same time, you can't be providing pages and pages then which month you buy what, which month you sell what. Even at the town council level we usually don't pursue such information."
KPMG's Mr Hoon says using unit trusts as a guide, financial statements could perhaps be prepared twice a year - end September and end March.
As to how extensive the statement should be, further guidelines may be needed, Mr Hoon feels.
Dr Lim agrees.
"Going forward, probably MND, Ministry of National Development will have to come up with some form of guidelines. It's very difficult for the town councils themselves to regulate to say these will be the guidelines."
The National Development Ministry when contacted, said it has no comments at this point, but that more details related to this could be forthcoming.
Dr Teo Ho Pin also declined comment.
Armed with more financial information, should residents then be given the chance to decide how they want the funds invested?
No, says Dr Lim.
"I don't want to confuse the running of the town council with a listed company, with shareholders like AGM. The main role of the town council is to run the town. If it's too preoccupied with investing money then something is wrong."
Yet, National Development Minister Mah Bow Tan recently said his ministry is exploring key performance indicators as a way to keep town councils on their toes.
Adapting corporate governance practices from the private sector may not be such a bad idea if it means greater openness.
Even the charity sector has done it, so why not town councils?
As Associate Professor Mak Yuen Teen, Co-director of the Corporate Governance and Financial Reporting Centre at NUS Business School argues,
the relatively less developed governance and transparency standards in the public sector has to do with the narrow conception of accountability as accountability towards shareholders.
For town councils, the shareholder is Parliament because people have elected the government.
Town councils therefore see little need to be more open with HDB residents.
It's only when they recognise residents at large as the key stakeholders in this debate that greater openness can come about.
For 938 LIVE, I'm Geraldine Soh.
No comments:
Post a Comment