A Reply to Mr Low: The Role of Town Councils as a Governance Laboratory

This article has been sent to us by Dennis Theseira.

 

In the face of fire of the problems faced by the Aljunied Town Council, Mr Low Thia Khiang says that town councils should be “depoliticised”.

This point follows his argument that the opposition party was not able to get the expertise it needed to run the council “for political, not professional reasons”. Among other things, it had to scramble to set up its IT system, and had problems hiring experienced personal. The MPs meanwhile had to deal with the minutae of municipal issues.

Clearly, his idea of “depolitisation” is to distance himself from any operational issues and let the government take it over. His role would then be the same one as it is in politics – to “check” the PAP government’s work in this respect.

AHPETC1

It is not at all clear that this is depoliticisation. Quite the reverse.

The town council is a peculiar animal. In legal structure, it is neither a private company nor a public statutory board. In terms of governance oversight, it faces far less onerous requirements than a charity. It has wide discretion and there is room for considerable political participation. This is a structure that demands both political and technical capacities.

This reflects the fact that town councils were constructed in 1989 as a test bed for MPs who aspire to run the government.

In the words of Mr Goh Chok Tong, moving the bill in 1989 as Deputy Prime Minister, “If a new party finds itself unexpectedly in government, it would be like an aspiring pilot taking over an SIA jumbo jet in mid-air before he has flown solo in a Cessna. This cannot be in the interest of passengers in the jumbo… TCs are the Cessnas of our political system”.

He elaborated in 2009, “Town Councils would give us that flexibility to do different things for our housing estates. This means that over the whole of Singapore, each Town Council would have its own way of doing things. So in a way, the MPs became the elected representatives of this municipal aspect of government.”

Goh Chok Tong

Town councils require both technical and political capacity. The running of a town council is not meant to be an easy task. It is meant to be a stress-test of governance capacity so that residents can see their elected MPs in action. The Auditor-General report on the AHPETC then must be seen in this light.

How has the WP fared in its first test of running a large town? The AGO report highlighted two main shortcomings.

First, murkiness in record-keeping. The AGO finds that there is a “lack of full and proper disclosure for AHPETC’s related party transactions”.

RPTs may have a whiff of impropriety but in themselves are not illegal. The key is whether these transactions are open, transparent, and clearly documented; whether the people who had oversight of processes – in this instance, the elected MPs –were fully and clearly informed.

It is clear from the AGO report neither processes nor oversight was in place. Basic processes such as keeping of records, checks and balances, and reporting lines were grievously absent. The AGO audit itself took a year – this is an audit of a relatively small amount of money – some $20 million – which should have taken no more than three months.

The AGO said that the town council has “despite repeated requests, failed to provide us with critical documents relating to these transactions”. The town council was at one time thought to have in arrears of nearly 30% – after nearly a year (from April 2014 to Jan 2015), it clarified that it was only 5.6%. The mistake was due to “human error”. How could this error have taken a year to uncover?

This delay is most likely caused mainly by the lack of information and proper documentation, a problem was faced by its own auditors Foo Kon Tan Grant Thornton in 2011 and 2012. FKT issued a disclaimer of opinion for both years, for four and for 13 lapses.

But the Worker’s Party is not without experience in this area. As it reminded voters during the 2011 General Elections, Mr Low Thia Khiang has two decades of experience running his own town council, Chen Show Mao is a corporate lawyer with billion-dollar deals under his belt, and Sylvia Lim and Pritam Singh are both lawyers.

low thia khiang

These are basic operational and accounting issues, which would have not been beyond their individual capacities. Why did they not step forward? Even now, they are keeping silent.

Second, and relatedly, the poor record keeping can be traced to the town council’s capricious financial philosophy. The AHPETC takes in $3 million in S and C fees each month. It has $60 million in its sinking funds. It therefore, has a significant role as a custodian of public funds.

Yet the AGO detailed how, through a series of related party transactions, the town council played a high-risk game with public funds. The AGO reported “multiple lapses in the payment process to related parties.”

Its managing agent FMSS was owned by a husband and wife team, who also held senior positions in the town council. Alternately wearing their town council and managing agent hats, they issued both invoices and payments to themselves. As managing agents, they reaped profits from the transactions, as town council employees, they received salaries. Both husband and wife, Mr and Mrs Danny Loh, are long time WP supporters. Altogether some $6 million over 84 invoices were carelessly treated in this way.

Taken together, we see that at the very least, that the WP is not ready to run a town of some 150,000 people; its harshest critics may say that trust of the people of Aljunied has been misplaced.

Perhaps we can find a middle ground. The WP town councillors has been locked in political battle for so many years that its operational and management capacity has been under-exercised.

It should relook the balance between the political and the technical; it should invest time and energy, not just in political campaigning, but in the technical nuts and bolts of service delivery.

Because, even though town councils are deliberately political entities, they are primarily the engines of people’s welfare on the ground. MPs given such wide discretionary powers must employ them with a clear fiduciary duty in mind. The town councillors have clearly failed in this respect.

As AGO observed, “until such weaknesses are addressed, there can be no assurance that AHPETC’s accounts are accurate and reliable, or that public funds are properly safeguarded and managed”.

Mr Low calls for a depolitisation of town councils. But perhaps the politics lie only in his own mind – the operational problems of the Aljunied town council arose from a deficit of technical, not political skills.

 

 

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