SINGAPORE — The police are investigating “possible wrongdoings” related to the procurement of electronic resources by the National Library Board (NLB), following lapses uncovered by an annual audit of the public sector by the Auditor-General’s Office (AGO).

Details of the case were sketchy, amid the police investigation. Released today (July 15), the findings of the AGO audit for 2014/15 financial year of public agencies have also led to the voluntary resignation of the chairman of Admiralty Citizens’ Consultative Committee (CCC) over a conflict of interest in related party transactions.   

The chairman was involved in approving awards of two contracts amounting to S$32,000 to a company where he held a senior management position. For one of the awards, another CCC member - who was a director and shareholder of the company - was also involved in the approval process. Both the CCC chairman and the CCC member, who were unnamed in the AGO report, did not declare their interests in the transactions. The CCC chairman was also involved in approving seven of his own claims totalling S$114,767. The claims were subsequently verified by supporting documents. 

In a press statement, the People’s Association (PA), which oversees the CCCs, said it set up an investigation panel on July 1. Four days later, the CCC chairman voluntarily stepped down to “facilitate a full and impartial investigation”. The investigation was completed yesterday, and PA accepted the resignation today. 

National Development Minister Khaw Boon Wan, who is a Member of Parliament for Sembawang GRC, said the CCC had fully cooperated with the PA investigation panel. “I am glad that the investigation panel found no evidence of dishonesty. Nonetheless, it was a related party transaction that was not declared,” he added. “The CCC will study the investigation report, and review its procedures to ensure that such lapses do not recur.”  

PA said the CCC member has been reminded to comply with proper procedures, and staff involved in the lapses would be reprimanded. On the approval of claims, PA said the staff responsible for preparing the payments should have been more conscientious in ensuring compliance with financial rules by requiring the vice-chairman, secretary or treasurer to approve the claims instead of the chairman himself. 

FOUR AREAS OF CONCERN

Related party transactions were among the four areas highlighted by Auditor-General Willie Tan Yoke Meng where public agencies could pay greater attention to. The Institute of Technical Education (ITE) and Singapore Polytechnic (SP) were also taken to task over related party transactions. 

ITE leased office space to its subsidiary ITE Education Services (ITEES) without obtaining approval. It also did not charge ITEES market rate, thus undercharging by S$480,000 for the five-year licence period. SP leased land parcel at below market rate to Singapore Polytechnic Graduates Guild (SPGG), against government policy of letting premises at market rates. 

Other areas of concern cited by AGO were the administration of grants, tendering and management of revenue contracts, and management of contract variations. 

PA was also rapped for weaknesses in managing tenancy contracts, and procurement lapses. For example, 35 management committees of community clubs or centres did not get approvals from relevant authorities for awarding 53 tenancy contracts that amounted to S$17.78 million. 

Five grassroots organisations (GROs) had awarded nine contracts - totalling S$152,600 - before approvals were obtained from relevant authorities. The approvals were granted between two and 70 days after the contracts were awarded. 

AGO said the lapses reflect “a lack of oversight” by PA on GROs’ compliance with its financial rules.

PA said in its press statement that there were many instances where project organising committees gave in-principle approval for purchases to ensure timely delivery of community programmes. These included buying a new projector to screen the World Cup football games last year, and air purifiers for patients in non-air conditioned wards at a community hospital during the severe bout of haze in 2013. 

Stressing that it takes the AGO findings seriously, PA said that a committee has been set up to review the financial rules for GROs to enhance compliance, and propose measures to facilitate effective monitoring by staff. It has also issued a circular reminding GROs to strictly comply with the rules, and started a hotline to guide them on correct procurement procedures. 

NLB’s LAPSES

Other agencies chided by the AGO in its 86-page report included NLB, which had procured e-resources directly from vendors “without any evidence” of having considered other alternative materials that were similar. Apart from not having a robust system to verify that the selected vendors were sole distributors of the e-resources. NLB also renewed subscriptions to the e-resources “based on weak justifications”. 

In FY2012/2013, NLB spent about S$7.3 million to buy and maintain its e-resources collection including e-books and databases, AGO said. 

Detailing the string of lapses, AGO said that for all seven cases of procurement that it test-checked, it observed “no documentary evidence” to show how NLB had selected those e-resources over other materials of similar nature. Separately, out of 29 procurement cases test-checked, AGO found 13 cases where NLB merely relied on scanned copies of letters provided by the vendors to confirm their sole distributorships of the e-resources. It should have confirmed these with the owners of the materials, AGO said. 

NLB also renewed annual subscriptions for an e-resource for two consecutive years, despite low usage rates and against the recommendations of its evaluators. The renewals were justified on weak grounds that the vendor would implement initiatives to improve usage. 

Following the AGO’s findings, NLB has tightened its processes and adopted open tenders as the default procurement to “ensure transparency and fair competition”. An NLB spokesperson said: “We have also enforced direct verification of sole distributorships and strengthened the evaluation process for subscription renewals, in compliance with the government instruction manual.” 

AGO said there were indications that the weaknesses could have been exploited and it had recommended that the case be referred to the police. NLB’s parent ministry, the Ministry of Communications and Information (MCI), said a police report was immediately made based on AGO’s observations of possible wrongdoings. “As the case is under investigation, we are unable to comment further,” an MCI spokesperson said.