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THE Ministry of National Development (MND) has applied to the court to appoint independent accountants to safeguard government grants disbursed to the Aljunied-Hougang-Punggol East Town Council (AHPETC).
If the court grants the order, MND will be able to disburse Service and Conservancy Charges (S&CC) grants for both FY14 and FY15 to AHPETC - of which the Workers' Party is in charge.
From there, AHPETC will have to keep the grants in segregated accounts. In addition, payments from these accounts exceeding certain thresholds will have to be co-signed by the independent accountants.
The ministry said in a statement on Friday: "MND is also asking the court to empower the independent accountants to look at past payments made by AHPETC and to take appropriate action to recover losses suffered by AHPETC and its residents, provided the independent accountants obtain the court's permission to do so.
"The independent accountants, however, will not take over the operations of AHPETC, nor will they seek to remedy the problems identified by AGO (Auditor-General's Office) and AHPETC's auditors. These remain the responsibility of AHPETC's town councillors."
In February, a report by the AGO had said that there was currently no guarantee that AHPETC's accounts were reliable or that public funds were being properly spent.
It had flagged five broad areas of major lapses by AHPETC, including the governance of related-party transactions and the management of sinking funds.
In a parliamentary debate last month, National Development minister Khaw Boon Wan had said that his ministry would withhold S&CC grants for FY14 - worth about S$7 million a year - until AHPETC's problems were fixed.
He had also said that AHPETC should take "concrete actions" to show its residents that it would "make things right" - including commissioning a forensic audit to get to the bottom of things, and taking immediate steps to recover improperly-authorised payments, if necessary.
MND said on Friday, in giving the reason for its application to the court: "AHPETC has not indicated that it is willing to take these actions."