Sla Hit By $12m Fraud Involving Two Senior Staff

[adryz 1]

hehehe..logical with a twist of wicked humor ...nice 1..

[neubie 2]

(SINGAPORE) The conspiracy to cheat the Singapore Land Authority (SLA) of $12 million, while an unfortunate incident, could serve a higher purpose - by throwing the spotlight on governance practices in the public sector and prompting discussion on whether such practices now need to be re-examined.

The case made headlines in Singapore not just because of the sheer amount the two senior SLA officers made off with, but also because it begged the question: just how could such a crime have been perpetrated, for an extended period of time, in an organisation with the requisite checks and balances?

SLA said on Tuesday that it believes its two former officers - Koh Seah Wee, 39, who was deputy director of its technology & infrastructure department, and Christopher Lim Chai Meng, 37, a manager in that department - conspired to cheat SLA of $11.8 million.

They did so by asking friends to set up bogus IT companies, which then rendered services to, and were paid by, SLA. SLA believes they escaped detection because the invoice amounts were within their approval limits and they went through the proper procurement procedures.

The statutory board believes the joint effort enabled the two officers to circumvent the checks and balances in the processes. And, indeed, commercial crime experts agree that parties acting in concert can sometimes succeed in defeating the processes put in place to prevent fraud.

But that, very likely, isn't the entire reason.

'Collusive fraud is difficult to detect, but there is clearly also oversight here - as the SLA has begun disciplinary investigations on two officers whose oversight might have allowed the fraud to take place undetected,' said Associate Professor Mak Yuen Teen, who keeps a close eye on corporate governance.

'One has to ask whether internal audits, especially for the procurement area - always a high-risk area in the public sector - are sufficiently robust. One would also wonder if there is an internal whistleblowing programme in place for individuals who suspect something is amiss to raise concerns,' Prof Mak added.

NetResearch Asia's executive chairman Kevin Scully had a similar take on the matter. 'Such an incident clearly points to weaknesses in the organisation's risk management framework and its governance practices,' he said.

And it's something which SLA itself has acknowledged - by beefing up its internal processes to help prevent a recurrence of such an incident. The Law Ministry also established an independent review panel, when it was informed of the incident, which looked into how it could have happened and also recommended improvements to SLA's systems and processes.

And, given that SLA's systems and processes mirror those in all government bodies, it's perhaps time to ask if a review of the public sector's governance practices is timely.

Indeed, according to the Auditor-General's report for the financial year 2009/2010, weaknesses in governance practices in statutory boards are not confined to SLA. 'In the course of the AGO's (Auditor-General's Office) audit of individual statutory boards in the past two years, the AGO raised a number of audit observations on weaknesses in governance practices,' the report said.

To that end, the AGO commissioned a survey of the governance practices of statutory boards - which was conducted by the Corporate Governance and Financial Reporting Centre, when Prof Mak was in charge. That report has not yet been made public.

But the AGO has since developed a guide on good governance practices for statutory boards and encouraged the Finance Ministry - the authority for issuing finance-related instructions to public sector bodies - to have statutory boards take it up. And the Finance Ministry has said that the Public Service Division is studying the issue of statutory board governance, with a view towards formulating guidelines that can be shared with ministries and statutory boards.

Mr Scully believes now is the time to consider implementing such governance guidelines. 'Just as charities now have higher governance standards and tighter processes, in the wake of scandals such as that involving the National Kidney Foundation in 2006, so should the public sector consider a review of its governance and risk management practices, in light of this incident,' he said.

Prof Mak sits on the Charity Council that was formed to look at the governance processes of the charity sector after the spate of scandals in that sector and which issued the Code of Governance for Charities and Institutions of a Public Character in 2007. He believes there should be a code of governance for statutory boards, 'given the amount of assets they manage'.

'I think many of the principles and guidelines on corporate governance for listed companies would apply to statutory boards, including board governance, audit and accountability, remuneration and communication with stakeholders.'

[cromodora 0]

No one would have been the wiser had Lim Chai Meng not crashed his Ferrari at Nicoll highway last year.

[Sam Lee Poh Huat 0]

more head going to roll.

I really hope they will. We dont pay peanuts for monkey, dont we?

Edited September 30, 2010 by FD1976

[neubie 2]

the old guard must be very cake sim....