From: (Mr) Law Sin Ling
27 December 2005
Exorcising The Ghosts of NKF
Sg_Review

Exorcising The Ghosts of NKF

It was perhaps a wild coincidence that the KPMG report was released
to the public less than 5 days before a very busy festive season
where most are expected to be preoccupied with gifts and vacation,
thus diluting the impact from the shocking revelation.

It was perhaps an equally wild coincidence that the report was
released to the public when the Prime Minister Lee Hsien Loong was
away on holiday, and was hence not able to make a statement with
regard to the sordid affair.

But it was indubitably NOT a coincidence that T.T. Durai and the ex-
Board of NKF will become the public whipping boy for
their "questionable practices" and for "not fulfilling their duties".

Failure to adequately prosecute the above mentioned will send a clear
unambiguous signal to the public that monetary corruption through
self-enrichment is espoused by the government, and that such an act
will only at best draw rhetorical censure to pacify the mental rage
tormenting the psyche of sensible people.

Putting Durai and the board under chains and leaving them to the
talons of the legal eagles will be a breeze for a government used to
employing the judiciary to advance their ambitions.

But even upon this apparent bald mountain of accountability drag
chains bound to ghosts of undying grievances.

(1) The Ghost of Convenient Scapegoat

After Durai and his cohorts, the external auditor for NKF from 1988
to 2004, PricewaterhouseCoopers (PwC), became the choice quarry of
the Health Minister.

"I appreciate the challenge of auditing an organization which we now
know was completely dominated by its CEO. If he deliberately set out
to mislead, it would take some efforts to uncover the truth. But it
is not impossible and hence my disappointment with the former NKF
auditors."

And to be sure his message to the Accounting and Corporate Regulatory
Authority (ACRA) was not lost in transition, he added that,

"I'm sure their regulator will be looking at how they want to follow
up from here."

ACRA wasted no time in responding that it "will look into the matter
and take appropriate action if necessary".

Slaughtering PwC might seem like a logical option, though cooler
heads should prevail.

Issues relating to corporate governance (salary, promotions, and
purchases) had been broached from since 1999 right up to 2002 by
Arthur Andersen without resolution. And the defunct auditing house,
together with PwC, had both failed to present any evidence of
contravention within NKF to the public.

And a frail effort by KPMG in 2004 had likewise fallen flat without
success. Is it then fair to attribute PwC with a blame that seemingly
afflicts its peers in the fraternity?

PwC had done a terrible job in so far as unearthing accounting
irregularities were concerned. But PwC, unlike KPMG in 2005, did not
have the far-reaching mandate the latter had to permit it to conduct
its own invasive "Operation Crystal" where unlimited authority was
given to seal offices and deny access of sensitive data in computers
to the staff of NKF pending investigation.

The difference between PwC and KPMG 2005 is a comparison between
routine arithmetic auditing and purposeful investigative auditing.

The integrity of the entire accounting fraternity now rests on the
ability of the State to exercise justice on those whose failure had
repercussed on the ability of the regulatory agencies (who depends in
large part on auditors' report) to effectively discharge their duty
to uphold the trust between the NKF, the government, and the public.

And the auditors are not the only ones implicated in the failure of
PwC, for hindrance comes in many forms and at many State levels.

The NKF incident will not destroy PwC as clinically as Enron (US) had
on Arthur Anderson. But this is an eventuality which is beyond the
concern of the State. Public interest must always precede business
priority. And this will present a stern test for a government
accustomed to tooting about its world-admired discipline in exacting
a high standard of corporate accountability and governance, but who
had very few spectacular opportunities to convincingly vindicate the
claim.

Passing off the chance will severely dent the public confidence in
the ability of auditors in Singapore to effectively uncover and
publicly open the book on financial chicanery in private (such as
NKF) and public institutions (such as Temasek and CPF).

The government will have to be mindful of the message it would
otherwise send. And focussing on PwC alone is a bad start.

(2) The Ghost of Cowering Redemption
The patron of NKF was Mdm Tan Choo Leng, better known in Singapore as
the wife of ex-premier and current Senior Minister (SM) Goh Chok Tong.
When the NKF scandal first came into official light in a high-profile
defamation trial in July 2005, she defiled her up to then immaculate
respectability with the immortalising denigration against the
donating public that,
"For a person who runs a million-dollar charitable organisation,
$600,000 (in annual salary for Durai) is PEANUTS as it (NKF) has a
few hundred millions in reserves."
The furore over what is overwhelmingly acknowledged as a
demonstration of indecent arrogance and insensitivity from a member
of the high-society with a close relation to a high-ranking member of
the ruling elite sustained at a simmer.

Mrs Goh was to bring the seething emotion to a second climax when she
defended her ignorance (up to the trial in July) of Durai's
remunerations, and that not being "a member of the NKF Board or its
Executive Committee", she "no authority to endorse the salary paid to
Mr Durai."

Her choice of words, more measured than the careless insult in July,
was equally controversial.

Having offered her patronage to a high-profile organisation for a
consecutive number of years, it is difficult to be convinced that she
could not have an iota of knowledge or suspicion, through direct
communication or through the benefits of the grapevine, of the
outrage brewing within NKF.
As a distinguished lawyer, her job as a senior consultant in the
property and real estate requires an extensive knowledge on matters
of finance. It is not unreasonable to deduce that she would have
acquired the professional curiosity to read the financial statements
of NKF, and actively pursue information on any salient points
pertaining to the financial activities of the organisation.
Besides, if $600,000 is "peanuts" under her measurement, certainly
even 5 times the amount would struggle to be mere `potato chips', and
would not suffice to raise an alarm.

The lack of executive power does not equate to a moral inertia. A
greater sin would have been committed if she had allowed herself to
be convinced of the necessity of the obscene remuneration, and had
then decided to condone it by virtue of its perceived relative
numerical insignificance.

Therefore, knowing a problem and shutting an eye to it is a form of
endorsement. And the patron will need to satisfy the public demand to
answer crucial questions on the extent of her knowledge.

And her trouble does not stop there. The Health Minister defended her
ostensible oversight with the self-applicable alibi that patrons are
simply "supporting the cause by lending their patronage", and that
the patrons "know (they) are being made use of as a symbol for people
to support."

Mrs Goh's role as a patron surpassed the basic notion of a title
conferred on a regular and generous donor to the charity. As the
reputed figurehead at the bow of NKF, the confidence exuded performed
a pivoting role in securing the continual faith of donors.

But a renowned public figure cannot jolly lend a name to a charity
cause (be it NKF or some religious temples) without accepting both
the glory and the grime as a complete package.

With the disclosure that the public money drawn from good faith had
been unceremoniously drained into the coffer of thieves, the patron
had been consequently transformed from an emblematic paragon to an
instrument of mass deceit.

The patron had lent her image to NKF at the heights of the latter's
popularity. The derived mutual benefits between the patron and NKF
would have also allowed her spouse, the ex-Prime Minister Mr Goh Chok
Tong, to bask in a certain degree of political aura.

Even at the height of the defamation trial, she had openly proclaimed
her "complete trust in the NKF and Mr Durai".

Now, the patron must absorb the ignominious condemnation. She cannot
rightfully be exculpated of any eventual lapse in judgement as she
had had the moral responsibility to exercise as much (if not more)
interest in the deeper nature of the beneficiary (NKF) as ordinary
solicited members of the public should.

It is morally indefensible to absolve the patron at a time when the
public trust so built up is broken with the misappropriation of
millions in public fund.

In glory, she led the charge to gain donor confidence. In shame, she
must take up the flag and once again lead the charge to recover the
loot, regain public trust, and salvage the collateral damage done to
the Senior Minister and to the other institutions to which she
equally lends her person as a beacon of trust.

The attempt by the Health Minister to shoo her off into silent
retreat away from further participation will merely serve to
underscore once again the dishonourable habit of the government to
stage a legal and moral Houdini on those who are most in need to step
out.

(3) The Ghost of Governmental Houdini

And talking about legal and moral Houdini, one man and his fumbles
cannot be permitted to slip into oblivion.

Mr Lim Hng Kiang was the Health Minister between June 1999 and August
2003. The period was also the most tumultuous years in the history of
NKF prior to the exposé.

In 1999, the Ministry of Health (MOH) had smelled a rat over NKF's
need to amass excessive funds for what was a rather conservative base
of about 1500 patients.

By 2001, the regulator of charities the National Council of Social
Service (NCSS) had joined in the fray with their explicit statement
of deeper concerns over issues which were to be exposed by KPMG. And
even the Commissioner of Charities was kept preoccupied.

Those portentous signals culminated in the drastic reduction in the
period (from 5 years to 3 months) granted to NKF as an Institution of
a Public Character (IPC) with an accorded right to collect tax-exempt
donations. A subsequent dispute with NKF and Durai ended with the
rescission of NKF's ability to even issue tax-exemption receipts to
donors.

In a show of complete affront to logic and good-sense, MOH under Lim
Hng Kiang granted NKF an IPC status of 3 years, a veritable licence
to plunder.

Mr Khaw (Health Minster) explained that "The regulators collectively
assessed and FOUND NOTHING WHICH WOULD LEAD TO THE CONCLUSION that
the NKF's financial track record and fund management track record
were less than satisfactory, and would justify the removal of its
Institution of Public Character (IPC) status."

This is equivalent to stating that `The regulators found something
but could not draw a satisfactory conclusion on any irregularities in
NKF'.

KPMG stated that "The wasted opportunity to commence any
investigation was most unfortunate since some of the matters dealt
with in this report could perhaps have been either prevented or
addressed some four years earlier."

A failure by an elected leader of the State to nip a visible problem
at its nascent stage of development is a scandalous felony against
the people and the State. And for Lim Hng Kiang, this was not an
isolated oversight. He has amassed an impressive record for fumbling
on problems like SARS, for ignoring the growing problems in
hospitals, and regrettably NKF.

Good governance entails both the recognition of collective blame, and
a keen comprehension that it is wiser to remove a persistently
blemishing flaw than to allow the latter to do further harm in some
other capacity to the effort of the collective whole.

"Collective responsibility" (advocated by the government of Lee Hsien
Loong) is only meaningful if majority in the government was aware of
the growing trouble but chose to sit on its hand and look away.
However, it is more likely that the members of the government had
acted in accordance with what was reported by Lim Hng Kiang on the
situation then, and had acted under his discretion.

A convenient explanation from the current Health Minister is that Lim
Hng Kiang, like himself and the public, was "misled". But Mr Khaw
risk having his credibility grated.

By the time the MOH had had to decide on the IPC status for NKF, the
needle was palpitating at the red warning scale.

In 1998, a former aero-modelling instructor Piragasam Singaravelu was
sued for libel for implicating Durai of abuse of public funds (Durai
flew first-class on Singapore Airlines). The year before, a former
NKF volunteer Archie Ong was likewise sued for making a similar
remark on how "NKF squandered monies" and that Durai "jets here and
there in first class."

And throughout the period from 1997 to 2001, words from numerous
sources had travelled far and wide, finally igniting the attention of
NCSS.

It is not an exaggeration to conclude that Lim Hng Kiang could have
either seriously downplayed the situation, or cover up the affair all
together. At any rate, the ex-Health Minister would have been guilty
of dishonesty to the government, undermining the government of the
people, and disloyalty to the people he had been elected to service.

To continue to shield his individual responsibility behind the
thicket of "collective responsibility" is to court distrust and scorn
from the public and the international community. And that does not
augur well for a country dependent on foreign investments built on
trust and confidence.

Not acting judicially will harm the moral integrity of the people of
the Nation by throwing it into disrepute. And this smearing of the
good name of Singaporeans through governmental misrule is by no means
an accorded mandate from the people.

And rotating the guilty Minister out of public sight and thought is
tantamount to an insincere betrayal of the ethics of accountability
which is one of the pillars of any good and honest government.

But if no one will stand out and step down, then the entire body of
men in the government is implicated. It is hard to justify killing an
entire body to remedy a tumour on the arm. Not for a man who up to
2004 held the steadfast conviction as Second Minister of Finance that
with 56 per cent of its money on beneficiaries (which we know is
untrue), NKF is on "quite a sound record."

(Conclusion) The Ghost of Future Foreboding

The final examination come back to the Health Minister Mr Khaw's
delicate position that just about everyone has been a victim "misled"
by circumstances which escaped even authorities with keener senses.
As "silly" as he might admit he was, he should refrain from further
duping the public with aesthetic words lest the words bite the tongue
which utters them.

"Misled" has in this context a common synonym called "deceived". And
deceiving the government and the public at such a huge magnitude
comes very close to an act of deliberate betrayal (of trust). And
that is treason.

It is also silly to claim to be "misled" if one has at his disposal
the authority to summon a network of State resources to act upon
rapidly surfacing signs of misdeeds involving massive misuse of
public funds and a potentially damaging breach of government-endorsed
trust.

And it is criminal to quote "misled" as an umbrella for certain
individuals to evade just accountability.

The warning from Mr Khaw, ironically,

"We now know that we have been misled. Perhaps, we were coloured by
our deeply-held and positive view of the original NKF under Prof Khoo
Oon Teck (founder in 1969)",

contains a stark warning that infatuation with the nostalgic glories
and achievements of a perpetual institution can blind man to the
corroding rot eating away the founding core of virtues.

Contrary to what PM Lee Hsien Loong said in July that NKF
should "start from scratch" and urged Singaporeans to "look ahead",
it is about time that the nation understands that rebuilding cannot
be achieved on ruins beneath which skeletons of the unresolved past
remained buried.


(Mr) Law Sin Ling