Erroneous Payments of CPF Housing Grants as Highlighted in Auditor-General's Report for FY2020/2021

11 Ms Sylvia Lim asked the Minister for National Development (a) what caused HDB to make erroneous payments of CPF housing grants to ineligible applicants as highlighted in the Annual Report of the Auditor-General’s Office for FY2020/2021; and (b) in what manner will HDB be improving its controls over the processing and assessment of CPF housing grants.

The Minister for National Development (Mr Desmond Lee): Sir, applicants for Central Provident Fund (CPF) housing grants must declare all relevant information about themselves and the proposed occupiers of their Housing and Development Board (HDB) flats, as well as submit documentary proof of income, employment and details of their ownership of private property, if any.

HDB assesses each application by manually verifying, amongst other things, the declared incomes against the documents submitted by the applicants and their occupiers, such as pay slips, employers’ letters, commission statements, CPF contribution histories and Notices of Income Tax Assessment. For ownership of private property, HDB will verify documents such as the Notice of Transfer, Transfer Instrument, and Sale and Purchase Agreement. The verification process is often complex, especially when flat buyers and their occupiers have multiple sources of income and/or property ownership, both local and overseas.

The Auditor-General's Office (AGO) checked a total of 22,627 resale applications with the Family or Singles Grant approved by HDB between 1 April 2018 and 30 September 2020. These applications involved a total of 47,808 applicants and occupiers. AGO found that HDB had disbursed grants to 13 applicants who did not meet the eligibility criteria. Of the 13 applicants, HDB has since verified that one applicant had in fact been correctly assessed for the grant disbursement. Further investigations revealed that the grants were wrongly disbursed for the remaining 12 applicants because the applicants had failed to declare material information such as their actual income and private property ownership to HDB. This omission was not detected in the verification checks.

HDB has taken immediate action to recover the grants that were disbursed to ineligible applicants and is working to verify the eligibility status of the remaining 1,055 applicants flagged by AGO. HDB is also implementing process improvements and automating eligibility check processes. This will allow HDB to more efficiently and accurately assess the eligibility of the very many grant applicants, even if they fail to declare any material information to HDB.

Mr Speaker: Mr Pritam Singh.

Mr Pritam Singh (Aljunied): Thank you, Mr Speaker. And thank you to Minister Indranee and Minister Edwin Tong for replying my Parliamentary Questions. I have supplementary questions for Question Nos 4 and 7.

For Question No 4 to Minister Indranee, this year's AGO report was unusual in that there were a number of Ministries and Statutory Boards observed to have documents altered, backdated, artificially created or falsified. Hence, my Parliamentary Question was to inquire into the number of investigations and individuals involved, to get a better extent of the size of these infractions and the number of people involved. In view of information that the Minister has just shared and her reply that efforts will be stepped up to resolve some of these issues, can the Minister share what is the nature of these efforts, do they include more frequent internal audits, for example, or intensive contract management and procurement-related training programmes for the relevant personnel?

To Minister Edwin Tong, two questions. I understand that PA's internal investigation went beyond the test checks that were done for the contract variations with regard to the two development projects. Can I confirm that PA also will be making an announcement on the results of these findings when the investigations are complete, in view of the statement that was released on 22 July 2021.

The second supplementary question for Minister Tong is: is there a process or procedure in place to bar companies including managing agents for all Government-related tenders that are found to have been flagged out by AGO for significant irregularities, for example, like the managing agent identified at paragraph 56 of the AGO report which found irregularities in more than 90% of payments that were test checked?

The Second Minister for Finance (Ms Indranee Rajah): Mr Speaker, I thank the Leader of the Opposition for his supplementary questions. He had asked what efforts are being taken to address this because there were a number of infractions across various Ministries and agencies.

I think we can break it down to two responses that would be appropriate. As you can see from the lapses, one is a process problem. For the process problem, the key is to be able to pick this up as quickly and as efficiently as possible. And the key to that is lies in having more automated processes.

As I had indicated in my earlier answer, what we are doing is to have more process improvements and to deploy more central IT infrastructure and common services to facilitate regular reviews. That way, hopefully, you minimise human error and you are able to flag up the inconsistencies or the red flags as and when they occur.

The second and the more important one is really the people part. Partly, it is building capability, but the other part is impressing upon public officers the importance of doing this well and carrying out these functions well, so that in fact, they internalise it. The Public Service has in place platforms such as sharing sessions and training programmes to educate and engage the officers on the importance of maintaining the high standards of personal conduct and upholding the integrity of the Public Service. And the leaders in the Public Service will continue to emphasise to their officers that misconduct is viewed seriously and will not be condoned; and will also remind them that there are internal avenues to report wrongdoing and fraudulent acts, if these occur and if the reporting is made in good faith.

In addition, Heads of Agencies will prioritise and intensify our internal audits to look out for any such wrongdoing. And when such issues are detected, we will deal with them decisively.

So, our public officers, do recognise that public accountability remains a top priority for the Government and they are committed to addressing the lapses identified and resolving the problem at the root and this includes strengthening organisational, capabilities, systems and processes to prevent future recurrence.

The Minister for Culture, Community and Youth and Second Minister for Law (Mr Edwin Tong Chun Fai): Mr Speaker, on Mr Singh's two questions, the first is yes. When we have completed the review and made the resolutions on the remaining contract variation issues that we will look at for the remaining contracts, we will make the appropriate disclosures.

Second, in relation to the second question on whether we will take into account findings, all of such findings will be appropriately addressed. There is a framework to consider, to assess when tenderers come in to make bids. All of these, including the antecedent behaviour of a particular individual or contractor, will be taken into account when assessing and judging on these bids.

Mr Speaker: Mr Yip Hon Weng.

Mr Yip Hon Weng (Yio Chu Kang): Thank you, Mr Speaker. My question is for the Second Minister for Finance. Would the Minister require all the remedial and recovery action that is to be reported to AGO be presented to Parliament when completed, to give public closure to these lapses and violations?

Ms Indranee Rajah: Mr Speaker, there is already a framework in place to address the issue that Mr Yip had raised. Essentially, what happens is that we have the Public Accounts Committee which is a committee of Parliament. The Public Accounts Committee can enquire from the Ministry what the updates are. The Ministry will reply and the reply is effectively to a committee of Parliament, so it is as if it is to Parliament. And the Public Accounts Committee will then issue a public report. So, there is a mechanism in place. The Chairman of the Public Accounts Committee is Ms Foo Mee Har.

Mr Speaker: Ms Foo Mee Har.

Ms Foo Mee Har (West Coast): Thank you, Speaker. The significant observations arising from AGO's audit of the two development projects under the People's Association (PA) are disturbing. So, I would like to ask the Minister for Culture, Community and Youth to clarify the following. One, whether the lapses uncovered in contract management are systemic across the development projects. It is surprising to hear that PA actually manages 788 projects at any one time. Second, whether the root causes of irregularities have been identified and isolated, and if new projects that are now ongoing need to be suspended, pending the consultants' study of the issues that have been uncovered.

Mr Edwin Tong Chun Fai: I thank Ms Foo Mee Har for raising the point. The lapses, as far as we can tell, were not systemic. But at the same time, as I have mentioned earlier, we have already immediately implemented some changes to improve the system and oversight governance functions. We will also subject our oversight and governance of such matters to a professional external review, as I have mentioned. And I have mentioned that an external consultant has been appointed, being given a broad mandate to look at these governance systems and oversight functions.

The lessons that we have learnt, the immediate steps that we have taken on board will, of course, be shared with any new projects that will come on board. And thereafter, after we have done a full review, we will strengthen and continue to strengthen these processes.

Let me also add, Mr Speaker, that there will be the occasional lapse or oversight in the way in which contracts are managed. As I have mentioned, PA oversees a wide range of development and redevelopment projects for more than 780 such facilities.

We cannot always prevent fraud. It may happen from time to time. But what is important is to be able to detect it, to pick it up and then act firmly against it. So, it is important to have a strong audit system, both internal and also external. And on top of that, regular AGO audits which go deeper into specific matters. We take each case of lapse very seriously. And in this case, as Members know, once PA became aware of these findings, an internal investigation was carried out immediately. This led to staff being suspended and a Police report was filed; all of these even before AGO disclosed its findings. As I have mentioned earlier, we also are investigating transactions beyond the scope of AGO's sampling.

In many ways, Sir, we are tougher on ourselves when lapses are discovered. We must continue to do so and build a strong culture of zero tolerance, particularly when it comes to questions of integrity and probity of transactions.

Mr Speaker: Ms Sylvia Lim.

Ms Sylvia Lim (Aljunied): Thank you, Speaker. I have two supplementary questions for the Minister for National Development. The first is, besides clawing back the grants that were wrongly paid, HDB has stated that it would also take enforcement action against those who have suppressed material information. So, I would like the Minister to confirm whether HDB, by saying this, accepts that there could be some cases where the applicant did not act deliberately but there could have been some genuine misunderstanding about the eligibility criteria or the information that needed to be provided. That is the first question.

My second question: HDB has stated that AGO has asked HDB to report back on the remaining 1,055 cases which were picked up by data analysis which could have involved wrongful payment of grants. Could the Minister tell the House how long does HDB expect to take to finish these investigations and confirm that the Ministry will make the findings public as well?

Mr Desmond Lee: Sir, in response to Ms Sylvia Lim's first question, we will look at the facts and circumstances behind each case. Some of the instances of suppression of material information may have been deliberate; some of it may have been a misunderstanding. We will have to look at it case by case.

On the second query, of the 1,055 cases, we think we should be able to complete it by or before the year-end. And as to whether we will report back, the answer is yes.

Ms Joan Pereira (Tanjong Pagar): I have two supplementary questions for Minister Edwin Tong. PA has identified and appointed the external consultant. Can Minister share with us the identity of this external consultant? And if it has started work, it will be helpful to share with us the findings progressively. And I would like to know what kind of timeline we are looking at in sharing the findings with us.

Mr Edwin Tong Chun Fai: Sir, the accounting firm that has been appointed is Ernst & Young, one of the Big Four accounting firms in Singapore. To Ms Joan Pereira's second question, we expect to do it in as expeditious a manner as possible. But without having come into the details, I do not want to constrain the professionals from Ernst & Young as well.

As to sharing the findings progressively, we will certainly do so internally as and when lessons learnt or options become available to improve processes. At some stage after we have completed the review itself, we will then share that with the public as well.

Mr Speaker: Miss Cheng Li Hui.

Miss Cheng Li Hui (Tampines): Thank you, Mr Speaker. My supplementary question is for the Minister for Culture, Community and Youth. Our Tampines Hub (OTH) is very popular with residents. So, I would like to know if the operations, events and services at OTH have been affected by observations highlighted in the AGO report.

Mr Edwin Tong Chun Fai: I thank Miss Cheng for the question. Yes, the staff obviously have been affected in that they have been cooperating with AGO. So, they have had to put aside time to deal with that and also with the internal investigations that we continued with, over and above what AGO has done to ensure that we look at all the remaining contracts that OTH had entered into.

At the same time, it is also important to keep the functions and facilities of OTH running, making sure that residents' and businesses' interests are not compromised, ensuring that the tenants that remain at OTH will also be looked after. So, there is a wide range of other responsibilities that the staff are looking into. And it is important to ensure that there is enough resourcing and staffing to see to this. I would like to assure Miss Cheng that there is a task force that has been put in place to shore up the staff necessary for OTH, including to replace the personnel who had been suspended, to ensure that the functions and performance levels of OTH do not drop.

Mr Speaker: Ms Nadia Ahmad Samdin. Let us move on.