Improving procurement practices in the People’s Association

Response to parliamentary question on lapses by People’s Association identified in the Auditor-General’s office FY2017/2018 report

Question:

Mr Png Eng Huat: To ask the Minister for Culture, Community and Youth in respect of the Auditor-General's Report for FY2017/18 (a) how much additional costs were hidden in the award of contracts to the overseas tenderer for the Mid-Autumn Festival 2016 and Chinese New Year 2017; (b) whether there were such similar hidden costs paid to this overseas tenderer from 2014 to 2016 and how much was it in total; (c) what independent investigations had been carried out to address the tell-tale signs that the reimbursement claims made by the People's Association (PA) officer for overseas purchases for use in Chingay Parade 2017 might not be authentic; and (d) whether any of the statutory auditors of PA in previous audits flagged out such lapses since 2013.

Response:

1. Mr Speaker, on Mr Png’s questions, let me first clarify that the AGO’s recent report made no mention of “additional costs that were hidden in the award of contracts to the overseas tenderer”. Instead, AGO pointed out that the successful tenderer had in its tender proposal required the organiser to bear additional obligations, which included transportation charges and provision of a site for lantern-assembly. The organiser was well aware of these additional expenses as they had been bearing the cost every year, which averaged about $34,000 for each event from 2014 to 2016. The AGO had flagged this as an administrative lapse because the organiser did not take into consideration these costs in its tender evaluation for price comparison. The organiser has acknowledged the lapse and put in place measures to avoid its recurrence.
2. Pertaining to the reimbursement claims made by a PA staff member for overseas purchases for Chingay, an independent investigation panel led by a senior officer in the Ministry of Culture, Community and Youth was also set up in June 2018, to check on Chingay 2017 procurement, as well as to review past overseas Chingay purchases and payments. The panel has completed its investigations. While there was no conclusive evidence that there was wrongdoing, there were concerns over the authenticity of some transactions. PA has referred the matter to the Police and will fully cooperate with the Police in its investigations. We will decide on further steps after the Police complete their investigations.
3. Mr Png asked if any of these lapses were flagged out in the past by statutory auditors. The AGO observations for the Mid-Autumn Festival, Chinese New Year, and Chingay events were not observed in past external audits conducted. Although AGO did not previously flag out similar observations on Festivals and Chingay procurement, PA’s own internal audit had earlier identified that Chingay’s practice of overseas procurement did not fully comply with approved procedures. PA immediately stopped these practices for Chingay in early 2017, even before the AGO’s recent audit.
4. Mr Speaker, PA acknowledges and takes a serious view of the observations by the AGO. We will continue to educate our staff and volunteers to improve the procurement practices. We will also review the rules for local and overseas purchases with a view of simplifying them for ease of application and compliance. Procedures adopted by PA must be simple, robust but not overly onerous on the staff and large number of volunteers to adhere to. We will continue to balance the need for agility and accountability.