The High Court has ruled that the Ministry of National Development (MND) has not established the legal basis for its court application to appoint independent accountants to oversee government grants to the Workers' Party (WP)-run town council.

Justice Quentin Loh wrote that "when the Town Councils are set up, the whole idea is to rest the responsibility of the management of the funds as well as the estate with the Town Council."

The law therefore does not allow for the Court to appoint independent accountants to oversee payments made by AHPETC.

This is despite the "grave and serious questions" raised over the state of accounts at Aljunied-Hougang-Punggol East Town Council (AHPETC), the judge wrote.

The WP-run town council had objected to the MND's nomination of individuals from major accounting firm PricewaterhouseCoopers (PwC) as the court-appointed independent accountants.

PwC was the accounting firm that helped the Auditor-General's Office (AGO) produce the report that flagged major lapses in the town council's books. The town council argued that this could give rise to a possible bias.

Justice Loh said:

"It is clear that there are grave and serious questions that have been raised regarding the state of AHPETC's accounts."

"I have no doubt that AHPETC or its officers will be exposed to the possibility of civil liability ... or in an extreme scenario, criminal liability. I can only say it is a travesty for AHPETC to have ignored their duties and obligations imposed on them by the Town Council Act and Town Council Financial Rules," he added. "They owe a duty and a heavy responsibility to their constituents to run AHPETC properly and it is incumbent on them to put their house and finances in order."

A bit more context: In a two-day hearing in May this year, MND said questions remained over the cash flow position and accounting practices of the AHPETC.

Therefore, MND sought to impose conditions onto two years of grants disbursed to the town council (FY 2014/15 and 2015/16).

Peter Low, the lawyer who represented AHPETC, argued that the town council sees no necessity for the Government to commence court action to impose conditions on the grants.

This is because the Minister already has the power to do so.

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