Oral Answer by Minister for Law K Shanmugam to Parliamentary Question on SLA Fraud Case
22 Nov 2010 Posted in Parliamentary speeches and responses
Mr Lim Biow Chuan, Marine Parade GRC
To ask the Minister for Law (a) whether the Auditor-General had audited the Singapore Land Authority (SLA) in the last 2 years and why the alleged fraud committed in SLA was not detected; (b) whether there are additional findings on the full extent of the fraud committed; and (c) what are the measures that have been taken to prevent a recurrence.
Update on Status of Investigations
I will first give an update on the investigations. Investigations were undertaken into Koh Seah Wee’s past activities, following the discovery of possible fraud at the Singapore Land Authority (SLA). These investigations showed that he may also have committed fraud at the Intellectual Property Office of Singapore (IPOS).
Koh joined the Infocomm Development Authority (IDA) in 1997. He was deployed by IDA to Supreme Court, IPOS and then SLA. He left SLA and resigned from IDA earlier this year.
Koh’s accomplice in the SLA case, Lim Chai Meng, joined IDA in 2006. SLA was his only posting.
How the Fraud Happened
- At SLA, Lim was the officer who initiated IT procurement and evaluated quotations. Koh was the officer authorised to approve quotations. Koh and Lim are suspected to have conspired with several business entities to win IT contracts from SLA, and then submit false invoices to receive payment for the services and goods being procured, but which the business entities never intended to deliver. The fraudulent activities were conducted between January 2008 and March 2010.
- At IPOS, Koh was the officer who initiated procurement and evaluated quotations. He is suspected to have conspired with one business entity to submit lowest quotations for IT maintenance services and goods being procured by IPOS. IPOS would then be billed for the services and goods which were never delivered. The activities took place between December 2005 and March 2007.
- The perpetrators took careful steps to give the appearance of compliance and normality. They kept the procurement amounts within approval limits, and complied with internal guidelines such as getting the requisite approvals and putting up the requisite paperwork.
Update on Charges and Amount of Fraudulent Transactions
- The bulk of the charges for the suspected fraud at SLA and IPOS have been tendered in court. To date, the amount allegedly defrauded from SLA is about $12.18m. The amount for IPOS is about $286,000. Of this, about $10 million have been secured pending the completion of the trial.
Finance, Procurement and Audit Processes
- SLA and IPOS’ procurement and finance processes were in accordance with Government guidelines. Koh and Lim are believed to have circumvented the checks and balances by colluding with each other and with business entities.
- The Auditor-General did not audit SLA and IPOS during the period when the frauds took place. SLA and IPOS’ financial statements and accounts were instead audited by external auditors, in accordance with Auditor-General’s requirements.
- Immediately after the frauds were discovered, SLA and IPOS launched their own internal investigations. The Ministry also set up independent Internal Review Panels to identify how the frauds took place and to recommend measures to tighten SLA and IPOS’ procurement and finance processes.
- The Review Panels have given their views and recommendations. Among their conclusions was that certain officers at SLA and IPOS did not exercise sufficient supervision over Koh and Lim and had not carried out their audit responsibilities thoroughly, and that there were weaknesses in the internal audit processes in SLA and IPOS. SLA and IDA have since taken disciplinary action against two officers whose oversight had contributed to the fraud taking place undetected in SLA. As for the fraud at IPOS, IDA is currently conducting disciplinary investigations against Koh’s supervisors during the period he was deployed at IPOS.
- SLA and IPOS have since been implementing the recommendations of the Panels and the outcome of their own internal investigations. These include strengthening internal audit, centralising the procurement process under one department, requiring a different officer to verify the request to call a quotation, and reducing the limit for approval of financial transactions.
- In taking these measures, we need to strike a balance between adding more layers of checks and the resultant reduction in operational efficiency. We must guard against tightening up the system so much that the vast majority of legitimate transactions are hindered on a day to day basis. Adding more checks will slow down work for many officers, but may not increase our ability to deter fraud.
- Sir, on this, I speak as someone who has been involved in investigating and taking follow up actions in various such frauds in the private sector, including Barings.
- No system can guarantee to prevent fraud, against a skilful operator. Even audits whether external or internal are not always guaranteed to pick up fraudulent activities. The real insurance against fraud is to have vigilant people supervising and discharging their responsibilities properly.
- Indeed, the system of checks and balances is built on the basis that officers entrusted with the approval authority and supervisory responsibilities discharge those responsibilities diligently and with care. They have to ask questions and undertake regular reviews. When they don’t do so, there is opportunity for fraud.
- Sir, let me emphasise that these facts that I have set out are based only on investigations. They have not yet been proven in court. The answers I can give are also limited for the same reason, because the cases are pending in court. I would add that investigations are still ongoing, including investigations into Koh’s activities when he was posted to the Supreme Court between 1997 and 2004.
Last updated on 25 Nov 2012