NKF Saga - Auditors report

Categories: Singapore

The much awaited report on the infamous NKF saga was released yesterday. Although the true picture had not been fully appreaciated, from various reported articles, it seems that not all questions are answered.

The whole National Kidney Foundation (NKF) saga started after The Straits Times published an article entitled "The NKF Controversially ahead of its time" by its senior correspondent Susan Long on 19 April 2004. [link] Four days later, NKF served a writ on the newspaper saying that the newspaper article implied that NKF had misused funds collected from the public and splurged them on its CEO's office; and that NKF had mismanaged public donations. The court proceedings started on 11 July 2005. However, the defamation suit was withdrawn abruptly the next day by NKF, despite the 10-day scheduled trial. Then on the 14 July 2005, the whole NKF Board and its CEO, TT Durai and Patron resigned. This was revealed after the Health Minister conducted a press conference in which the Minister said that his Ministry was 'invited' by NKF to look into the fiasco. Now five months later, the auditor's report was finally released to the new NKF Board on 16 December and the public on 19 December 2005.

The report had carefully avoided the one point the public wanted to know most - that is, is there any misappropriation of funds, and who is the one ultimately responsible for the seemingly exorbitant salary and bonuses payable to TT Durai.

The main fault seemed to be "poor management practices and a lack of good governance of the NKF under its previous Board and management, and even questionable ethical conduct." The independant auditor, KPMG, found that the former NKF Board delegated all powers to the Executive Committee, which in turn delegated most, if not all, powers to the former Chief Executive Officer, Mr TT Durai. The Board was largely an ineffective one, which resulted in the concentration of power and authority in Mr TT Durai. The NKF also did not have a formal remuneration policy nor a comprehensive HR policy on staff benefits, which led to the apparent arbitrary determination and awarding of promotions, salary increment, performance bonus and other discretionary payments. There were numerous breaches of stated purchasing policy and noted inadequacies in finance and accounting controls.The NKF Board's Audit Committee was also found to be ineffective. There were evidence of manipulation of accounts, in order to comply with the 30/70 rule. KPMG also found that several directors in the former NKF Board and key management personnel had interests in or were involved in companies who had business relationships with the NKF.

Some of the findings were already suspected by the public and this had finally been confirmed. This included figures relating to the number of kidney patients, patient subsidies and treatment costs. They were inflated or misleading in its press releases and fund raising promotional materials. Board members, senior volunteers and staff made frequent travel and they travelled on First Class.

On the issue of regulation, the auditor said, "... while the Commissioner of Charities forms the central plank for the regulatory oversight of charities, there are various other bodies that participate in an assortment of roles which result in a sometimes confusing regulatory environment. The regulators play different roles, and not all are concerned with the welfare of charity beneficiaries, true owners of charities and their funds, or the management of the affairs of a charity. While some bodies have the power to initiate an investigation into the management of a charity, none did so in the case of the NKF, in the absence of formal complaint." Who would dare to try to make a formal complaint? At least three people had voiced their concerned regarding the going ons in NKF and what happened? They were sued by NKF and had to apologised and pay cost. The public was lucky the last time when Susan Long's article was published. The NKF, probably felt to all and mighty, sued SPH, parent company of The Straits Times. They had forgotten that this time it is no longer a case of David and Goliath. Here are two juggernauts who had to defend their integrity. If not for NKF short-sightedness, then TT Durai and the Board would probably still be flying first class and receiving fat pay checks courtesy of the general public!

Everyone is waiting eagerly for a comment from the Ministry of Health on this matter. The Taxman and CPIB is still looking into the issues. When the dust settles, it is hoped that frameworks are in place to have a better check-and-balances so that such mismanagement will not happen again. This is important not only for kidney patients but for all those who are dependant on charitable organisation in one way or another. Once the public is convinced that the chances of mismanagement is nil or marked reduced, then donations will start to pour in.


Links:
Verbatim: word for word [link1] [link2]
National Kidney Foundation [link1] [link2]
Channel NewsAsia [link1] [link2]
SPH Press releaseTT Durai to pay legal costs in NKF defamation suit against SPH
Statement on NKF withdrawing defamation suit against SPH
NKF VS SPH: ST'S COURT TRANSCRIPT FOR JULY 11 - MORNING SESSION
NKF VS SPH: ST'S COURT TRANSCRIPT FOR JULY 11 - AFTERNOON SESSION
NKF VS SPH: ST'S COURT TRANSCRIPT FOR JULY 12
The NKF: Controversially ahead of its time?