Why No Closure

I suddenly realised why there is no closure and why fellow donors like myself are still upset.

We might feel jaded about the entire scam, but we still want to hear Durai and his cronies speak. They have remained in the shadows. Quiet. Not willing to explain. Not daring to offer their account of what happened. That is why Singaporeans are still upset. Durai and the others have shut us out. Maybe it is because they still believe that what they did was right and all of us are merely deranged donors out for blood. Their silence is tantamount to their denial that a breach of trust has been committed.

The first step towards any real psychological closure is for Durai and the rest to admit their wrongdoings, and then apologise, and hopefuly the gesture is a sincere one. An apology is symbolic, a simple sorry is not enough, contrition is not a substitute for justice, but it is a good start. Whether we as individual donors can begin to forgive is a personal matter. But at the national level, a (sincere) public apology will start the process of closure.

Maybe there are legal grounds to why Durai and his crooks have remained silent. Maybe. But until they apologise to all of us, their silence is their defiance, making closure even harder and delaying it indefinitely.

To readers of this blog, happy new year everyone and do not stop donating to charities completely.

30 Pieces of Silver

The responsibility of PwC in preventing the scam has been muted. They are trying to 'take cover' and seem successful so far. In the report on NKF, KPMG delicately found it "puzzling that the statutory auditers did not have more observations to report at the end of their audits." Some complicity in PwC?


Just how much did the NKF board and exco know, and ought the auditors have done more?

Tuesday • December 27, 2005; Today online
ADRIAN TAN

I WANT to talk about liabilities and the role of the auditors.

There is a widely held view that if "everything was approved by the board and Executive Committee (EC)", then the ex-CEO of the National Kidney Foundation (NKF) and others would get away with what they are alleged to have done.

Relax. It isn't that easy to evade justice. There is the issue of what was it that was approved exactly, and whether decisions were made with the knowledge of all material facts.

The ex-CEO could have gone beyond what he was authorised to do by the board or EC. The latter may now say that they now know that actions taken by the ex-CEO went beyond the scope of what had been authorised or intended. And that they were not fully informed of these actions.

Also, their "authorisations" may have resulted from being misinformed, misled or deceived. Inconvenient material facts may have been concealed or twisted.

There is a case in America that is relevant in understanding what could have happened. It is an extremely complex case which I am simplifying almost to the point of caricature.

Recently, the ex-CEO of Tyco was jailed in the United States. His defence to various criminal charges was that he had had board approval for his actions (huge salary payments, a party for his wife at Tyco's expense and so on).

Among other things, the prosecutors succeeded in convincing the jury that he misled or misinformed the board, making the defence of approval irrelevant.

If exceeding authority or misinformation can be established (and it's all a question of oral and documentary evidence), then the ex-CEO and company should find that they don't have the shield of approval. What they did was beyond the scope of the approval, or that approval would not have been given if the board or EC knew the facts, not a distorted version.

The board and EC members may be legally accountable. They may be in breach of their statutory or fiduciary duties and could face criminal or civil proceedings.

What they knew, and when they knew it, could decide their fate.

But don't assume that all the board or EC members are guilty of something or anything dastardly. Like us, some or the majority of them may have been deceived or misled.

When we pass judgement, remember that they are volunteers.

On the issue of whether the NKF's ex-auditors, PricewaterhouseCoopers (PwC), did anything wrong or were negligent, let's wait for the promised statement from the Institute of Certified Public Accountants of Singapore (Icpas), which is responsible for professional standards.

Though I must say I found the ex-auditor's response rather arrogant. They said: "Our primary responsibility was to express an opinion on whether the NKF financial statements show a true and fair view. We believe we have discharged that responsibility."

After all, as a member of the public has written in to point out, "Costs and subsidies were inflated, and numbers manipulated, according to KPMG, but these were not detected in the several years that PwC had been auditing NKF's books". (Incidentally, could Icpas also comment on the role of the internal auditors if they were members? What were they doing?)

And KPMG did criticise aspects of the ex-auditor's work. Usually professional solidarity means members of any professional body do not criticise other members.

Finally, even if he was rather kind to them, the Minister of Health did find them wanting.

To be fair to PwC, last year when KPMG looked into NKF's tax-deductible receipts, KPMG did not uncover any large-scale weaknesses, and gave no indication of the extent of the poor governance and mismanagement.

And it's not easy to detect irregularities if there is an intention to deceive or conceal.

On this issue, even though the auditors rightly say, "Our job is not to detect fraud", I am under the impression (correct me if I am wrong) that auditors have to check that the controls are there to enable them to give "a true and fair view" of the financial statements.

If, in the end, the authorities find their conduct unbecoming, they deserve a deterrent sentence, so that other auditors will be less cavalier in their audits and statements.

Finally, also a personal observation on the NKF saga: Let's stop criticising the Government over its inaction.

If we want less Government interference, expect more things to go wrong. Even if the state is intrusive, things can still go badly wrong. Witness the collapse of East Germany.

Closure is Still Far Away

Which stage are we now in dealing with this NKF scam? I think developments now are little different from a few months ago actually. Only now there is confirmation on what we knew all along.

The new NKF is trying to set things right and is pleading to the public not to withdraw donations until they have come up with something convincing on the new NKF's altruistic direction. There is also still uncertainty on what will happen apart from the usual and expected government rhetoric to reassure.

The government promises that Durai and others will face the music. We must ask ourselves, what kind of penalties Durai and the others deserve as the impact of his actions is both direct and indirect, short and long term. What should Durai and his fellow con artists get in justice for misleading us, jeopardising current and future treatment of NKF patients, and rocking the boat for the entire charity sector in Singapore.

Let's start with something relatively straightforward first, ensuring Durai and the others reap what they sow.

These are the people singled out in the KPMG report on the old NKF.

T T Durai
Richard Yong Kun Da
Loo Say San
Alwyn Lim Kah Ho
Matilda Chua Li Hoon
Ong Su Ying
Pharis Aboobacker

Now is to determine how involved they were in the scam. Were they willing or unwilling players? Did anyone of them at any point forcibly question the dubious operations of NKF? Or were all of them in cahoots and so deeply convinced with the idea that even if 10% of all donations goes to kidney patients but the absolute amount collected is so huge compared to other charities, then it becomes acceptable practically i.e. if NKF's collected $100,000 in one campaign and only $10,000 goes to kidney patients, but if charity X can only collect $5,000, is NKF still an ethical business-charity as they collected (and pocketed) more anyway?

Simultaneously, the trickier and more sensitive resolution of aspects of the NKF fiasco should be addressed also. The new NKF under Gerard Ee, which is so far so good, better come up with a convincing plan to protect the interests of current NKF patients. The government and also charities themselves must make reassuring noises to potential donors in Singapore that such scams will not be repeated.

These are the 3 broad areas to proper closure in the NKF scam.

The Hunt For Justice Continues

The screws are tightening once again. Still we have not heard from Durai and the others implicated. They have not addressed us, the donors, directly. Fear? Shame? Guilt? Maybe it is because their lawyers, they probably have one, advised them against it.

MOH on NKF

The Health Minister promises justice. Good. We will see if the promises are kept.

"First, anyone found in criminal breach will be prosecuted to the full extent of the law."


Straightening the Straits Times (9)

In retrospect, this is an amazing prescient 2004 blog entry in reaction to a pompous name-dropping Durai-era NKF reply to a letter in the ST Forum. A must read.

"If equally big names like Arthur Andersen, Ernst & Young, KPMG and PwC have failed to prevent accounting scandals like Enron, AOL Time Warner, IM Clone and Tyco respectively, what makes Loo think that NKF is immune to such a possibility?"


NKF: The MOST IMPORTANT lessons....

Tongue in cheek perspective on the lessons learnt from the NKF fiasco.

"The truth brings pain. It is best kept hidden and beautified by a colorful facade."


National Education Lessons we can learn from the NKF scandal - Part 1

More useful lessons from the NKF saga, but less tongue in cheek.

"Not-for-profit organisations are founded for the aims of public service. Altruism and the desire to serve the community give the organisation its "energy". Thus, if members of a not-for-profit organisation have a profit seeking motive, energy will be diverted and effort dissipated, and this will interfere with the stated goals of the organisation and its ability to serve the public."


Alamak! NKF Skeleton in Cupboard

A quick selective summary of the KPMG report on NKF's operations under Durai for those who do not want to read the whole document.

"Whether the CAD would mao Durai, and those responsible in abetting the great NKF scam, with criminal charges?"


NKF Saga - Auditors report

Another interpretation and summary of the NKF report.

"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."


NKF and Charity

Charities are unfortunately caught in the wake of the NKF fiasco.

"Everyone has been buzzing about the NFK saga, and like most Singaporeans, I'm guilty of it too. I'm more worried about the fallout that charities are going to face though. Over lunch yesterday with Louis, we were discussing how we will be affected."


NKF Saga

A voice of calm and reason in channeling our rage. If only it is louder.

"while durai will face the music for all his bad deeds, we shd keep this issue seperate from the the kidney paitents. i need to stress tat these paitents still need donors to continue their financal aid to NKF."


NKF waste our bloody money!

First only rage. Now humour and rage. Maybe we are getting less emotional over it now as the media saturates the news with the NKF focus.

"NKF
NKF
Durai all the way!
O what fun it is to ride
On a first class plane"

Nowhere to Run Nowhere to Hide

Slowly but surely, Durai and his gang are being cornered. That was what I initially feared, that Durai fled Singapore before his passport could be seized either through the authorities' incompetence or subtle hints to him. I am glad, for now, that the legal system's cranks and cogs are turning away. I am patient and will wait for justice - that the truth comes out, that all wrongs are addressed as best as possible and no future breaches of trust of this manner will happen in charities. Let's wait and see how things will turn out.

Bank Accounts of Key NKF People Under scrutiny
By Conrad Raj
September 04, 2005


THE dragnet has widened to the bank accounts of key NKF people.
In the search for possible irregularities in the National Kidney Foundation's books, white-collar crime investigators have sent letters to financial institutions, seeking information.

Sources told The New Paper that the Commercial Affairs Department (CAD) has officially asked various banks and financial institutions to disclose records, including those relating to bank accounts and deposits of former key executives, several board members and a number of employees of NKF.

Apart from the CAD, tax authorities are also said to be looking into NKF's affairs.

The CAD probe is into NKF's financial records going back to 1 Jan 2000.

The CAD was called in late last month by the charity's caretakers after NKF's interim board came across 'certain matters of grave concern' in the course of its work over the past month.

Barely days after this report was lodged, The New Paper learnt that CAD officers had widened the search to include data kept by banks and other financial institutions.

The financial records of several companies associated with NKF and of some of these persons are also being looked into.

CAN BE JAILED AND FINED

According to the CAD's letter to the financial institutions, it is investigating an offence under Section 477A of the Penal Code which involves an intent to defraud by destroying or falsifying accounts and other financial records.

The section states that any employee or officer who 'defrauds, destroys, alters, mutilates or falsifies any book, paper, writing, valuable security or account which belongs to or is in the possession of his employer', or has done anything to omit or alter any material in the books or accounts will be guilty of the crime.

Those convicted can be jailed for up to 7 years, and be fined as well.

A leading lawyer said that any offence under Section 477A 'is a serious matter which is reflected by the punishment that could be dished out to the offender'.

NKF's new board, under recently-appointed chairman Gerard Ee, would not elaborate on what the matter of 'grave concern' was.

Health Minister Khaw Boon Wan, however, was quoted as saying that the CAD was called in because 'unusual transactions' were spotted when NKF's interim board reviewed its operations.

'This now goes beyond our capabilities both in terms of ability, as well as legal power. That's why we moved to this step, and if they need other agencies' support, they will get it,' he told the media.

The NKF saga has continued to be in the news after former CEO T T Durai withdrew his defamation suit against Singapore Press Holdings in July.

A public outcry followed the revelation during the case that Mr Durai's annual remuneration, including bonuses, amounted to some $600,000, and that he flew first class on his NKF business trips abroad.

An on-line petition calling for his resignation drew some 40,000 signatures.

People were also upset when it was disclosed that the NKF had overstated the number of kidney patients it was treating at its 21 clinics and had understated how long its reserves of $262 million would last.

Mr Durai, 57, and the entire board subsequently quit.

'I have been there (NKF) for 37 years. I think it's time a new leadership takes over. The time has come for a new change,' he said, in announcing his resignation.

Friday September 2, 8:41 AM
SINGAPORE PRESS: Police Seize Passport of NKF's Ex-Chief

SINGAPORE (Dow Jones)--Singapore's police have impounded the passport of the former chief executive of the city-state's biggest charity, the National Kidney Foundation, following a scandal that broke out in July that funds of the charity had been mishandled, the Business Times newspaper reports.

T.T. Durai's passport has been seized possibly after the Commercial Affairs Department was called in by the charity's new management team to investigate "unusual transactions" at the charity, the newspaper reports quoting unnamed sources.

The NKF saga started in mid-July when it took Singapore Press Holdings Ltd. (T39.SG) and one of its writers to court for defamation.

In the course of the trial, details emerged on the extent of the pay and perks that its then-chief executive T.T. Durai was receiving. Lawyers for SPH also showed that NKF had overstated the number of patients at its dialysis centers and understated how long its S$200 million-plus reserves would last if it discontinued its fund-raising activities.

Public pressure led to the resignation of Durai and the NKF board, and the Health Ministry stepped in to appoint an interim board and chief executive.

Justice for NKF Patients

Justice in the NKF scandal is more than justice for NKF donors per se.

It involves justice for the patients, whatever happens to Durai and NKF, NKF's patients should not be victims again because of the people's rage.

It involves justice, of course, for any malpractice by Durai and his cronies. They should not be allowed escape any rebuke and worse if there was criminal breach of trust in using public donations for personal gains.

Justice also pertains to other charities being treated fairly despite the stain Durai's NKF caused in the noble charity industry.


New NKF board announces cut in dialysis cost in preliminary review
19 August 2005

SINGAPORE: The new Board of the National Kidney Foundation has completed its preliminary review of the cost of dialysis.

In its first progress report, a month after it was set up, it assessed that there was scope to reduce the current cost.

From next month, the cost of dialysis at NKF dialysis centres will be reduced to $162 from the current $200 per session.

Almost all the NKF's 1,779 patients will benefit from such cost savings, though by different degrees.

The Board says it will continue to study cost reduction options, with a view to bringing down the cost further.

The current cost of providing this dialysis programme to each patient is $2,600 a month, with patients receiving dialysis 13 times a month at $200 per dialysis session.

The Board also reviewed the need to build more dialysis centres, in addition to its 21 centres.

It feels there is an urgent need to build one or two more new dialysis centres soon, and will explore the possibility of getting corporate sponsors to fund the building of these new centres.

If it is unable to obtain any sponsorship, NKF will have to use its reserves to fund the building of these centres.

Meanwhile, the Board says it will examine the adequacy of its current reserves in relation to its projected activities.

Its current reserve now stands at about $262 million.

It comprises three components - $189 million for its kidney dialysis subsidy programme, $45 million for the Children's Medical Fund, and $4 million for Cancer Fund as well as restricted funds of $24 million, for example, the building fund and endowment fund.

The Board says as active fund-raising has been suspended, the ability of this reserve to fund future activities will depend critically on how actively the public would like the NKF to expand on its existing services.

It says it hopes to have clarity on this subject soon.

The Board, in its report, also notes that the NKF's dialysis programme goes beyond mere kidney dialysis.

It includes a rehabilitative exercise programme, job placement programme and tuition subsidies for needy families.

This is what makes it unique among dialysis programmes in the world.

And this, it says, is a sound programme worth preserving.

Visiting the Shaw-NKF Children's Kidney Centre at the National University Hospital on Friday, Health Minister Khaw Boon Wan said the NKF review had made good progress, without disrupting patient care.

In addition to reducing the dialysis fees, the new NKF Board will find more ways to keep cost down.

Mr Khaw said: "What is more important is that this will set a new market benchmark for the cost of dialysis which is a good development.

"But at a national level, the main way of funding programme like this ought to be insurance, catastrophic illness insurance but supplemented by government subsidy and VWOs like NKF. So going forward long term, that is how we should be thinking strategically." - CNA/de

Time for Amends

That is one promising way of showing goodwill to the people.

29 July 2005 1935 hrs
NKF reviewing operating costs, will pass savings to patients: interim CEO

The National Kidney Foundation is looking into reducing operating costs so that savings achieved can be passed on to patients.

Speaking in an exclusive interview with Channel NewsAsia, interim CEO Professor Goh Chee Leok said: "You know when you conduct a dialysis, we put a lot of operating costs, how you utilise your manpower, how you use the facilities and all that and if we can reduce the operating costs, it will mean that patients also will have to pay less."

"We hope that by doing these changes, we should be able to reduce costs for patients. Subsidy will go down and we will be able to admit more patients and patients who have less subsidy can look for more subsidy. But nothing should be given out free because then it will be abused. We still believe in means testing and co-payment to help ease the funds that we need to fund such programmes."

Professor Goh has been working non-stop since he stepped into the NKF's headquarters on Monday.

And over the last few days, he has managed to meet staff, patients, heads of departments and tour the facilities to get a better understanding of the workings of the organisation.

Patient-care is one of his priorities especially with regards to subsidies.

Professor Goh added that NKF has a good comprehensive programme for its patients which extends beyond dialysis and these programmes should be continued.

He said: "It's actually a holistic programme that NKF has for our patients and we should try and keep it going because I think patients have now lived longer and have got a better quality of life with these programmes. It's a big programme, as I mentioned, pre- and intra- and post-dialysis programme to improve the lives of our patients and that the NKF actually organise a lot of programme to allow screening to ensure that people lead a very healthy lifestyle and prevent disease. Prevention is always better than cure."

He hopes that once the audit on NKF has been completed, the organisation can be the first to institute the guidelines as required by the Institutions of Public Character so that more transparency and accountability can be achieved.

When that happens, he hopes that the public will have the confidence to start donating to NKF again.

The organisation has stopped fund-raising activities for the time being.

Professor Goh said: "The problem we have now is accountability...we will try to right that so that people will start to be generous and donate to a good cause again. There are a lot of people who need some help and only a caring society will be able to help these people."

Professor Goh said that while there were still members of the public who call in to cancel their donation, there were also those who have called to reinstate their donations that they've cancelled.

New donors have also called in to pledge despite the NKF saga.

Professor Goh alternates between the National Skin Centre and the National Kidney Foundation's headquarters as he still runs a clinic at the Centre on a part-time basis.

He is expected to do so for up to a year or until a new permanent CEO is found for the NKF. - CNA /ch




9 August 2005 1313 hrs
New NKF board announces cut in dialysis cost in preliminary review


The new Board of the National Kidney Foundation has completed its preliminary review of the cost of dialysis.

In its first progress report, a month after it was set up, it assessed that there was scope to reduce the current cost.

From next month, the cost of dialysis at NKF dialysis centres will be reduced to $162 from the current $200 per session.

Almost all the NKF's 1,779 patients will benefit from such cost savings, though by different degrees.

The Board says it will continue to study cost reduction options, with a view to bringing down the cost further.

The current cost of providing this dialysis programme to each patient is $2,600 a month, with patients receiving dialysis 13 times a month at $200 per dialysis session.

The Board also reviewed the need to build more dialysis centres, in addition to its 21 centres.

It feels there is an urgent need to build one or two more new dialysis centres soon, and will explore the possibility of getting corporate sponsors to fund the building of these new centres.

If it is unable to obtain any sponsorship, NKF will have to use its reserves to fund the building of these centres.

Meanwhile, the Board says it will examine the adequacy of its current reserves in relation to its projected activities.

Its current reserve now stands at about $262 million.

It comprises three components - $189 million for its kidney dialysis subsidy programme, $45 million for the Children's Medical Fund, and $4 million for Cancer Fund as well as restricted funds of $24 million, for example, the building fund and endowment fund.

The Board says as active fund-raising has been suspended, the ability of this reserve to fund future activities will depend critically on how actively the public would like the NKF to expand on its existing services.

It says it hopes to have clarity on this subject soon.

The Board, in its report, also notes that the NKF's dialysis programme goes beyond mere kidney dialysis.

It includes a rehabilitative exercise programme, job placement programme and tuition subsidies for needy families.

This is what makes it unique among dialysis programmes in the world.

And this, it says, is a sound programme worth preserving.

Visiting the Shaw-NKF Children's Kidney Centre at the National University Hospital on Friday, Health Minister Khaw Boon Wan said the NKF review had made good progress, without disrupting patient care.

In addition to reducing the dialysis fees, the new NKF Board will find more ways to keep cost down.

Mr Khaw said: "What is more important is that this will set a new market benchmark for the cost of dialysis which is a good development.

"But at a national level, the main way of funding programme like this ought to be insurance, catastrophic illness insurance but supplemented by government subsidy and VWOs like NKF. So going forward long term, that is how we should be thinking strategically." - CNA/de

Time of Reckoning

And I thought Gerard Ee would hope that we have forgotten. What
misdeed and further scandal will be uncovered? Let justice be served.


18 August 2005 2036 hrs
Spore's NKF asks CAD help in probe into "matters of grave concern"

SINGAPORE : The interim board of the National Kidney Foundation has come across "certain matters of grave concern" in the course of its work over the last one month.

It has requested the assistance of the Commercial Affairs Department (CAD) to look into these matters, an NKF statement said on Thursday.

The board had appointed accounting house KPMG to conduct an independent audit of the charity.

But it's not known whether this on-going audit has thrown up any "matters of grave concern" or irregularities.

On Thursday, the CAD made its presence felt at the National Kidney Foundation's headquarters at Kim Keat Road.

Its officers were seen leaving the premises shortly after 1 pm.

The department confirmed it has received a complaint from the NKF - but said it's inappropriate to comment further as investigations are on-going.

However for patients and staff of NKF, it was business as usual.

The news comes as another blow to staff morale, just a month after the NKF saga put the charity under the spotlight.

The mood among the staff at the NKF's headquarters is pensive - they have been asked by their chairman Mr Gerard Ee to be truthful in answering questions if they are called upon to help in the investigations by the Commercial Affairs Department.

Dr Ernest Kan, Vice-President, Institute of Certified Public Accountants, said: "People don't call in the CAD until such time they suspect there may be criminal breach of trust. If there is criminal breach of trust, the matter could be very serious - it could involve issues such as misappropriation of assets by the organisation and skimming of cash, donations collected and not recorded - this is of course highly speculative, but the moment you call in the CAD, the issue is quite serious."

The NKF said the matters had been referred to the authorities, and so it was not at liberty to discuss them now.

In July, the revelations stemming from the high-profile defamation suit by NKF against Singapore Press Holdings led to the resignations of its former CEO Mr T T Durai and the entire NKF board.

Health Minister Khaw Boon Wan then reiterated the Government would not hesitate to take action if investigations showed up any wrongdoing.

He said: "Certainly if there has been fault, or acts which are wrong, we have to act. You know my position on these sort of these I don't condone such practices."

The CAD's presence at NKF shows that action has indeed been taken.

Investigations are expected to take some time before the public will know the exact nature of the "grave concerns". - CNA /ch