Prequel to the Storm
Civil Suit against TT Durai and ex-directors of NKF
.... in 1999
THE National Kidney Foundation has tracked down and taken legal action against a woman who sent a defamatory e-mail about the organisation.
Madam Tan Kiat Noi will have to pay NKF $50,000 in damages and legal costs and is making a public apology in today's edition of The Straits Times and Lianhe Zaobao.
Another 48 others who circulated her e-mail would also find themselves the subject of legal action, said the NKF yesterday.
While this is not the first case of legal action taken against defamatory remarks made over the Internet here, it is perhaps the first against a person who used e-mail -- conventionally perceived as a private and direct form of electronic communication -- to make such allegations.
The NKF would not say how they tracked down Madam Tan, who sent out her e-mail on April 5 to a group of people, save that it used her e-mail address. As for the 48 others, two-thirds had used their company's Internet accounts.
In her e-mail, Madam Tan claimed that her brother-in-law's application to NKF for dialysis treatment had been rejected. She claimed that the NKF did not help the poor and needy, paid its staff unrealistically high bonuses and urged members of the public not to donate money to it.
Ms Matilda Chua, NKF's senior associate director, said concerned donors had alerted the NKF to the e-mail. "On average, about 10 to 12 donors would call us up a day to tell us about it." She said that Madam Tan's claims were baseless, malicious and untrue. Madam Tan's brother-in-law never applied for treatment and, contrary to her claims, NKF employees were paid an average bonus of 1.4 months last year and were not given a 13th month bonus.
Madam Tan said in her apology notice that she "thoroughly" regretted her irresponsible conduct and unconditionally retracted the statements in her e-mail. She could not be reached for comment yesterday.
NKF's Ms Chua said that the rest who had used their company accounts to broadcast Madam Tan's e-mail were "putting their companies in trouble". "It's the same as using the company letterhead," she said.
Some firms had actually helped the NKF in their investigations into the matter, she added. She declined to give further details. In a statement issued yesterday, the NKF said that it needed to take legal action as the constant assault on its reputation might deter patients from approaching the organisation for assistance.
Mr Rajesh Sreenivasan, of the law firm Rajan & Tann, which has been engaged by the NKF to pursue legal action, reckons that the number of people who have received the defamatory e-mail reached into the hundreds. "The e-mail is forwarded again and again. It catches on like wildfire and obtains a certain degree of credibility. That is why it is important to stop it," he said.
This is the third time the NKF has taken legal action against people who had defamed it. In August 1997 and again, in December last year, it took two men to task for alleging that NKF CEO T.T. Durai travelled first class on Singapore Airlines, and for insinuating that he had used NKF funds meant for patients. Both issued public apologies and paid out undisclosed sums in damages and legal costs.
The New Paper
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Acting Health Minister Khaw Boon Wan has come out in support of the National Kidney Foundation in the wake of recent publicity surrounding its reserves.
Mr Khaw, a regular donor to the NKF himself, says it would be a sad day in Singapore if, as a result, there was a donation backlash, and this affected patients. In recent days, there has been much publicity on the NKF and the amount of reserves it has.
But the Minister said the NKF has been innovative in its fund-raising and that is why it has been able to encourage a lot of regular donors, like himself. And donations must be continuous.
Mr Khaw said: "It is a continuous process. It is a large operation now. I don't know how much they spend but with a thousand over dialysis patients on continuous dialysis, the demand is big and you can never be sure when the donation will dry up. I hope the publicity will lead in the correct direction - that is to cause more awareness of the problem of dialysis, of people with kidney failure, and by all means donate. I continue to donate."
The Minister, who has made transparency his trademark since he took over the health portfolio, urged the NKF to continue to remain transparent about the donations.
And he said while donors want 100 percent of donations to go to the beneficiary, that was not possible as some money needs to go to pay for further fund-raising. Charities must also abide by the rules of fund-raising.
He said: "I'm sure the Commissioner if Charities has certain rules and code of conduct and if they are not fulfilling it, then the MOF will react but in this case, I don't think so. Otherwise, they have been around for many years, MOF would have reacted many years ago." Mr Khaw added that donating to charities should be encouraged.
"It's good for Singaporeans to promote, be encouraged to give to charity. It's good for you. I take my hat off to the NKF. They have been able to raise that kind of money over the years and we wish them well."
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Non Profit Organisations (Guidelines on raising funds)
Dr Mohamad Maliki Bin Osman asked the Deputy Prime Minister and Minister for Finance (a) whether there are clear guidelines for non-profit organisations on raising funds from the public and on the utilisation of these funds; and (b) if there are, what is the monitoring mechanism in place to ensure compliance with these guidelines and thereby to ensure public confidence in such organisations.
The Second Minister for Finance (Mr Lim Hng Kiang) (for the Deputy Prime Minister and Minister for Finance): Mr Speaker Sir, it is important to have clear guidelines on the raising and utilisation of funds to maintain public confidence in our non-profit organisations and their programmes. There are essentially three questions the public is most interested in. First, what methods are used to raise the money? Second, how much of the charity dollar is used to raise funds? And, finally, how is the money spent or saved?
The Government launched the Council on Governance for IPCs in January this year to look at best practices for IPCs. IPC stands for Institution of a Public Character. IPC status is conferred under the Income Tax Act. IPCs are authorised to accept tax deductible donations from the public. They are regulated by IRAS or by central fund administrators, which are organisations authorised by IRAS to grant IPC status to other organisations whose objectives are similar to theirs.
The Council is chaired by Ms Lim Soo Hoon, Permanent Secretary of the Ministry of Community Development and Sports. It has seven members from the people sector with wide experience in the local charity scene, and three members from the public sector. The Council is studying ways to better improve fund-raising practices and ensure that IPCs' use of funds is transparent and in line with international best practices. It is working on a code of best practices for the IPCs, and will also recommend how existing fund-raising regulations could be refined to better support informed giving.
Let me now describe what the current rules are, which the Council will improve upon, as appropriate.
First, on fund raising methods. Today, we do not regulate fund-raising methods, except when fund-raising is conducted in public places. This is then regulated by the Police under the House to House and Street Collections Act. Under the House to House and Street Collections Act, any individual or organisation wishing to solicit donations in the streets or other public places is required to obtain a licence from the Police. One of the conditions is that fund-raising expenses must not exceed 30% of the total funds raised. Enforcement comes under the Police.
Second, on fund-raising efficiency. IRAS also imposes a 30% limit on all fund-raising expenses by IPCs. The 30% limit is stipulated under Income Tax Regulations 2004 and enforcement is by IRAS and the central fund administrators.
Third, on effecitive use of funds. Currently, there are no benchmarks for measuring the effectiveness of IPCs as they cover a wide range of activities and charitable sectors. The Council on Governance for IPCs will be studying this matter. All IPCs are required to submit their audited financial accounts to IRAS and their central fund administrators every year. IPCs are also required to post their financial reports online, hyperlinked to IRAS' website, so that the public can better scrutinise their use of funds. This requirement to post financial information online began in 2002. At that time, only about 15% of the IPCs or 170 of the bigger IPCs were required to post their key information online. However, from 1st January 2004, all IPCs are required to post their financial information online to allow free public access. Today, all 821 organisations with IPC status have done so.
Donors have an important role to play in demanding accountability for the way their donations are used. They should be aware of the financial needs of different IPCs, choose the charities they wish to support, and be satisfied about how their donations flow through to the beneficiaries. IPCs, on the other hand, must understand that increasing accountability to the public is critical for ensuring a continuing flow of donations for their causes. The Government believes that charity dollars will go up with informed giving.
Dr Mohamad Maliki Bin Osman (Sembawang): Sir, can I ask the Minister what is the basis for the 30% cap on the funds that can be used for fund-raising expenses? Does the Minister think that this is high, eg, if we take a donation of $6 million which allows the organisation to use up to $1.8 million just for fund-raising expenses alone? What is the basis and whether this is high in his opinion?
Mr Lim Hng Kiang: Mr Speaker, Sir, our general approach to regulating the charities is to adopt a very light approach. I think we do not want to over burden the charity sector with very tight regulations. As Members know, the charity sector comprises a wide range of causes. Some are very small organisations, others are larger organisations. So, when we had this rule of 30% for fund-raising expenses, we were looking more at the majority of charities, which are much smaller organisations, and therefore to stipulate a 30% rule is not unreasonable, because the amounts they raise are small and the costs of overheads of raising funds are also high. But, of course, if the organisation is large, then I will agree with the Member that 30% seems on the high side. We urge all organisations to always look carefully at the amount they spend in raising each donation dollar and to make sure that this expense is kept as low as possible.
Mr Sin Boon Ann (Tampines): Sir, do I take it that it is also not within the remit of the Council on Governance to determine how much a charity or an IPC can keep as its reserve in its accounts in order to meet its future expenditures?
Mr Lim Hng Kiang: Sir, as I mentioned, there is a wide range of charitable causes. Some require long-term commitments when they take on the role of looking after their beneficiaries and, therefore, it is prudent for them to have a sensible policy, especially those which are able to raise sufficient funds that will see them through multi-year projects. So, we do not have a specific rule on how much charities should set aside for their reserves. But we urge all charities to disclose this adequately in their statments.
Mr Charles Chong (Pasir Ris-Punggol): Sir, could the Minister tell us whether the National Kidney Foundation is in full compliance with all the current guidelines that he mentioned just now in the collection and utilisation of the funds that it receives from the public?
Mr Lim Hng Kiang: Mr Speaker, Sir, the NKF is in full compliance with the regulations.
Mr Sin Boon An: Sir, while I understand that the Minister wants the IPCs to have some say in how they want to use the money, surely, within the spirit of good governance, would they not want also to give an indication of how they plan to spend the money, so that they will know how much money they are going to keep, what they are keeping the money for the future, to give an indication why so much money is kept?
Mr Lim Hng Kiang: Sir, I would not disagree with that motherhood statement. We would like all charities to disclose fully. I think what the Member is probably referring to is the NKF. As the NKF has explained in their press releases, when they take on a kidney dialysis patient, it is not for one month, it is not for one year. They are committed to the patient for the rest of his life. And I think it is a very prudent policy for them to maintain sufficient reserves to keep the organisation going for many years. If we look at the reserves of the NKF in relation to their annual expenditure, their annual expenditure is in the region of $50-$60 million, and their reserve is about three or four years' worth, that, in my opinion, is not unduly large.
19 Apr 2004
Ms Braema Mathiaparanam: Thank you, Mr Deputy Speaker, Sir, for granting me this opportunity to speak on this topic, and to all Members of this House for being charitable enough to listen as it is already past six o'clock.
I wish to speak on this issue of charity practices as the recent developments over the National Kidney Foundation (NKF)'s reserves have highlighted practices that are too varying in nature, too polarised and, I think, this has already been spoken on twice this year, in dire need of better governance. It is my hope that some of the issues I have raised here can be taken on board by the Council of Governance as they mediate on the guidelines that will be announced soon.
Firstly, NKF needs to be applauded for being creative, having long-term vision and for branding itself so well that so many people immediately can recognise what it does and donate generously. There are inherent good practices that one can learn from. Forward-planning and amazing reserves up to $189 million is not wrong in itself. But when it comes to such large charities, it must also be seen as an equal responsibility to exhibit good corporate social responsibility and be accountable to all their shareholders, that is, each and every donor. In reference to this particular comment, I would like to point out a few areas where I think corporate social responsibility means sharing with the public clear information. The most important criterion to a member of the public is what comes back to the beneficiary. In this case, NKF, in the public domain, has made two announcements of 52 cents coming back to the beneficiary, as well as 56 cents. One has been passed off as a computing error and the other has been accounted for as well.
What I am raising here with this incident is that different definitions do go into making up what comes back to the beneficiary in terms of a precise dollar value. There needs to be greater consistency in the factors that go into such computation.
Another example - operational costs. Comparing an apple for apple, NKF cites an example of $31,200 per annum to help a patient on dialysis. Kidney Dialysis Foundation (KDF)'s figure is $15,079. The manpower resource for NKF is one person to two beneficiaries. And KDF works with a much smaller manpower pool. The subsidies granted to the beneficiaries are also not very clear, from both the websites. Therefore, it becomes imperative that as these guidelines are being mediated by the Council, it is my hope that very clear criteria are spelt out so that the public will know once and for all what are the factors to look for, what goes into the computing, and then make a considered decision.
I do not wish to knock NKF here. But what I would like to point out, using them as a case study, is that it is difficult for the public to become a wise donor if basic issues on monetary value on each charity dollar given to the organisation, or operational and administrative costs, as depicted by the organisation, are not consistently applied. This includes transparency issues on salaries of top management - the CEOs. After all, public listed companies - the banks - recently announced what their CEOs are earning. And when we talk about mega dollar charity organisations, transparency issues should cover such areas too.
The second part of this is to highlight the proportion that is allocated to fund-raisers. It is currently at 70% back to the organisation and 30% - up to 30% - back to the fund-raiser. The recent NKF shows over the two weekends have reaped about $14 million from the very generous public - well and good! Thirty percent of that can roughly amount to $4 million, which is also well and good. Because this means we can really churn a good fund-raising industry. However, there are some outcomes that one must be a bit cautious about. Bigger charities can throw bigger money to lure more money; sometimes crowding out, in the absence of enlightened donors, the smaller charities.
Secondly, fund-raisers' creativity - after all, they have a 30% stake in this business - can lead to a staple fair of stunts in some particular cases, as we recently saw, each more demanding than the last in an effort to lure the charity dollar.
Thirdly, the most important - what are we then leaving as our heritage to our children or to the next generation? A warped sense of values - as we are now dangerously close to linking charity-giving to how hard or how well they perform their stunts, what kind of celebrity performs the stunt. In the whole issue, as already mentioned by the Minister, there are issues here for governance on how funds are raised, if we are going to remain watchful on how values are going to be transmitted to our younger people.
Another area of fund-raising is cross-selling. The recent one, as in the papers, is Aviva (the insurance company) and NKF. Cross-selling and sharing of databases - this is an area which I would also hope that the Council will look into.
The third part of this that I would like to raise is the attention on how the charity dollar is used. We have seen in some organisations aquariums galore, in some instances, TV sets, plasma screens, plush surroundings, water features - nothing wrong with that at all. What is more important is the system with which the dollar was lured. Was the donor given a whole spectrum of things that are needed by the charity, so that the donor can make a considered choice of where to put his or her one dollar? And it was not told instead that, "Here, this is our need. Could you please donate to this item? We need it badly." What I am talking about here is enhancing the capabilities such that the individual donor can make good and well-considered decisions.
And, fourthly, the whole issue of the IPC status. We have big umbrella funds - health endowment fund and the education endowment fund - and it is sometimes an auto registration if you come from a particular field closely related to health or education that you do get your IPC status. Maybe this needs a review under the guidelines that are to come. We have asked earlier when these guidelines are due. It is my hope that, in the interim, when the new set of guidelines comes on board, we still have instruments that will govern any practice that may not be so conducive, as it has already been acknowledged that the current guidelines are a little bit too broad.
At the end of the day, I totally agree with what the Minister said earlier. It is important to note that as Singaporeans become more sophisticated and ask the right questions, they want to know where to park the precious charity dollar. If Singaporeans themselves are too easy going on where they would like to place their charity dollar, then we are just opening the doors to charities which will work less hard in being as transparent as they ought to be in sharing the information with the public.
And, lastly, it is my hope that bigger charities will allow smaller charities to piggyback on their fund-raising efforts so that both can share proportionately the goodies that Singaporeans are willing to give them.
The Second Minister for Finance (Mr Lim Hng Kiang):Mr Deputy Speaker, Sir, we have gone through this debate a couple of times, once in the Committee of Supply and, also, this afternoon during the Questions for Oral Answer. In responding to the Member, I would just like to clarify a few points.
First, on the press release put up by NKF. I am not aware of the details. I think they put up the press release and explained the differences between 52% and 56% go to the beneficiaries. I recall also that they indicated in the press release that about 26% goes to the reserves. So, actually, if you add up the two numbers, nearly 80% goes to the beneficiaries. I think that puts NKF on quite a sound record. The vast bulk of the money goes to the beneficiaries, both immediately as well as in the reserves.
Secondly, on the operation cost of running a dialysis centre. From my experience in the Ministry of Health, I can tell you that running a dialysis centre is very, very expensive. The NKF looks after more than 2,500 patients and the average cost is more than $25,000 or $30,000 per patient. That is the reason why the NKF requires a budget of $50 million to $60 million. These are not small sums to run the centres.
As I mentioned this afternoon, when NKF takes on a patient, it is committed to the patient for life. I have met patients, both locally and overseas, who have been on dialysis for more than 20 years. The medical record of NKF is extremely good, better than world standards. So, the patients that go to NKF are actually treated to very high medical standards and therefore they live much longer. That is the reason why they need more funds. And there is nothing wrong in putting these funds in the reserves because they are committed to the patients for their lifetime.
On the point about cost and salaries of CEOs, this is a decision by NKF whether to disclose the salaries of the CEOs. Here, I have some sympathy for their dilemma. If they do not disclose, then there will be critics who say they are not transparent. If they disclose, there will also be critics who will say that whatever they pay are too high. So I think they are caught between a rock and a hard place. I think it is their decision not to disclose.
We also discussed earlier this afternoon about the proportion of expenses towards fund-raising. And the reason why we set the 20% rule is to have a reasonable cap that will facilitate fund-raising for the smaller charities. Smaller charities require high overheads in fund raising. So if we were to lower the cap to something below 20%, then I think we will constrain the smaller charities.
On the issue of cross-selling and the sharing of databases, I think NKF has come up to clarify its position. So I see nothing objectionable to its position. What they are saying is that they will only release this data if there is consent from the donors. I think that is a very sensible position to take.
On aquariums and TV sets, if you have been attending dialysis three times and each time it takes long duration, I think it is nothing wrong actually to have aquariums and TV sets to keep the dialysis patients occupied. We do have aquariums and TV sets also in our blood donation centres. So these are not unusual, I would say, distractions for the patients to keep them busy.
On the running of the IPCs, our administration is to appoint administrators for different groups. So it is not true to say that if you belong to the education or the health group, you get your IPC status automatically. The fund administrator in each group has certain criteria by which he evaluates applicants who want IPC status, and these criteria are set by IRAS, and we make sure that people who apply have to qualify before they are given this IPC status.
Let me conclude by saying that it is not a zero sum game. I think there is room for the big charity organisations and there is room for the smaller charity organisations. And if both groups go out and convince Singaporeans, I think Singaporeans have big hearts and are willing to donate to the wide range of charities. We have 1,300 charities registered in Singapore and we have 820 IPCs. So there are more than 2,000 organisations out there doing good for Singaporeans, largely run by volunteers. And Singaporeans, by and large, if you convince them of the worthiness of the causes, will open up their wallets. So I do not see this as a zero sum game. I urge all the VWOs to continue their good work and continue to solicit the donations from Singaporeans. One way to do so is, of course, to have good corporate governance and to be transparent as to how the donation dollar is going towards the beneficiaries. The more people are convinced that the money which they contribute goes directly to the beneficiaries, I think the more they will be willing to donate.
As for the smaller charities, I think there is a case to be made for them by combining their resources so that they go out and operate as a group or as a cluster. I think there are efforts made by the Community Chest and other groupings so that clusters of smaller charities can go out and solicit the donation dollar as a group. So these are some of the ways in which they can get a bigger share of the pie.
19 Apr 2004
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By Susan Long
THE article that provoked the lawsuit
Controversy stalks the National Kidney Foundation, with critics lambasting its fund-raising methods, brazen self-promotion and work practices. Is the NKF just a cutting-edge charity ahead of its time, or is there more to those rumblings?
A RETIRED contractor who wants to be known only as Mr Tan used to be a National Kidney Foundation (NKF) donor until he was hired to install some bathroom fittings for its new headquarters at Kim Keat Road in 1995. Inside chief executive T.T. Durai's office suite on the 12th floor of the $21 million building, he says he 'lost it' when he had to install, among other things, a glass-panelled shower, a pricey German toilet bowl and a gold-plated tap.
'I started screaming my head off. The gold-plated tap alone cost at least $1,000. It was crazy. If you're Bill Gates and own your own multinational, whatever you want, fine. But you're a charity, using donors' money,' he huffs. After his outburst, he was told to 'just do' his job. The shower stall remained, but the taps he eventually installed were 'scaled down' to an upmarket chrome-plated model.
To this day, the 54-year-old belongs to NKF's die-hard detractor camp, unmoved by its shining success in social entrepreneurship and its track record in saving lives. As he puts it: 'After that day, not a cent from me. I'm not going to pay for gold-plated taps.' Asked for its response to the contractor's story, the NKF's public relations arm sidestepped the details and said yesterday: 'Since you can't give us details of the contractor... it is difficult for us to give an answer to enlighten your readers.'
In the past fortnight, the NKF has hogged the headlines. Propitiously, the news of its amazing $189 million in reserves broke the very day it celebrated its 35th anniversary on April 7. Since then, a stream of more than 130 people - former employees, former donors and disgruntled members of the public - have e-mailed or called this newspaper to let off steam about its hard-sell tactics, thick carpets and controversial chieftain.
At the same time, about 30 others, individuals and organisations, have sent in letters of support for the organisation, praising its dialysis programmes and pledging continued donations.
So far, the NKF kitty appears none the worse for wear despite all the caterwauling. On April 11, its 11th NKF Charity show raised $6.7 million, just a fraction short of last year's $6.8 million. Last night, it netted another $6.4 million.
These serious sums of money - how the NKF gets it, spends it and accounts for it - have been a well-gnawed bone of contention among its naysayers. Way before details of its $5 million tie-up with insurance giant Aviva unleashed a ferocious debate on donor privacy issues, charges of 'invasive' fund-raising have dogged the outfit.
But the NKF has made no bones about gunning for the charity dollar - the more the merrier, just like any other profit-and-loss business. Relentless innovation over the years has brought new ways of fund-raising: greeting cards, live charity shows, donations via SMS, consultancy services, even selling its spare telemarketing capacity to private companies. In the social service sector, the NKF is the unparalleled paragon of the art of 'heartsell'.
Most impressive of all, notes Mrs Tan Chee Koon, executive director of the National Volunteer and Philanthropy Centre, is its ability to tap on the health screening it conducts for heartlanders to ensure a 'sustained pool of regular givers'.
Unlike many charities which rely on large, one-off infusions from wealthy foundations, NKF's bread and butter is the $3 to $5 monthly Giro donations from about one million ordinary Singaporeans. With such a big base of small heartland givers - its website says nearly two out of every three Singaporeans are donors - the pennies add up.
Every day, seven days a week, some 100 'prevention evangelists' and nurses fan out to companies, army camps, condominiums and churches islandwide to test the blood, body fat and urine of at least 1,600 people daily.
Since 1997, more than one million Singaporeans have undergone these free health screenings, which are followed typically by an impassioned pitch: 'This is something we're doing for you; is there something you'd like to do for us?'
A voluntary sector consultant notes: 'Even old grannies are not spared the spiel. Most are pressured to do a Giro contribution for a minimum of six months. Nothing they do is illegal, but it's all very aggressive. Nothing wrong with that, but when they push the fund-raising envelope, they tend to be insensitive to the larger consequences for the charity sector.'
But the NKF's head of what it calls 'prevention marketing', Ms Shirley Tan, makes no apologies for the 'heartfelt pleas' it delivers along with its basic health checks, which she notes would cost at least $60 in private clinics. She says these are 'free-will offerings' and the 'evangelists' have no financial targets to meet at each venue.
NKF chairman Richard Yong, 63, a former private banker who has been on the NKF board for 18 years, makes clear that lucre is the necessary lifeblood of the organisation.
Every cent literally buys time for each patient. And the NKF's mission to save the lives of those with kidney failure is undeniably daunting, which explains why there are no other self-funded, non-profit dialysis providers in the world. Each patient is admitted for life - or until they are lucky enough to get a kidney transplant. The average life expectancy of those on dialysis is 10 to 15 years, at a cost of $150,000 upwards a head to the foundation. Mr Yong says patients themselves pay from nothing to $800 each month for three-times-a-week dialysis which would cost at least $3,000 each month outside.
The incidence of kidney failure here - increasingly a lifestyle disease closely associated with diabetes and hypertension - is now the third highest in the world, trailing only affluent countries like the United States and Japan. This, coupled with a fast growing grey-haired population, means that the NKF has plenty of costly work cut out for it.
Its money-minting machinery, however, was not always so hard-nosed or well-oiled. Starting out in an unprepossessing Singapore General Hospital attic with just two beds and one metal tray in 1969, Mr Yong says, it battled the same growing pains that less publicised, cash-strapped charities face today.
When it set up its first dialysis programme in 1982 in Kwong Wai Shiu Hospital, it dispensed free treatment with little regard for outcomes and costs.
In 1986, it ran out of money, so he and other board members had to make the heart-wrenching decision of who among their 32 patients should continue with dialysis, and who would have to be sent home with morphine to die.
'I couldn't sleep; I couldn't eat. Who were we to play God?' he recalls. It hit home then: It was important to have 'healthy reserves that can withstand even the most dire economic times', and self-generated income 'so that we can be independent, instead of on our knees, poor and begging for life'.
So the irony is that, despite being one of the oldest, the NKF is yet one of the most progressive charities here. As a mature 35-year-old, it is looking at sustainability and continuity issues for the next 100 years, even as most other voluntary welfare organisations (VWOs) grapple with day-to-day survival issues.
In the international arena, it is such a trail-blazing model of social entrepreneurship that American universities like Harvard, Johns Hopkins and the Massachusetts Institute of Technology have done case studies on it.
Locally, however, it is so far ahead of its time that society has yet to keep pace. Unlike in the West - where charities aggressively campaign for the charity dollar, professional fund-raising is a bona fide industry and tie-ups with commercial entities are old news - the social sector here unfortunately is still in its infancy.
According to Mr Terry Farris, head of charity management for Asia at European private bank MeesPierson, the fact that it costs money to raise money - the accepted norm, he says, is now 15 to 20 cents out of every dollar - may not have sunk in here yet.
Many VWO chiefs note there still exists an arcane expectation that non-profits should survive on the 'goodwill and sacrifice' of volunteers, even though it is recognised worldwide that the public good is much better served by hiring professional managers at market rates.
THE NKF has tried to break away from the 'third-tier' image charities suffer from, by sourcing for talent worldwide and paying them fair market value. According to NKF's honorary treasurer Loo Say San: 'Many Singaporeans prefer not to work for charitable organisations, so we go overseas to hire.'
It does its recruitment drives at top institutions like the Indian Institutes of Management and Beijing University, competing with the likes of General Electric and Morgan Stanley for the best brains money can buy. Since 2001, it has also tapped the skills of a steady stream of MBA interns from top business schools like Harvard and Stanford.
It staff strength is 947, a figure that NKF defends as necessary to man the three shifts of dialysis sessions, each lasting four hours, which its 22 centres around the island run daily.
Pressed for details on staff composition, Mr Yong said 'more than half are medical personnel'. The rest are spread among the administrative, marketing, fund-raising and communications departments.
The taboo it seeks to break is that charity is synonymous with poor quality. As Dr Gerard Chuah, an eye surgeon and chairman of the NKF Children's Medical Fund, says: 'What bothers me is when people say, why can't you continue to function out of containers? Hello, just because we're a charity doesn't mean we have to operate in a hovel out in the rain.
'Would you ask a family member of yours who has an honours degree to work in a container? We want to get the best people we can find who will run good programmes to save more lives.'
Even when administering its dialysis and patient rehabilitation programmes, the NKF approach is controversial. You might call it 'tough love'. According to Mr Job Loei, a dialysis patient who also helps counsel new admissions at NKF, those wallowing in self-pity are set straight.
NKF demands that patients co-pay for dialysis, hold down jobs and stick to their diet - or pay more. Patients' fees, for example, are reduced by $50 to $100 as an incentive, if they find a job, get promoted, tie the knot, give birth, or even when their school-going children score As.
It helps patients find jobs, provides courses to upgrade their qualifications and holds personal grooming classes to help them remain attractive to their spouses. If their children's grades slide, it even helps engage, and provides subsidies of up to 80 per cent for, tuition teachers to coach them.
As Mr Yong says: 'We don't dialyse them to go home and sleep. We want them to have jobs, bring home the bacon, contribute to the economy, have normal relations with their spouses and their children to do well in school. We say openly to them: 'If you want to die, go and die by yourself; don't come to us'.'
As a result, 93 per cent of NKF dialysis patients work, support their families and lead productive lives, compared to less than 60 per cent worldwide. The general philosophy is: No free rides.
LIKEWISE for employees, adds Mr Loo. They are constantly reminded that their wages come from donor dollars. To prevent wastage, there is an extensive list of fines, from $5 for getting to work five minutes late, to $30 for forgetting to switch off the lights. All staff functions are held in the in-house auditorium 'for fear of being labelled spend-thrift' if they venture outside.
For the record, Mr Yong says, there is no such thing as 'first-class travel'. Senior executives, from directors up, including CEO Mr Durai, fly business class. The rest fly economy.
Little is known of Mr Durai, 56, apart from the fact that his name T.T. (Thambirajah Tharmadurai) means a charitable man in Tamil. A former president of the then University of Singapore Students' Union, he graduated with a law degree and worked in the government legal service for six years until 1977.
The elegant and eloquent man eschews publicity and, despite 3 1/2 hours spent with top officials at the NKF last week, this reporter received only a handshake from him. No quotes.
His staff know him as a 'visionary' who cares deeply for NKF patients and knows each one by name. He is also a 'tough taskmaster' who works from 6am to 10pm, and eats and showers in his office.
He is said to run a tight, results-oriented ship, with a labyrinth of departments within departments and units within units.
But even the most embittered acknowledge it is a 'dynamic' workplace and training ground. Its staff turnover is high; employees are so often poached that managers now have to sign three-year contracts. One downside cited by former employees is a corporate culture described as 'cagey', in which staff are discouraged from discussing finances.
Despite much public prodding and the Finance Ministry's encouragement to charities to reveal the salaries and benefits of their top employees, NKF top guns are sticking to their guns not to allow more public disclosure.
What they keep reiterating is: 'Although the NKF is a non-profit organisation, the people who have chosen to work in the NKF are private individuals, who are entitled to their privacy.'
But therein lies the chink in an otherwise spiffy armour: NKF's forward-looking business model lacks the financial transparency that would enable it to stand tall and get out of its controversy-laden shell. After all, if it is governed by the creed of the marketplace, it should also appply rigorous standards of disclosure and accountability.
As a VWO analyst notes: 'You can find out how much any CEO of a public company makes, so why not them? How can it be that when they feel like it, they can be 'private', but when raising funds, they are 'non-profit' and 'public'? If any member of the public asks, why shouldn't the information be made available to them?'
As society matures, says Mr Farris, people will have higher expectations of non-profit governance. 'Like it or not, if you turn over as much as $67.5 million a year, you're a business, though it be the business of doing good,' he says. 'As a charity, you have to always remember: You are spending other people's money.'
On the NKF's part, so often has it been bad-mouthed - which it attributes to 'professional jealousy' - that it seems to have developed a persecution complex of sorts. 'Why is it us, always us?' is a plaintive cry its board members often utter.
It has also gone beyond plaintive cries, to being the plaintiff in defamation suits - at least three times. In 1999, for instance, it sued Madam Tan Kiat Noi for sending out an e-mail message accusing it of paying ridiculously high bonuses to its staff. An estimated 100,000 people received it. The case was settled after she apologised publicly, and paid $50,000 in damages, as well as NKF's legal costs.
Whither the NKF from here? Although it continues to bid the public judge it by its works and its effectiveness, detractors will continue to be fixated by the shroud over its numbers. Like it or not, rumblings are likely to persist until there is more publicly-transparent accounting.
The Straits Times
19 Apr 2004
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Defamation Suit, Day 1
LAST April, the National Kidney Foundation (NKF) made headlines in The Straits Times' (ST) on several occasions: First, for its corporate tie-up with insurance company Aviva, then for its $189-million reserves and again on April 19 - a day after an NKF fund-raising charity show - in a report that mentioned a "gold-plated tap" that cost "at least $1,000" at its Kim Keat Road headquarters.
The non-profit organisation is now making headlines again as it commences, along with its chief executive T T Durai, 57, a libel suit against the Singapore Press Holdings (SPH) and Ms Susan Long, 32, ST senior writer and author of the April 19 report, "The NKF: Controversially ahead of its time?".
In the first six paragraphs of the report, Ms Long set out that her source - "a retired contractor known only as Mr Tan" - told her of a "gold-plated tap" costing "at least $1,000", as well as a glass-panelled shower and a "pricey German toilet bowl", that he had to install on the "12th floor of the $21-million building".
She recounted how the contractor had "scream(ed) his head off" on learning of the assignment at the NKF's "new headquarters at Kim Keat Road in 1995", but was told to "just do" his job. According to the report, the taps he eventually installed were "scaled down" to an "upmarket chrome-plated model".
These allegations implied that the NKF had - under Mr Durai's management - misused public funds, said the NKF in the Supreme Court yesterday. It is arguing that the newspaper had an agenda against it.
Following the report, the NKF had sought an apology and retraction of this allegation from SPH. But as none was forthcoming, the case will be heard out in court over the next nine days.
The NKF statement cited that in 1995, it was not yet housed in its current 12-storey premises, but instead, in a two-storey block on site. The statement also said that there was no "gold-plated tap" nor any tap which "alone cost at least $1,000" in that building.
During his full-day cross-examination session by SPH's Senior Counsel Davinder Singh, Mr Durai stated that in 1994, a shower mixer and basin mixer had been installed in his absence. He "gave instructions for that to be removed" upon his return from an overseas trip. Mr Durai did not want the office interior to appear luxurious. But, according to the NKF, Ms Long's report had implied that the alleged "gold-plated taps" were "scaled down" only because of the contractor's protestations.
Mr Singh said this incident supported his argument that the report was factual and that the "expensive bathroom fittings" were, in fact, installed and then removed.
Mr Singh also said that SPH had a duty to comment on the NKF's financial affairs in the interest of the public and questioned Mr Durai on his salary package and whether he had flown first class on NKF funds collected from the public.
Mr Durai, who initially told the court he preferred to keep his salary private, said he earned an average of about $550,000 a year, including bonuses varying from 10 months to a year's salary. Over the last three years, he earned a total of around $1.8 million. Two years ago, when Mr Durai earned nearly $600,000, the NKF had an annual turnover of $100 million.
Mr Durai explained that his pay package and bonus was a decision made by the foundation's board and that the board had also pegged the flight entitlement for senior staff at Singapore Airlines business class prices. Mr Durai said that he had flown all classes before and only started travelling first-class in the past two years. He said he would pay the difference for any first class upgrades and that sometimes, it was cheaper for him to fly first class than on business class.
In the public gallery was Mrs Goh Chok Tong, patron of the foundation, and SPH chief executive Alan Chan.
12 Jul 2005
Defamation Suit, Day 1
The National Kidney Foundation's (NKF) defamation suit against the Singapore Press Holdings has opened in the High Court.
The case centres around an article in the Straits Times published on 19 April 2004 entitled "The NKF Controversially ahead of its time".
And first to take the stand was the NKF's CEO, TT Durai who made some startling revelations during cross examination by SPH's Senior Counsel Davinder Singh.
The article in question was written by SPH's journalist Susan Long, whom NKF is also suing. It had an account of a contractor who had been hired to install some bathroom fittings for its new headquarters in 1995. NKF says the article had many falsehoods and half truths. But Monday's hearing was more than just about toilet fittings. It was a public scrutiny of how the NKF is administered and run, the travel patterns of its senior executives and the chief executive officer, and what salaries were paid to the CEO in the last three years.
The court heard that CEO Durai got a twelve month bonus last year. And between 2002 and 2004, he would have earned close to S$1.8 million.
From the outset, Senior Counsel Davinder Singh who is acting for SPH, emphasized the importance of transparency and public accountability on NKF's part as every cent which NKF spent came from public donations.
Several senior officials from NKF were in court to follow the proceedings, including its patron Mrs Goh Chok Tong.
11 Jul 2005
Defamation Suit, Day 1
A CLOSELY-GUARDED secret of the National Kidney Foundation was finally made public on Monday: the salary of its chief executive Mr T.T. Durai.
On Day 1 of NKF's defamation suit against Singapore Press Holdings, it was revealed that on top of his S$25,000 a month salary, Mr Durai also received 10 to 12 months in yearly bonuses. That makes his annual salary between S$550,000 and S$600,000, or S$1.8 million in total, over the past three years.
The NKF, which is entirely dependent on public funds, offers dialysis treatment to kidney patients.
It is taking issue with an article published in The Straits Times by senior correspondent Susan Long on April 19 last year headlined 'The NKF: Controversially ahead of its time?'. The NKF and Mr Durai contend that the words in the article had damaged their reputation by implying that donors' funds were being misused. The article stated that a gold-plated tap had been installed and later replaced in the private bathroom in Mr Durai's office suite.
During the hearing before Justice Tan Lee Meng, Senior Counsel Davinder Singh, acting for SPH, sought to show that the NKF was neither honest nor transparent about the way it uses donors' funds. He told the court he had to ask the NKF three times, including twice through the courts, to have the salary of its CEO made public.
Mr Durai, represented by Senior Counsel Michael Khoo, argued that he was not required by law to tell the public what he earned. Also, he wanted to protect his personal privacy, he said.
Under questioning on Monday, he also admitted that he had flown First Class on some airlines, even though the NKF had maintained consistently that none of its executives flew First Class and had threatened to sue people who said Mr Durai did so. His explanation: The NKF Board allowed this as long as he did not bust the Singapore Airlines Business Class rate.
Mr Singh countered: 'Isn't it your duty as a trustee of people's monies to make sure that you get best value on a business class seat instead of deploying this clever device... using it for First Class on another plane?'
Mr Durai replied: 'This is a decision made by the board. I used the entitlement.'
The Straits Times
11 Jul 2005
Defamation Suit, Day 1
A CLOSELY guarded secret of the National Kidney Foundation (NKF) was finally made public yesterday the salary of its chief executive T.T. Durai.
Gasps could be heard in the courtroom when it was revealed that on top of his $25,000 a month salary, he also received 10 to 12 months in yearly bonuses. That makes his annual salary between $550,000 and $600,000, or $1.8 million in total over the past three years.
This fact, and the disclosure that he had flown first class on NKF's funds, emerged on Day 1 of NKF's defamation suit against Singapore Press Holdings (SPH).
The NKF, which is entirely dependent on public funds, offers dialysis treatment to kidney patients. Two out of every three Singaporeans contribute to it.
It is taking issue with a Straits Times article by senior correspondent Susan Long published on April 19 last year, which stated that a gold-plated tap had been installed and later replaced in the private bathroom in Mr Durai's office suite.
The NKF and Mr Durai contend that this was not the case and that the words in the article, 'The NKF Controversially ahead of its time', had damaged their reputation by implying that donors' funds were being misused. The hearing yesterday was delayed by the NKF's application for special damages of $3.24 million, which it claimed was what it lost in donations following the publication of the article. Justice Tan Lee Meng threw out the application and ordered the NKF to pay SPH's legal cost for its last-minute move.
At the hearing, Senior Counsel Davinder Singh, acting for SPH, noted that the tap in question cost $990, expensive by his standards although Mr Durai did not agree. The lawyer sought to show that the NKF was neither honest nor transparent about the way it uses donors' funds. He told the court he had to ask the NKF three times, twice through the courts, to have the salary of its CEO made public.
Mr Durai, represented by Senior Counsel Michael Khoo, was the only witness who took the stand yesterday. Among those in the gallery was NKF patron, Mrs Goh Chok Tong, wife of the Senior Minister, who left midway through the hearing. Mr Durai argued that he was not required by law to tell the public what he earned, even though he conceded that they paid his salary. Also, he wanted to protect his personal privacy.
Mr Singh asked 'The man who earns $1,000 a month who donates $50... every month thinking that it is going to save lives, should they not know that that is the kind of money you earn' Replied Mr Durai 'I don't see the need for him to know.' He denied Mr Singh's charge that he refused to disclose his salary as he knew he would lose moral authority with donors.
Mr Durai's travel perks also came under scrutiny. Not only had the NKF maintained consistently - as recently as in the April 19 article - that none of its executives flew first class, it had threatened to sue people who said Mr Durai did so. At least two people have had to apologise publicly and pay damages and costs for saying they had seen Mr Durai travel first class, as the NKF said this implied he was wasting donors' funds.
Under questioning, he admitted he had flown first class on some airlines. His explanation The NKF board allowed this as long as he did not bust the Singapore Airlines business-class rate.
Mr Singh countered 'Isn't it your duty as a trustee of people's monies to make sure that you get best value on a business-class seat instead of deploying this clever tactic... using it for first class on another plane'
Mr Durai replied 'This is a decision made by the board. I used the entitlement.' The entitlement, he added, kicked in only in the past two years. Previously, when he flew first class, he had paid the difference out of his own pocket, he maintained.
Mr Singh noted that although he now flew first class, Mr Durai did not correct his chairman Richard Yong's assertion in the April 19 article that 'there is no such thing as first-class travel'. 'The reason you hide the truth is because you know that that is the wrong thing to do, using people's money, and you know that is mismanagement of donations.'
Mr Durai was asked if he should now 'do the right thing' by the two individuals who had paid him damages and costs for saying what he had now admitted in court. He said no, sticking to his claim that at that time, he did not travel first class using NKF funds and when he did so, he paid the difference himself.
The Straits Times
12 Jul 2005
Defamation Suit, Day 1
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NKF VS SPH: ST'S COURT TRANSCRIPT FOR JULY 11 - MORNING SESSION
MR KHOO: My name is Mr Michael Khoo. I appear for the plaintiffs, both the plaintiffs. With me are Ms Low and Mr Chiok, and we also have Mr Peter Gabriel; he is seated behind me, he is also with me. And on behalf of the defendants are my learned friends, Mr Davinder Singh and Mr Adrian Tan.
MR SINGH: And Mr Peter Wadeley, your Honour.
MR KHOO: Mr Durai, we have here two bundles. Can you please look at the two bundles of documents? The first one is headed or entitled 'Affidavit of Evidence-in-chief of TT Durai'.
MR KHOO: There is a second volume to that affidavit which comprises exhibits.
MR KHOO: Your honour, may I just object? He is going into advice.
MR SINGH: I am happy to rephrase that, to save time.
MR KHOO: Because it is viewed as privileged.
MR SINGH: You believed that the article carried the four meanings which are described at paragraph 4?
MR KHOO: Your Honour, may I object to this question? "Has not come clean'' is that the same as "non-transparency''? Transparency and controversy have somehow been translated into "has not come clean''. It is something different.
MR SINGH: I wish to avoid controversy between my learned friend and me, and I will be as transparent as possible with the witness, so I will rephase the question.
MR KHOO: Thank you.
MR SINGH: You are aware, are you not, that it is the defendants' case that NKF, under your management, has been less than transparent about its financial affairs? You are aware?
MR KHOO: Your Honour, my learned friend insists on peppering his questions with words "after great difficulty''. These documents were disclosed by us voluntarily in the course of discovery. To put it to this witness that he had obtained these documents after great difficulty is a misstatement, to say the least.
MR SINGH: I stand by what I say. I will demonstrate, your Honour, that the invoice in relation to this or what I would think is a very expensive tap, was not disclosed at all in the original list of documents filed by the NKF, although that is the central issue according to the plaintiffs in this claim. We then had to write a letter to ask for further discovery, and when we asked for that further discovery, NKF then came up with this invoice. But I will also show your Honour in due course that when we applied for further and better particulars of the installation in that bathroom, the further and better particulars were of the replaced fittings and not the original ones. We will come to that. Mr Durai, the reason you changed your position, I think I said for the fourth time, is this. You originally thought that there is no way that SPH would produce the evidence. When you saw that SPH actually had the evidence, and that in any event, there is an invoice of the value of the taps for that bathroom of yours, you decided to change the meaning and now emphasise the $21 million building and the 12th floor, is that not right?
MR KHOO: I hope my learned friend, I do not like to interrupt, but are we talking of the same thing? There were two installations. The article refers to a wash basin tap, a mixer, which does not cost $990, but $660, subject to a 10 per cent discount.
MR SINGH: Thank you, Mr Khoo. I am glad my learned friend talks about the article saying wash basin mixer. But on the plaintiffs' own case, as far as meaning goes, it does not matter whether it was a wash basin, shower or any other mixer, meaning is a gold-plated tap that cost at least $1,000.
MR KHOO: Sorry, there are two installations. Is he referring to the correct one which the article refers to or is he referring to something else? If it is something else, then that is not a wash basin tap. It is a mixer, shower mixer with a shower bar. That totally costs $990, subject to a 10 per cent discount.
MR SINGH: Right. Your Honour, I am just flummoxed that we are into this detail. I would have thought that if I was going to buy a tap, or wherever, based on public donation from people who earn $1,000 a month, it would not matter whether it was $600 or $900. I would be very careful with how I spent that money. But Mr Durai, the reason I put to you again is that you have now changed your meaning in paragraph 3 to shift the focus to the $21 million building and the 12th floor because you know you have problems on the value of the fittings.
MR SINGH: This is dated 27th April, about eight days after the article appeared; right?
MR KHOO: Again, forgive me for interrupting, your Honour. When Mr Singh asks this question, he must make reference to the question being asked. The question being asked at that time was: "Of paragraph 18(b) of the defence, in respect of paragraph (b)(ii) is it admitted that fittings were installed in the said private bathroom but the plaintiffs deny that the fittings were "expensive'.'' If you look at 18(b)(ii), the original pleading they referred to what was installed, and then they amended that to add in a new (iii), the removal of expensive fittings.
MR SINGH: Your Honour, Mr Michael Khoo can try as much as he wants to help the witness, but I would invite the court, now that he had done me a favour, to also look at the defence. Can I ask your Honour to go to tab 2? We appear to be in two different cases. Under the original defence, paragraph 18, page 33, the present 22, it comes after the word "Justification''; in other words, we are going to justify the article. It says: "The words were true in substance and in fact. Particulars of justification. (b) The plaintiffs have used funds donated to the 1st plaintiff on: (1) the construction and/or renovation of a private office suite with an attached bathroom for the use of the 2nd plaintiff in the 1st plaintiff's offices in the two-storey block in Kim Keat Road; (2) installation of expensive fittings in the said private bathroom.'' So the question was asked in relation to (2), your Honour. There was a reply to 18(2), and if your Honour can go to the reply at tab 3, page 8, this is the relevant reply in relation to which particulars were sought. It reads: "In respect of paragraph 22(b)(ii) it is admitted that fittings were installed in the said private bathroom but the plaintiffs deny that the fittings can properly or fairly be described as "expensive'. In any event, the plaintiffs deny that any fittings installed in the private bathroom were of the description stated in the words complained of and contained in the article written and published by the defendants.'' I respectfully submit that nobody can be in any doubt at that stage as to what these pleadings are about, and which fittings are being talked about. Then at tab 5, the question at page 12 is asked about these fittings. Mr Durai and the NKF were asked to identify each and every fitting that was installed, identify the cost of each and every fitting that was installed, and is it not correct, Mr Durai, that you deliberately suppressed the information in that answer?
COURT: Please answer the question.
MR SINGH: Thank you. Mr Durai, it it your case that SPH and Ms Long have an agenda against you and NKF?
MR KHOO: Your Honour, they are two different things. "I cannot say'' is different from "no''. "No'' is a "no'' to the issue of she does not have an agend
MR SINGH: My question is: is it your case
and if the answer is "I cannot say'', it means it is "no''.
MR KHOO: Your Honour...
MR SINGH: Please, malice is a question of law, your Honour.
MR SINGH: Malice is as well a question of law, but arises from whether there are any facts to come to that conclusion.
MR KHOO: Of course, but when he asks him if this is malice, was he asking him in relation to malice in a legal sense, in a defamation suit where you have to prove suit, where malice has to be proven to rebut fair comment?
MR SINGH: Mr Durai, you are aware that, in this case, you have relied on malice.
MR SINGH: Would this be a convenient point, your Honour? I am going on to a new are
MR SINGH: Mr Durai, the defendants say...and I know you do not agree...that the article means that NKF is controversial and that there is a lack of transparency. I would like to talk to you about controversy for a moment if I may. Would you agree with me that there is and has for some time now been controversy surrounding NKF?
MR SINGH: Can I just have a few minutes, your Honour?
COURT: Certainly. (A short adjournment)
MR SINGH: Thank you, your Honour. Mr Durai, coming now to the events leading up to the article. You had agreed with me before the break that SPH had a duty to write the article and that the public had an interest in reading about it. Would you agree with me that in the course of writing that article, or for the purposes of the article, Ms Susan Long, the 2nd defendant, did interview NKF's officers?
MR SINGH: That is it for today.
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Defamation Suit - Day Two
The National Kidney Foundation's (NKF) defamation suits against the Singapore Press Holdings (SPH) came to abrupt end on Tuesday at the High Court.
This, after its CEO TT Durai admitted during intense cross examination that some of the fittings in its headquarters, which were highlighted in a Straits Times article, were indeed extravagant for a public charity. The article spoke of a glass panelled shower, a pricey German toilet bowl and a gold plated tap.
Mr Durai finally withdrew both his and the NKF's case against the SPH and its journalist Susan Long. NKF's CEO was in the witness box for the second day and he was to be the only one.
Senior Counsel Davinder Singh's cross examination focused on several areas.
First, the business relationships Mr Durai had with NKF board member Ms Matilda Chua. These were through two companies - Proton Web Solutions, a call centre operations based in India, which NKF had contracted its tele-marketing work to - and Global Net, in which Mr Durai himself had a stake. Mr Durai also said he had held several directorships in addition to his work as CEO of the NKF. Asked if he had informed the NKF Board of these appointments, he replied that it was not consequential and the Board gave him the liberty to do so.
The court also heard the NKF had a fleet of eight cars and drivers, which Mr Durai and its visiting guests and VIPs could use. NKF also paid for the road tax, repair and maintenance for Mr Durai's personal Mercedes Benz.
On NKF's reserves, the court was told it stood at $262 million as of July 2005. Mr Singh argued that if the NKF stopped all fundraising activities and concentrated on treating kidney patients, it would still have enough money to see through its operations for 30 years, based on its expenses scheduled for 2003. For that year, the NKF received $24.4 million for patient fees for dialysis but spent some $31 million for these operations. So even if it was out of pocket of $7 million to $8 million per year, NKF's current reserves were sufficient for at least 30 years. But Mr Singh says the organisation has been telling Singaporeans its reserves won't last more than three years, according to statements made by its officials.
Another issue that arose during the cross examination was that of patient numbers. Mr Singh argued that NKF had overstated its patient numbers and this would have given the impression to the public that more funds were needed to run its operations.
The final straw came when Mr Singh began to zoom in on the issues of contention - the expensive fittings which the Straits Times article had highlighted. Mr Durai agreed they were expensive and extravagant for a public charity and withdrew his and the NKF's cases.
The trial which was to have lasted for ten days ended in two days.
Speaking to the media afterwards, Mr Durai told reporters that litigation is always fought with difficulty. On public reaction to the revelations in court, he said the NKF is quite aware of what may happen but its track record spoke for itself. He said the NKF has struggled to be perfect and he himself has tried his best for 37 years. He maintained that the NKF did not hide the truth in any way. And there's no running away from the fact that NKF has discharged its obligation to the people of Singapore with a world class kidney programme.
In a separate statement, the NKF Board says it has discontinued its proceedings against Singapore Press Holdings and its senior writer Ms Susan Long. And the decision to withdraw was a considered decision made in the best interests of the NKF, its supporters, donors and patients.
The Board also reiterated its whole-hearted support for Mr Durai as its CEO and looked forward to carrying on all its life-saving activities with full vigour and strength, and to continue to serve the public to the best of its ability. Mrs Goh Chok Tong, an NKF patron who was present in the public gallery, told TODAY: "All NKF asked for was a retraction, because what was stated was not true. Instead they have expanded the case into other matters. I have no question on the NKF's transparency, and have complete faith in the NKF and Mr Durai."
12 Jul 05
Defamation Suit - Day Two
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NKF VS SPH: ST'S COURT TRANSCRIPT FOR JULY 12
MR KHOO: Before my learned friend recommences his cross-examination of the 2nd plaintiff, if your Honour recalls, a lot of the cross-examination yesterday, a large part, and very serious cross-examination, was on the statement made by Mr Richard Yong, chairman of NKF, in the reported portion of the article, if your Honour remembers, where he said there was no such thing as first-class travel. Your Honour must bear in mind that the witness here, Mr Durai, was not present during that interview. There was the suggestion and I would even put it higher than suggestion, that the NKF was misleading the public without telling them that actually there was first-class travel, only business-class. Before my learned friend continues, perhaps he should -- I am just suggesting to him -- check with the 2nd defendant, Ms Susan Long, who conducted the interview, for this reason. If I may refer your Honour to Ms Long's affidavit of evidence-in-chief at page 213.
COURT: Please proceed.
MR KHOO: This represents a typewritten transcript of her interview of Mr Richard Yong on 13th April 2004 on the question of business-class travel. Somewhere in the middle of that page of the affidavit you will see at page 29, it reads as follows, according to her transcript: "Would you disclose yours. Salaries are confidential. 'Bonus' non-13 month co -- six months hearsay. 'Victim of our own success people always pick on us'. No such thing as first-class travel -- we go on business-class travel. If upgraded or pay the difference." This portion, whatever she may have meant, as an understanding of what Mr Richard Yong says, was not reported in the article. When Mr TT Durai gave his answers yesterday on whether Mr Yong was telling the truth and should be corrected, I think the best person to answer this as to what he actually told Ms Long should be Mr Yong himself, who will be coming as a witness. I just would like to point this out to your Honour because Mr Durai was not at the interview. That is only for the record, your Honour. I am much obliged.
COURT: Thank you.
MR SINGH: I am grateful for my learned friend drawing this court and my attention to the transcript of the interview. All that goes to demonstrate is two things. I say it with the deepest of respect. First is Mr Michael Khoo, my learned friend, does not appear to have followed my cross-examination yesterday. Secondly, it only confirms that what Mr Richard Yong is reported to have said in the newspapers is false. There is a critical difference between being upgraded from business class to first class, because you travel a great deal of business class, and you have the miles, for example, or if you pay the difference and therefore are upgraded on the one hand, and on the other, where you create a contrivance where on the face of it, it looks like your perk or entitlement is business-class fare, but you use that business-class fare based on a higher rate, which is published by one airline, and then use that same amount of money or less to get first class on another airline or that same air line flying out of a different destination. Therefore, when Mr Richard Yong said that there is no first class and I quote: "For the record, Mr Yong says, there is no such thing as 'first-class travel'. Senior executives, from directors up, including CEO Mr Durai, fly business class. The rest fly economy." That is as false as it can get. So my learned friend is right when he said I made a serious suggestion. It is very serious. It is a false statement that is made to the public. The fact that Mr Durai was not present at that interview is neither here nor there. First, he did come in and out of that interview, but even putting that aside, I asked him yesterday, "What steps did you take to correct the statement if it was not correct or not accurate?" First, he accepted that it was not accurate, and second, he also accepted that he did nothing to correct that statement. So we do not resile from anything that we have said. The evidence speaks for itself, and we stand by the position that we have taken. With your Honour's permission --
MR KHOO: With my learned friend's leave, I will make a slight response to that. It should not go unresponded to. These are the notes of the 2nd defendant. She conducted the interview. You will see that even from the interview notes, as recorded by her, assuming they are accurate, and of course she will be asked about the accuracy when she comes on the stand. For the record, they do not even appear in her notes, that is one thing. Secondly, we have asked for a tape-recorded transcript or rather the tape-recording of that interview in discovery, and it was told to us that it was lost or missing. That is a different matter altogether, but I would just like to say that even by her own recorded notes, Mr Yong did not say "for the record". As far as Mr Durai's ability to correct what Mr Yong had said is concerned, he was not at the interview.
MR SINGH: Before I recommence my cross-examination, I will just close off on this point by making this contention, which I think seems to have eluded my learned friend. He says that he asked for the tape, and they take issue, perhaps, with the tape or the transcript. But if he remembers his own witness's statement yesterday, in evidence on oath, his witness said that the rest of the article is correct; to the extent that it is comment, it is fair.
Therefore, this witness has confirmed that what appears in the rest of the article is accurate, but later resiled from that when he accepted that that one portion on air travel is unfortunately -- I think his words were -- inaccurate; our suggestion is false. With that, can I resume my cross-examination.
MR KHOO: $20,000 or $12,000?
MR SINGH: $20,000 because if it was enough, he would have accepted full-time employment. The reason you were not prepared to accept full-time employment at $20,000 was because you had a family of four to support and it was not enough?
MR KHOO: He wanted to say something else. "The car is also used ... "
MR SINGH: Please answer.
COURT: Mr Durai, it will help if you answer the question.
MR SINGH: Why? Why are you not prepared to come clean? We already know that, to use your word, there was an "inaccuracy". Why are you not prepared to come clean?
This is people's money, you know.
MR KHOO: Your Honour, I think to be fair to the witness, one must look at the reply itself. The reply says: "... for only three years of support of the 1st plaintiff's dialysis and various healthcare programmes ..." So this reply does not only apply to dialysis. It applies to other programmes as well.
MR SINGH: Mr Khoo may not have followed my cross-examination again. The rationale cited in the reply for the reserves was to ensure that those who are now being treated continue to live. On that basis, I asked: is it true that the statement that $189 million is only good for three years is true or false? And Mr Durai, without any assistance from counsel, admitted it is false.
MR KHOO: If it is for dialysis, yes, it is not correct. But here it says "dialysis and other healthcare programmes".
MR SINGH: Right. Let us take what Mr Michael Khoo says and given that he has asked me to review this issue, I am sorry, Mr Durai, I have to trouble you with the accounts again. Please go to the core bundle at page CB122, the accounts that we saw a moment ago.
In addition to dialysis, the NKF conducts public health education programmes; right?
MR KHOO: I am sorry. You cannot take 262, because that is on today's value. We are talking of these figures which relate to 2003. Thank you.
MR SINGH: That is fine.
MR KHOO: Because it is going to be misleading the witness.
MR SINGH: In 2003, your reserves were, what, 220?
MR KHOO: 189 -- sorry.
MR SINGH: I think Mr Khoo should read the papers before he stands up.
MR KHOO: Sorry.
MR SINGH: In 2003 it was, what, 220?
COURT: Mr Singh, the court reporter has requested a short break. We will take a five-minute break. (A short adjournment)
MR KHOO: Before my learned friend resumes, there is just one matter for clarification's sake. From the notes as recorded, if your Honour looks at CB260, my learned friend was reading from the dialysis number of patients as at December 1999 and as at November 2003, and I think the questions put to the witness was that for the NKF, as at December 1999, the figures were 1,414, and as at November 2003, it was 1,512. There was a drop in the percentage of total number of patients in Singapore on dialysis. That is not disagreed with. But the question as recorded by my learned friend, which is recorded at line 12: "Therefore, you accept, do you not that, over the years, despite the numbers or dollars that you are raising, the percentage of kidney patients which NKF cares for has decreased? Answer: No, not now. I mean, the numbers have gone up of late. Question: I am talking about 1999 to November 2003. Answer: Yes, the numbers went down. Question: Went down; right? But as these numbers went down, your reserves and fundraising went up?" And the answer was yes. Actually it should be percentage; the numbers went up, but it was a decrease in the percentage from 54 per cent to 44 per cent of the total.
MR SINGH: That is what I said at line 14, the percentage has decreased.
MR KHOO: But the last question to the witness: "But as these numbers went down, your reserves and fundraising went up?"
MR SINGH: I think it was obvious that it was a reference to the percentage. In fact I said 54 and 44.
MR KHOO: No, but that question itself. I think it should be corrected, your Honour.
MR SINGH: There is nothing to correct. I stand by what I said. It is the percentage that went down. When I referred to the number, the number is the percentage which is 54 to 44. And the witness agreed.
MR KHOO: In that sense, it is the percentage and not the number of patients. That is all I want to clarify. That is what Mr Singh meant, for the record.
MR SINGH: Yes. I will now come to the number of patients. Mr Durai, would you agree with me that NKF has been less than careful, to be generous, about the way it has put out its numbers, i.e. the number of patients that NKF treats?
COURT: The question is a simple one. Where would you draw that line?
MR SINGH: Give us a number, please, because you told us what the perspective is, the man who earned $3,000 to $4,000.
MR SINGH: Your Honour, would this be a convenient time.
COURT: Yes. (The luncheon adjournment)
MR SINGH: Have you managed to get hold of the letters of appointment that you said you would produce after lunch?
MR KHOO: We have not got a copy of that letter yet, your Honour.
MR SINGH: Can arrangements be made by your organisation to retrieve it this afternoon, because I would like to deal with that letter while Mr Durai is on the stand. While we wait for it, can you go to the article at 2DB, pages 335 and 336.
MR KHOO: Can you read the whole sentence.
MR SINGH: '... that only a multi-billionaire like Bill Gates could afford to install.' Do you see that?
MR KHOO: Your Honour, without wanting to interrupt my learned friend again, I think he must ask the witness, because in the answer to interrogatory, a specific period was mentioned. Between 2002 to 2003. We do not know what period Mr Yong was referring to when he gave this interview.
MR SINGH: That is why I very fairly took the witness to an earlier page of the answer where he said that in the year 2002 to 2003, there were directors, page 24, and it has been established that directors have been described as senior executives. And it has also been established that one said they do not fly business class, while another said something totally different.
Anyway Mr Durai has now confirmed that his answer on oath was wrong.
MR KHOO: Your Honour, I have to object to that. Because malice is at the time of publication and not what the contractor is prepared to swear one year later. At the time of the publication.
MR SINGH: I think my learned friend misunderstands my point. The point Mr Durai is making is there was a reckless disregard for the truth. It cannot be a reckless disregard for the truth when in fact that is the position that the person who gave the information is willing to stand by.
MR KHOO: But that is today. He is prepared to swear an affidavit today. The question which the witness has said is: was there proper investigation at that time before the rush to publication? And that would have been 17th or 18th April 2004.
MR SINGH: Your Honour, let me put an example. Let us assume that a day before the article, Ms Long had asked Mr Durai whether it is true that he is receiving $600,000 in annual remuneration. Mr Durai says he needs time to consider before he replies, but Ms Long goes ahead the next day and publishes it anyway. It is proved that it is true. How can it be reckless disregard of the truth? It is logically impossible.
MR KHOO: Only if it is proven to be true, but we have not proven the question of the gold tap to be true. The fact that the man has decided to swear an affidavit does not mean that it is true. That is the fallacy of the argument.
MR SINGH: There is no fallacy because even if it is not proved to be true, if the man who gave that information is prepared to stand by that information, and is prepared to come to court and say on oath that what he said is true, and that he is maintaining it, that is a factor your Honour would have regard to, as to whether or not we acted recklessly. It would be or might be argued to be reckless if there was no such source and no one was produced. But I am fully entitled to ask this witness whether he would still say it is reckless if the source is prepared to come to court.
MR KHOO: No, I think you must be specific. After 3rd January and he specifically says the Monte Carlo toilet bowl was never removed.
MR SINGH: That is fine.
MR KHOO: But do not say 'any time' because it could have been done one year before that. There could have been a removal. We do not know.
MR SINGH: Mr Khoo would know that one year before that there was no private suite.
MR KHOO: No, but there was a toilet there.
MR SINGH: Mr Durai, you say after 3rd January, the Monte Carlo toilet bowl costing $1,100 was not removed; correct?
MR KHOO: Can you please read the entire installation.
MR SINGH: Certainly:
'... complete with Cobra sliding shower (white/gold) -- $990.
Hansa Star Ronda basin mixer complete with pop up (white/gold) -- $680 .
Total -- $3,150.
Less: Discount 10 per cent.
Taxable amount ...
Total payable -- $2,920.'
MR KHOO: Again, your Honour, 'Is not $990 pricey for a tap?' Which tap is he referring to? There are two taps. One is a shower mixer and one is a wash basin mixer.
MR SINGH: All right. I will clarify.
MR KHOO: And the $990 includes the shower head and the sliding bar. I think this has been made clear. It is in the invoice read by my learned friend. So perhaps if he could be more accurate.
MR SINGH: Let me ask you again. If $1,100 is pricey for a toilet bowl, is $1,000 pricey for a tap, complete with shower, sliding?
COURT: What is your answer?
MR SINGH: Thank you. That is the message in the six paragraphs; right?
COURT: What are you saying?
MR SINGH: The reasonable reader would not think that the CEO was involved in the installation of taps?
MR KHOO: Your Honour, it was not the NKF who told him to do his job. That is not the evidence.
MR SINGH: No, I am talking about the article and the reading that a reasonable reader would take from the article. It says here: 'After his outburst, he was told to 'just do' his job.' Right?
MR KHOO: Yes. Not the NKF.
MR SINGH: Thank you very much. So if it was not the NKF, then who was it? Your lawyer said it is not the NKF. Who was it?
MR KHOO: That is only assuming that this version is true, but certainly it was not the NKF who was involved. That is all I am pointing out.
MR SINGH: You see, I am going to put to you, because we have spent a lot of time on this, that there is nothing in the article to suggest that the NKF decided to downgrade because of protests?
COURT: There has been a request from the court reporters for a break.
MR SINGH: This might be a good time, yes. (A short adjournment)
MR KHOO: On the request for the letter of appointment, we have not been able to trace it just yet, the letter of appointment which my learned friend seeks. Overnight we might just do it. If we get it, we will let him have it.
MR SINGH: I am grateful. Mr Durai, the document I wanted you to look at is in volume 2 of the defendants' bundle of documents, page 356. This was the letter of demand you sent on 19th April after consultation with your lawyers?
MR KHOO: Your Honour, the witness has said he wants consultation on this aspect. It is not with regard to his evidence. He wants to give instructions on this aspect.
MR SINGH: There is nothing to give instructions on, and any consultation will touch on his evidence, because by necessity, he will have to ask Mr Khoo whether as a result of his evidence, he should withdraw. And Mr Khoo will then be put in that difficult position of having todeal with the evidence, and I think it is not something he would want to do, but if he wants to, he takes a grave risk, and I do not think it is something that any lawyer would want.
MR KHOO: Your Honour, if my client wants to consult me, not on his testimony, but as to the question of whether he should withdraw, he should have the right to counsel on that.
MR SINGH: That misses the point. He cannot ask Mr Khoo about whether he should withdraw unless he also asks the corollary question, in view of my evidence, should I withdraw? Mr Khoo then is put in a position where he has to say, well, in view of this evidence, yes, or no, and therefore enter into a discussion of the evidence.
MR KHOO: No, there will be --
MR SINGH: The witness is a trained lawyer, has been a lawyer for 10 years, has been instrumental in driving this action, has given us answers on all the meanings, and all I ask for is a straight answer to a straight question.
MR KHOO: Your Honour, he is not in this court as a lawyer. He is not in this court as a lawyer; trained though he may be, he is entitled to legal counsel.
COURT: Yes, Mr Singh.
MR SINGH: He is not, your Honour, entitled to discuss hisevidence with his lawyer in the course of cross-examination, and if Mr Michael Khoo is prepared to say to this court that no part of the evidence will be discussed directly or indirectly, then he takes the risk, your Honour. But as I said, it is not a risk that any lawyer would want to take, given that this discussion cannot take place without an evaluation of the evidence and his answers. So I would ask your Honour, given the way this case has developed, that all I want is a straight answer from the witness as to whether in view of his evidence on all the meanings, he personally is prepared to do the honourable thing and withdraw the case.
COURT: Yes, Mr Durai.
MR SINGH: Your colleagues have nothing to do with this case. You are the plaintiff. You have sued personally.
COURT: Take your time, take your time and think carefully before you answer this question.
MR KHOO: Your Honour, I think there must be this ability -- that he should be given access before he decides on whether to withdraw and not as to whether his evidence should be discussed. It is a question of, should I withdraw, what are the consequences? Nothing to do with his evidence, your Honour.
MR SINGH: I will be fair and I will tell the witness the consequences. Mr Durai --
MR KHOO: He is not giving advice to him.
MR SINGH: I am not, but I am explaining to the witness so that he understands, and if Mr Khoo thinks that I am misleading or I am not complete, Mr Khoo can add to it. Mr Durai --
MR KHOO: Your Honour, I leave it to you whether you would want him to be able to take legal advice before he gives an answer to your Honour.
COURT: Yes, carry on first.
MR SINGH: Thank you. Mr Durai, I see that you are on record as saying I will withdraw?
MR SINGH: Thank you very much. Can I also ask clarification --
MR KHOO: That is what the witness has said, your Honour.
COURT: Do you have anything to say?
MR KHOO: Nothing because it is a statement made by him in the witness box. There is nothing else I can say to what he has said in the witness box.
MR SINGH: Thank you, your Honour. Would you also withdraw the claim by NKF?
MR SINGH: Thank you very much. Your Honour, can we submit on the issue of costs tomorrow or would you like it today?
COURT: We will deal with the question of costs tomorrow.
MR SINGH: Thank you very much.
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SINGAPORE, July 17 - In Singapore, where public protests are banned and the government has tamed the media, it took an unlikely golden tap in a luxurious office to turn on a rare outpouring of widespread community anger.
Singapore's biggest charity, the National Kidney Foundation, was the focus of the outrage last week after an attempt to avoid scrutiny over its chief executive's lavish perks and 600,000-Singapore-dollar (350,000-US) salary spectacularly backfired.
The saga began when the foundation and its chief executive, T.T. Durai, sued the Straits Times newspaper for defamation over an article published last year that raised questions about how donors' money was being spent.
They claimed the article, which said a 1,000-dollar gold-plated tap had been installed in the private bathroom of Durai's office suite then removed after protests from the building contractor, had damaged the charity's reputation.
In his libel suit, Durai, who had led the foundation since 1992, said the implication that donors' funds were being misused was "scandalous" and "ridiculous".
However, Durai went to court apparently unaware the case would force him and the foundation to reveal a wide range of facts and practices that the Straits Times' legal counsel said the organisation had long tried to keep hidden.
During a torrid two days of questioning in court by the newspaper's lawyer, Durai was forced to reveal his salary and that donors' money paid for his first-class flights overseas as well as the upkeep of his Mercedes Benz.
Durai also reluctantly admitted the foundation had misled the public over how long its reserves of 260 million dollars would last if donors' money stopped pouring in, as well as how many patients it treated each year.
After finally conceding the original article about the tap was indeed not defamatory, a defeated Durai on Tuesday withdrew the libel suit with his and the foundation's reputation in tatters.
On Thursday, after more than 40,000 people had signed an on-line petition calling for Durai to quit and the government had expressed major concerns, he and the 15-member board resigned. Prominent lawyer Tan Choo Leng, the wife of former prime minister and current Senior Minister Goh Chok Tong, also stepped down as patron of the foundation after initially publicly backing Durai's salary.
It was an enormous come down for one of Singapore's highest-profile organisations, which was formed in 1969 and rose to become the self-proclaimed "largest not-for-profit (kidney) dialysis provider in the world". An estimated two thirds of Singapore's population have donated to the foundation, which employs an aggressive, commission-based marketing model and regularly holds television donation drives featuring celebrities.
"This whole issue has been about transparency and accountability," 20-year-old national serviceman Lawrence Tan, who started the on-line petition after reading about the court proceedings, told AFP. "The public has showed them a lot of support for a long time, it's only right they should be held accountable by the public and that they should be more transparent."
But government critics say the "golden tap scandal" has generated so many expressions of anger from the community because it was also a rare opportunity for ordinary citizens to vent their frustrations at figures of authority.
Aside from the online petition, there was also a blitz of letters to newspapers and complaints on radio talk shows, as well as the foundation's head office being vandalised with graffiti.
"This is almost a surrogate situation. It's basically a reaction because they (the community) can not speak out against the government," prominent opposition politician Chee Soon Juan told AFP. "The government has basically got a lock on society."
Chee said the National Kidney Foundation could not operate without having close government links. Yet he said the charity was not a direct government body and was thus seen by the public as a "safe" target for criticism. Chee said the issues of transparency, accountability and high salaries raised in the National Kidney Foundation affair were also matters of concern for the public in regards to the government.
The People's Action Party, which has ruled since the nation's independence in 1965 and currently holds all but two seats in parliament, has ensured government ministers in Singapore are among the highest paid in the world, saying it keeps them from becoming corrupt.
Another opposition group also said last week's charity saga raised broader questions about the use of public money by all government bodies. "The public has the right to ask, and the equivalent right to a satisfactory answer, from institutions charged with the handling of public money," National Solidarity Party president Yip Yew Weng said in a letter to the government. "These institutions include ... the nation's public offices."
In pursuing defamation action, the National Kidney Foundation also attempted to use a tactic that senior Singapore government figures have successfully used over many years.
The career of Singapore's most famous opposition politician, J.B. Jeyaratnam, was destroyed by defamation suits from the nation's founding father, Lee Kuan Yew, among others. Fellow opposition politician Chee is also facing bankruptcy after losing a defamation suit to Lee and his successor, Goh Chok Tong.
While Lee and Goh have insisted the defamation actions are necessary and legitimate actions to defend their reputations, Chee and others maintain the libel laws have been used to silence government critics.
In the National Kidney Foundation's case, the charity successfully won damages and apologies from two people in 1998 who said Durai and other senior figures in the organisation had flown internationally on first class.
But in court last week, the defamation tactic ended up destroying Durai's career and the NKF's reputation after he admitted that he indeed flew first-class on foundation money. - AFP
17 Jul 05
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SINGAPORE : The National Kidney Foundation and its CEO TT Durai was the talk of town on Wednesday.
This comes after they withdrew their defamation suits against Singapore Press Holdings, following a two-day hearing where the court heard about Mr Durai's pay and job perks.
Some 3,800 donors have cancelled their contributions to the organisation. At the same time, some 15,000 people signed an online petition calling for Mr Durai to step down.
But NKF staff have rallied behind their boss.
The public spoke out swiftly - in the wee hours of the morning, vandals defaced a signboard outside the NKF building at Kim Keat Road. Painters were quick to repaint the graffiti but the damage had already been done.
In cyberspace, signatures came pouring in at an online petition website for Mr Durai to step down. Even at Channelnewsasia.com's online forum, public disappointment was clear. Many donors said they would cut their donations to the charity after the revelations in court.
This has now put the organisation and its spending under intense public scrutiny.
Besides this call for greater accountability, the majority of those who spoke to Channel NewsAsia said they will not stop donations to the NKF.
Despite the backlash, many staff members and patients at the National Kidney Foundation have rallied behind its chief Mr Durai, and they have also called on donors to take a more measured response to the revelations over the past few days. Dialysis patient Chan Poh Choo, 58, visits a dialysis centre three times a week for treatment. She made a plea to donors not to write off the NKF because of what has happened. Ms Chan said: "As a patient, I know the NKF has done a lot for kidney, cancer patients or else we can't afford expensive dialysis and with medical so costly now, the NKF has done a lot and I hope it will carry on with the good work they have done, as we need the funds for survival."
For Job Loei, he is not just a patient but has been working closely with patients there. Mr Loei said: "Whatever money we raised goes back to the public. Mr Durai has worked very hard, I have seen him over the past four years. He is very passionate about the cause and no matter what, he has done a good job and I will stand by him."
Mr Durai is seen as the engine of the organisation, not only for the 1,800 patients at the 21 dialysis centres islandwide, but also among his 900-strong staff.
Ms Michelle Ang, Deputy Communications Director of NKF, said: "He addressed staff to explain the decision on withdrawing the case, and they gave him a standing ovation. "As we all know how hard he has worked, his whole life has been about the NKF, the patients especially, as he knows them by name, he sees everyone of them so we all know what TT Durai stands for and he is a great boss." That is the general consensus among many staff members of the man who has played a key role in building the NKF over the years.
13 Jul 2005
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THE National Kidney Foundation (NKF) is fast becoming a fortress under siege - with thousands of supporters deserting it, abusive red graffiti being painted on its headquarters and pressure mounting on its CEO to step down.
For now, the NKF board is standing by the man it sees as an asset. The foundation insisted that Mr T T Durai (picture) was not given the chance to tell his side of the story in court - even though it was his decision to abruptly drop the defamation case against SPH.
But, anger against the NKF is brewing.
The first sign of trouble came at 6am yesterday, when the front wall of the NKF's headquarters at Kim Keat Road was vandalised with red graffiti screaming "Liar". While this was later covered up, more drama followed.
As its board of directors scrambled to contain the damage, about 3,800 donors want to cancel their monthly donation to the NKF. An outraged public also voiced their displeasure online - more than 15,700 people have asked for the man at the centre of the storm - the CEO, Mr Durai - to quit over the uproar he ironically created himself.
All this, after a two-day trial had focused on his $25,000 monthly pay and 12-month bonuses, on undisclosed business dealings, expensive toilet fittings and first-class travels. Said reader Richard Lam: "I think it is time for Mr Durai to bow out gracefully..."
Fervent supporters, however, prefer to separate the man from the organisation. "Does the NKF not run its programmes well? Have patients not been given dialysis? Why are we attacking the organisation?" said a volunteer.
Amid rumours that Mr Durai had unsuccessfully tendered his resignation, NKF chairman Richard Yong again pledged his support for the CEO. "He's still very much an asset to us. Mr Durai has done nothing wrong," he told Today. The board is also understood to be discussing ways to clarify certain doubts that have arisen from the trial.
Said NKF's spokeswoman Michelle Ang: "To a lot of the questions put forth in court, Mr Durai was only able to answer yes or no. We feel that a lot of information that came out is only part of the story. It's not the whole story." For instance, she said although the chairman of its Children's Medical Fund board, Dr Gerard Chuah, had wrongly claimed that the NKF had 3,000 patients, NKF's chairman Mr Yong had, in fact, used the correct figure of 1,800 patients in a letter that appeared on the same page. But she admitted that NKF is "still assessing the damage".
What about public calls to revamp the board? Said Mr Yong, who has been on the NKF board for 18 years: "All the board members are professionals, doctors and lawyers and accountants. They receive nothing in directorship fees. They are all volunteers." Inevitably, the whole NKF episode has also cast a pall over the charity movement in Singapore.
The National Council of Social Service said it has received several calls from donors who have concerns about how charities manage donations.
Meanwhile, some NKF donors have called to switch their allegiance to the Kidney Dialysis Foundation (KDF), instead. Said its CEO Dr Gordon Ku: "It is sad for the NKF episode to have taken place. For the charity scene, there is now a dent in public confidence. But it's positive in that people have suddenly woken up and want to know where their donations are going."
Meanwhile, the show will go on in NKF, which is holding its final fund-raising event tonight (Thursday) to raise money for its cancer patients. For the first two shows over the past two weekends, it raised a total of $10.43 million.
But Mr Yong said he hopes the public won't take it out on the patients. Asked if this was the worst crisis NKF has faced, he said: "I would say so. In 1986 and 87, when we had no money, that was also a crisis, but we built it up. This is one crisis which we have to ride through. Patients have to continue their treatment. Everything must go on."
14 Jul 2005
THE National Kidney Foundation began its day yesterday with graffiti splashed on its walls - and by 5.30pm, more than 3,800 of its regular donors had stopped their contributions.
Calls for NKF chief T. T. Durai´s resignation took concrete form in an online petition started by full-time national serviceman Lawrence Tan, garnering over 18,000 signatures as at midnight.
Public outrage reached an unprecedented scale, with The Straits Times newsroom inundated with hundreds of e-mail messages and dozens of calls to its hotline.
Readers were angry at the size of chief executive officer Durai´s salary and his perks, as well as how the NKF had misled the public on the number of years its reserves will last and the number of patients it treats.
But even as vitriol was poured on Singapore´s biggest charity, calmer voices pointed out that there were kidney patients in need of donations - and that the episode should not diminish contributions to charity.
Health Minister Khaw Boon Wan told The Straits Times yesterday the NKF must provide more information and explain its actions to regain the public´s confidence. ´The key to gaining confidence is full transparency.´ But he made it clear he will continue donating to charity, whether it is to the NKF, ComChest or others ´because there are people out there who can benefit from it´.
In court this week, the NKF admitted to having $260 million in reserves, enough to subsidise dialysis treatment for 30 years at the current subsidy rates - not the three years it has consistently maintained.
Mr Khaw, who had spoken in support of the NKF when it maintained that three years was how long its reserves would last, had this advice for the NKF yesterday ´If there was bad judgment, then acknowledge it and move on.´
Politicians like MP Chong Weng Chiew echoed Mr Khaw´s call for greater transparency, in particular, its expenditure ´on publicity, manpower, administration and patients´. He also wants to know how the NKF assesses patients for subsidies, as he had been approached many times by kidney-failure patients who had been rejected by the NKF.
The issue of transparency was a key plank in The Straits Times´ defence against the defamation suit brought on by NKF and Mr Durai.
Among other things, SPH´s lawyer, Mr Davinder Singh, spoke of the difficulty of getting the NKF to disclose that Mr Durai earned more than half a million dollars a year and how, contrary to its oft-stated position, he had travelled first class. The NKF withdrew its suit against Singapore Press Holdings and journalist Susan Long on Tuesday.
Lawyers for the two parties met again at a hearing in Justice Tan Lee Meng´s chambers to address the issue of costs yesterday. The matter has been adjourned to Monday.
It was Ms Long´s article published on April 19 last year that was the subject of contention, particularly its opening paragraphs which reported lavish toilet fittings in the bathroom of the CEO´s private office.
Before withdrawing the suit on Tuesday, Mr Durai admitted in court that the article was fair and accurate and told reporters after the hearing that he would not resign ´unless the people want him to´.
Non-constituency MP Steve Chia said yesterday Mr Durai should resign as ´he has lost his moral authority to ask for money´.
NKF staff, however, are standing by their chief. Ms Michelle Ang, NKF´s deputy director of corporate communications, said ´They are still solidly behind him and know the high degree of his commitment to NKF.´
The Straits Times
14 Jul 05
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Interim chairman expected by weekend and a new board to be constituted quickly
THEIR faces grim, National Kidney Foundation chief T.T. Durai and board chairman Richard Yong emerged from the Health Ministry building at 3.30pm yesterday. They were hustled into cars, declining to say what had transpired during their meeting earlier with Health Minister Khaw Boon Wan.
This was what happened. They had gone to consult Mr Khaw on what they should do in the wake of public outrage over the way the NKF rewarded its chief and misled people into thinking it needed more money.
They were told 'the status quo would not do'. They asked if the board should make way for new leaders. Mr Khaw's reply: 'That would certainly be very helpful.' That phrase marked the end of a 37-year association between Mr Durai and Singapore's largest charity.
At 6.30pm, Mr Khaw announced the resignation of Mr Durai and the entire NKF board at a press conference attended by Mr Durai, Mr Yong and NKF board vice-chairman Alwyn Lim.
Asked about his future, the NKF CEO of 13 years told reporters that his 'paramount interest' now was to help Mr Khaw in the transition stage.
Businessman Piragasam Singaravelu, 45, whom the NKF sued for libel in December 1998, described the en masse resignation last night as the 'best news for Singaporeans, especially those who donated to NKF'.
Right up to yesterday morning, it had looked as though Mr Durai, 57, intended to ride out the controversy that began with NKF's lawsuit against The Straits Times over expensive toilet fittings - and ended with disclosures it had paid its CEO $1.8 million over three years, allowed him first class air travel and maintained his private car.
Calls for Mr Durai's resignation escalated with close to 40,000 signatures put on an online petition, and more than 6,800 donors cancelling their monthly contributions to the charity in two days.
The NKF Cancer Show on Channel U last night made no attempt to solicit donations from the viewing public, in line with the suspension of canvassing activities.
Mr Khaw hopes to find an interim chairman by the weekend and get a board constituted quickly to review NKF's practices, serve kidney patients and restore public confidence in the institution.
Among the board's tasks: To determine if the NKF reserves, now standing at $260 million, would last 40 years as in the 'rosy picture' painted in the media, or the NKF's 'tragic' three years.
Despite the 'unfortunate turn of events', Mr Khaw issued the reminder that the NKF had done much good over the years, with Singapore's dialysis care among the best in the world.
The NKF had transformed itself into such an effective fund-raiser that it was he who had asked Mr Durai to branch into serving cancer patients as well, he disclosed.
Although some might argue that 'some of the techniques may be a little bit outside OB markers', he said he was in favour of more 'NKFs' with professionals running their fund-raising operations.
With one big caveat. Because the 'stakeholders' are donors, they need to know as much as possible about the finances and practices of those out for the charity dollar.
'As I always maintain, donation is voluntary. So it is self-regulating in that sense because if you are so opaque, secretive or whatever, who would donate to you? But the more transparent you are, I think you win greater public trust,' he said.
The larger issue, however, is whether Singaporeans are ready for charities to be run like corporations with key performance indicators and employment contracts.
He asked: 'Should VWOs be uncontroversial and remain amateurish, old-style, collect little... or is there not a place in Singapore for a different kind of VWO?'
But what was clear: he himself would continue donating to the NKF because patients would benefit. The question of whether too much money had been collected could always be settled by channelling the money to other causes.
He made a plea to the public not to delve into 'history', but to restore the NKF by building on its strengths. 'I am determined to help... NKF... emerge from this incident even stronger so that patients continue to be served.'
Last night's announcement of an interim committee replacing the current board was welcomed all round. Those contacted want the committee to go through NKF books with 'a fine-tooth comb', as insurance adviser Robert Young, 53, put it.
Said Mr Brandon Lee, 33, a businessman: 'We also want the Government to put in measures to make sure such things don't happen again.'
Mr Johari Marzuki, 46, father of four and an NKF patient for 15 years has only one item on his wish list: 'I hope people don't react emotionally and cancel their donations. There are so many lives that depend on it.'
The Straits Times
15 Jul 2005
Two days of outrage force Durai, board to quit
IN A dramatic end to his 37-year career, a defeated T T Durai finally succumbed to public pressure yesterday, quitting the chief executive officer hotseat at the National Kidney Foundation (NKF), along with its entire board of directors.
The resignations - which came in the afternoon - were accepted by Health Minister Khaw Boon Wan, who admitted that the Government had "no legal rights" to intervene in a private charity.
The fact that it still did so spoke volumes of the impact of the public outcry Singaporeans have raised over transparency issues at the country's best-known charity.
At a hastily-arranged press briefing yesterday, Mr Khaw said the NKF had approached him for "advice" on how to respond to the public anger that has seen thousands calling for Mr Durai's head.
Two priorities emerged - not disrupting dialysis services for NKF's patients, and restoring public confidence in the charity, which has been shattered.
Said Mr Khaw: "On public confidence, my advice was that the status quo will not do. They asked if they should step down so that a new board and CEO could be appointed. I told them this would certainly be very helpful."
Meanwhile, active fundraising in NKF will be suspended while the Government scouts for replacements and reviews NKF's accounting practices, funding needs, pricing and subsidy policies, said Mr Khaw.
The review - as well as the resignations - have ironically come in the wake of a defamation suit that Mr Durai and NKF had filed over a newspaper report that mentioned the air of luxury at the foundation.
The case ended, instead, with revelations about Mr Durai's annual earnings of $600,000, the cars at his disposal and suggestions of half-truths in NKF's public pronouncements.
The Government now needs to look at some of these issues of extravagance and transparency - including the unresolved question of just how long NKF's reserves can last.
"Is it as rosy as what has been painted in the media - that (the reserves) can last 40-odd years - or is it as tragic as the three years that has been presented (by the NKF)? The truth is that it could be somewhere in the middle," said Mr Khaw.
He also said that if investigations reveal criminal activities, the law will take over. "If funds collected suddenly disappear into Swiss funds, then of course that's criminal. If that is so, we have to find out who is responsible," he said.
However, reviews may show there's nothing wrong with NKF, he said. "I hope Singaporeans will also acknowledge that if these accusations were exaggerated and unfair to individuals, they should also come upfront and say so. I'm sure the individuals want to have a proper scrutiny and endorsement. Am I a crook, criminal or what?" he said.
Yesterday, the NKF representatives - consisting of Mr Durai, chairman Richard Yong, and vice-chairman Alwyn Lim - were mostly silent during the press conference. Gone were their repeated insistence that "they have done no wrong" in creating a public relations nightmare.
Although Mr Durai abruptly withdrew his suit on Tuesday, the damage had already been done. By Wednesday, red graffiti defaced NKF's headquarters as 6,800 donors pulled out and thousands more petitioned for Mr Durai to quit. As the chorus of voices grew louder, government leaders also gave their take on the fiasco.
Yesterday morning, Dr Vivian Balakrishnan said at an industry event that while the government cannot force any decisions on the NKF, it will "watch very closely" and "nudge people in the right direction". By evening, the nudge had become and invitation to leave _ though Mr Durai would not say if the government's stand pushed his hand.
Speaking to reporters, a drained and solemn Mr Durai said: "I think it's time for a new leadership to take over. Having brought the organisation to a level like this, it's preferable for a new leadership to take it to another level. Thirty-seven years is a very long time."
But he will not leave alone. NKF patron, Mrs Goh Chok Tong, who has thrown her support behind Mr Durai throughout the controversy, has also decided to relinquish her position. In a statement, she said: "This has been a sad and unfortunate episode. But I hope that Singaporeans will continue to support the NKF's efforts to help kidney failure patients and their families."
The board that had backed Mr Durai has resigned too.
Over the next few days, Mr Khaw will be busy finding a new chairman for NKF. The new board, however, may consist of existing NKF directors, for "continuity" reasons.
Despite the public flak, the NKF's model of professional fund-raising was praised for its efficiency.
"It would be a loss for Singapore if we go back to the old days, if we collect a few dollars here, a few cents there," he said. In fact, after the review, NKF reserves may be diversified into other causes, he revealed. But bigger implications may result from the NKF fiasco.
For instance, there may be closer scrutiny on other charities, and if need be, the government may tighten regulatory controls, said Mr Khaw.
Vowing to help NKF "get back to basics", Mr Khaw said: "I'm against destroying in order to rebuild. This is stupid, silly and a waste of time. Unless it's so rotten, then it's a different story. I don't think it's rotten. Good work has been done, and let us build on that strength."
15 Jul 2005
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Chairman and Members of the National Kidney Foundation (NKF) Board, together with its CEO, approached the Minister for Health this afternoon for advice on how to respond to public reactions to the ongoing court case between the National Kidney Foundation (NKF) and the Singapore Press Holdings. The Minister stressed two immediate priorities. First, care for NKF's dialysis patients should not be disrupted in any way. Second, shattered public confidence must be restored.
The NKF Board members and the CEO shared this view.
On restoring public confidence, the NKF Board and the CEO sought the Minister's intervention and offered to resign in order to give him a free hand in this. In particular, they requested Minister's assistance to reconstitute a new Board and appoint a new CEO. NKF is an independent non-Governmental Voluntary Welfare Organisation. However, in the interest of the dialysis patients and the NKF, the Minister agreed to help in this effort.
Over the next few days, the Government will appoint an interim board to ensure continuous operation of NKF's various Dialysis Centres, as well as to work on medium-term tasks, including forming a new Board, appointing a new CEO, reviewing accounting practices, funding needs, and pricing and subsidy policies. Pending completion of these reviews, NKF will suspend active fund-raising activities.
The Minister acknowledged that the NKF has been a key partner in providing care for kidney patients. There will continue to be many patients needing such help and the cause for charity should not be diminished by this episode.
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20 Jul 2005
THE NATIONAL KIDNEY FOUNDATION
(Statement by the Minister for Health)
Mr Khaw Boon Wan: Mr Speaker, Sir, the revelations in the High Court on 11th and 12th July by Mr T T Durai, then-CEO of the National Kidney Foundation (NKF), gripped the attention of Singaporeans and sparked widespread outrage. They eventually led to his resignation and the resignation of the entire Board of Directors.
The intensity of the public reaction is understandable. Many Singaporeans have donated to the NKF with good intentions of supporting the less fortunate who suffer from kidney, cancer and other diseases. The donors are naturally upset by the disclosures which seemed to suggest overly-generous staff compensation, improper spending, weak Board governance and misleading statements on fund reserves. They feel misled, betrayed and deceived.
While such emotions are understandable, we need, at the same time, to remain objective and not lose sight of the bigger picture. The NKF cause is a worthy one. There are real patients out there who have benefited from the work of the NKF and who continue to require care. I have visited the NKF dialysis centres before, and so have many Members of this House. We have spoken to the patients. They were sincerely grateful and happy with the work of the NKF in giving them a new lease of life.
I believe that Singaporeans know this and support the NKF's fundamental cause. That is why the NKF enjoys such widespread support, with more than half a million Singaporeans making donations to the NKF last year.
Continued patient care
Therefore, while it is important that we look into the issues which the court case has thrown up, we must not allow them to distract attention from the NKF's patients in need.
Our top priority must be to ensure that patient care and existing clinical services are not disrupted. The NKF runs 21 dialysis centres, serving 1,800 patients regularly. Professional standards and services must remain intact. Patients must continue to receive their medical treatments. They must continue to have access to their doctors and nurses, dialysis machines, medication and medical advice.
Equally important, we must not forget the staff of the NKF: the doctors, nurses, administrative and support staff. Their morale has taken a beating. They are a dedicated group, serving a cause which they believe in. They need the assurance that their work is appreciated, and that they can carry on delivering patient care without distraction or worries about their future. Despite a difficult week, they have rallied together to ensure that the work still gets done. They need our moral support.
Regaining public confidence
But NKF must acknowledge that public confidence has been shattered. For the NKF to continue its work, it must address this comprehensively.
Putting a new, strong Board in place
The immediate task is to put in place a new, strong Board to stabilise the situation. A few people have questioned my involvement, and by extension, the Government's involvement in this matter. They are concerned about the Government's intervention in the affairs of a voluntary organisation.
Mr Speaker, Sir, the NKF is indeed a private non-Governmental Voluntary Welfare Organisation (VWO). It was founded in 1969 and registered in 1984 under the Charities Act. It is not a Government-linked entity, nor is it run by the Government. It has its own governance framework to manage its organisational issues.
However, as public pressure built up last week, the NKF Board of Directors and its CEO came to see me on Thursday, 14th July. They asked for advice on how to respond to the crisis. They sought my help, presumably because patients' welfare was at stake, and their Institution of Public Character (IPC) status, which allows them to collect tax-exempt donations, was issued by my Ministry.
I told them candidly that they had lost the public trust. The NKF was built up by public donations. Without public support, the NKF could not continue. For the NKF to survive, its top priority was to regain public confidence. They agreed with my assessment and asked me if I could help shepherd the NKF through this crisis.
I told them bluntly that the status quo would not do. I added that a new Board and a new CEO would offer the best chance of winning back public confidence. They took in the message and offered to resign en-bloc to give me a free hand to reconstitute a new Board and to appoint a new CEO. That was how I got involved in this assignment. This was Friday, 14th July.
In my view, the key to preserving public confidence and sustaining a vibrant voluntary sector is full accountability and transparency of all charities and IPCs. This should be achieved, first and foremost, through the efforts of the voluntary organisations themselves - their ethos, culture and policies - as determined by their Boards of Directors.
This is why my first urgent task was to find a suitable Chairman for the NKF. After pondering a few possibilities, I approached Mr Gerard Ee. I am glad he is in the Chamber today. He is in the Public Gallery. I felt he was the best person to lead in this healing process. He is synonymous with charity and compassion, and is a well-known public figure. On 15th July, I got his agreement to chair the new Board.
Gerard and I quickly got on to the next task of forming the rest of the Board. To regain public confidence, the Board needed Directors with high standing in their professions and in the community, with reputations for integrity and high ethical standards.
Today, I am pleased to report that a new NKF Board of Directors has been appointed. In fact, they have already held their first Board Meeting. The new Board comprises:
(a) Mr Gerard Ee, as Chairman;
(b) Mr Koh Cher Siang, a retired Permanent Secretary and a former Commissioner of Charities, as Deputy Chairman;
The other Board Members are:
(a) Mr Gan Seow Aan, Executive Vice-President of Singapore Exchange Ltd;
(b) Mr Philip Jeyaretnam, a Senior Counsel and current President of the Singapore Law Society;
(c) Mr Ng Boon Yew, Chairman of Raffles Campus and a member of the Council that drew up the new Code of Governance of IPCs;
(d) Mr Peter Seah, Member of the Temasek Advisory Board and Chairman of both SembCorp Industries and ST Engineering;
(e) Mr Ernest Wong, Group CEO of MediaCorp. He is also a Director of the UOB Board and chairs Nanyang Technological University's Endowment Fund Investment Committee; and
(f) Prof. Woo Keng Thye, Senior Consultant Nephrologist at Singapore General Hospital.
These are competent and senior individuals, with vast experience and diverse skill sets, covering accounting, banking, business, corporate governance, legal and medical expertise. Together with Gerard Ee, they form a very strong Board with sound values and good community instincts. I know most of them personally, and I believe most are known to Members of this House too. They have good hearts and good heads. And this job requires a good balance of the heart and the head.
I was not at their first Board Meeting, because I have no business to be there, but I was told that the mood was cheerful and determined. I think the obvious competence of these Directors helped everyone feel comfortable. And Gerard Ee was, as usual, organised, confident and calm, calm without daily meditation. I am optimistic that the new leadership will enable the NKF to start afresh, on a sound footing.
Their first task is to appoint a new CEO. Choosing a good CEO is the single most important responsibility of any Board of Directors. They will need to take their time on this assignment. Being new to NKF, they would first need to be clear of the organisation, its mission and objectives, before they can decide on the skill sets that a CEO needs. They should not rush through this.
That said, there is much work to be done, with daily operations to run and reviews to address the various issues which have been raised.
Hence, I suggested to the Board that, in the meantime, I ask a hospital cluster to second a senior hospital administrator to be the interim CEO. An experienced hospital administrator who is familiar with managing healthcare facilities will be most appropriate at this time of need. I have such a candidate in mind but the person has to be acceptable to the new Board. We hope to settle this and announce it within the next few days.
Meanwhile, the Board has to identify and prioritise the many issues confronting the NKF. As I see it, six crucial areas require their early attention.
First, is the continuation of patient care and the restoration of staff morale, which I touched on earlier.
Second, they must fully address the public unease and disquiet over allegations of questionable practices and inappropriate spending of charity funds. Let me note here that the NKF's accounts have been audited by PriceWaterhouseCoopers (PWC) since 1999. Based on the Ministry of Health records, no major findings were raised, at least post-2001 when NKF's IPC came under the Ministry of Health.
The new Board will no doubt want to discuss further with PriceWaterhouseCoopers, to get their insights on the NKF based on their past audit experience. Nevertheless, it would be helpful for the Board to commission a fresh, detailed review of financial controls within the organisation. They need to specifically ask the questions which Singaporeans have been asking: Have donations been wasted on inappropriate things? Were charitable funds used lavishly or improperly? Have there been lapses in judgment? Were any funds misappropriated? If so, could these lapses have been detected earlier?
The new Board has moved very quickly and appointed KPMG to conduct this review. The Terms of Reference of the review are being discussed. I will advise the Board to make public the findings in due course.
Third, the Board should review the adequacy of the reserves built up for dialysis patients. Is it three years, as presented by the NKF, or 30 years, as argued by the Singapore Press Holdings in the High Court? This will help the Board determine its immediate fund-raising needs. Meanwhile, I am glad that the NKF has taken my advice not to embark on new fund-raising activities until the Board has deliberated and determined what the funding needs of the NKF are.
Fourth, they should review corporate governance. A Board of Directors has fiduciary responsibility for overall good governance. Did the NKF Board maintain sufficient independence from the management, to provide the necessary oversight and checks on management? How was CEO's compensation determined? What was the basis of his bonus payment? Court disclosures suggest that the organisation's system of checks and balances was inadequate. Was this the case? If so, what safeguards should the Board put in place to prevent a recurrence?
A second component of restoring public confidence is putting in place a robust regulatory framework for charities and IPCs. Arising from the NKF incident, Singaporeans are asking if the Government had adequate safeguards against abuses and malpractices by charities and IPCs, and whether a tighter regulatory framework could have prevented the sad turn of events for the NKF.
Charities and IPCs are governed by two pieces of legislation, through which the Government sets the basic requirements for governance and transparency. The framework is basically sound, and the legislation has served us well.
Notwithstanding the current regulatory framework, one may ask if we need more and tighter rules for charities and IPCs to prevent future mishaps. The answer is not straightforward.
From a small local VWO, the NKF is today recognised as one of the leading dialysis providers in the world, with very good clinical results. The NKF has a vision to become a pace-setter on the international stage. It organises international medical conferences on nephrology and transplants, in conjunction with world-renowned nursing institutions.
In fact, just an hour before coming to Parliament this morning, I happened to receive a letter from the Samoa Health Minister. I just received it although it was dated and sent quite sometime ago. I suppose postal service takes some time. Unfortunately, the font size is very small. But the gist is that Singapore's NKF seconded a few staff, paid for by Samoa, led by one Dr Prabhakar. He is a renal physician, and together with two other NKF staff, helped to supervise and run this centre. They were so pleased with this arrangement and the whole service that is being provided that the Prime Minister of Samoa has decided to bestow a High Chief title called muagututiÄ to Dr Prabhakar. The award has already been given and the letter was to inform me that they have decided on this and partly also to thank me for the match-making role.
Incidentally, Dr Prabhakar is my constituent in Moulmein. Just three days ago, on Sunday, when I was doing my house-to-house visit, the wife was there when I knocked at the unit. I cannot recognise her but she can recognise me. She said that her husband is right now in Samoa. We talked a little bit about NKF. So I have not neglected my constituency duties.
I know many find such developments jarring. They are used to the traditional model of charity. Yesterday, Dr Robert Loh wrote to the Straits Times to suggest that the NKF should return to this traditional model. Bob Loh is another person synonymous with charity and compassion. He is a former President of the National Council of Social Services. He personifies kindness and decency, a most wonderful man. He even finds time to help me in my Moulmein Constituency as a grassroots leader. Volunteers like him, Gerard Ee and Jennie Chua spend much of their time, energy, expertise and resources contributing to charity work without any compensation. They teach us and spread the message of philanthropy. Singapore is a much stronger society because of such individuals.
But I believe that our charity landscape can accommodate a diversity of models. There is nothing wrong with a large charity outfit run by professionals instead of volunteers, provided it is properly governed and managed. As one commentator pointed out, it is not wrong to combine "the passion of a social mission with an image of business-like discipline, innovation, and determination". We should not lose sight of the possibility that there can some day be a Singapore Oxfam or the equivalent of an International Red Cross but based in Singapore.
Running such a large charity outfit will require full-time professionals. To recruit and retain such talent, the charity outfit has to pay a competitive wage. It is the responsibility of the Board to determine what this wage is and to defend their decision, if necessary. To avoid abuses and criticisms, the Board will need a robust human resource management system to design an appropriate compensation scheme, a sensible incentive bonus programme and proper checks-and-balances which ensure independence between the Board and the CEO. Unfortunately, the former NKF Board appears to have fallen short in this regard.
It will also be necessary for such an outfit to be transparent in its disclosure, so that donors can be satisfied that their money is being put to good use. There is a dilemma here - if the charity declares every detail of its senior staff's remuneration, many capable people may not want to work there, but if it does not do so, donors may be unsatisfied, and may take their donations elsewhere. This is a real problem which many organisations face. There is no ideal solution to be found in governance rules or disclosure standards, though these are necessary. In the end, we must depend on putting people of integrity in charge, and earning the trust of the public that honourable men are doing their best for a good cause.
I am confident that, together, we can turn this unhappy saga into a fruitful learning experience with a positive outcome. The cause for charity should not be diminished by this episode. If we learn the right lessons, and are skilful in managing the growth of our charities and IPCs, our charity landscape and our society will emerge stronger, to the benefit of all Singaporeans. While the process of change takes place, I appeal to Singaporeans to remain objective, patient and generous.
Meanwhile, Singaporeans with the passion, expertise and knowledge should continue to step forward and help our many charities. They can offer to serve on Boards to help improve governance, or serve as volunteers to help charities provide better services at lower cost. Indeed, many Singaporeans are making a difference to the community every day. Let us not allow one sad episode to discourage us from doing good. Instead, let us pick ourselves up and do even more to help our fellows in need.
Mr Speaker, Sir, pursuant to Standing Order No. 44, I beg to move,
That the Ministerial Statement on the National Kidney Foundation be considered by Parliament.
Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, with your permission, I will ask the Clerk to distribute a table giving a comparison between the two voluntary welfare organisations (VWOs) providing kidney dialysis service in Singapore, namely, National Kidney Foundation (NKF) and Kidney Dialysis Foundation (KDF). I tried my best to be as accurate as possible, pulling information from multiple sources. I seek your indulgence if the data presented are not entirely accurate.
First, I would draw your attention to the donations received by NKF. Its tax-deductible donations in 2003 amounted to $38.5 million or 57.3% of the total. By itself, it is already higher than the Direct Charitable Expense of $36.2 million. Given that the co-payment of patients amounted to $24.4 million, NKF's tax-deductible donations alone would have more than covered the needs of the dialysis activities after making allowance for operations and administrative costs of $8 million in the same year. Nonetheless, NKF went out to raise $28.78 million in non-tax-deductible donations which I would gather to mean television shows and telemarketing, etc.
On the expense side, it incurs $16.57 million in fund-raising. Sir, I do not know what is the proportion spent for tax-deductible donations and what is the proportion spent for non-tax-deductible donation activities, but we knew it spent a total of $16.57 million to bring in a total of $67.4 million, or an expense ratio of 24.6%. In 2001, the corresponding figure was 21.4%. In 2002, the figure was 22.1%. In other words, in the three years from 2001 to 2003, NKF raised a total of $193.1 million in donation. Cost of fund-raising amounted to $43.7 million. Net of cost, the amount of disposable income, Sir, is $149.4 million. Sir, I give all these numbers just to illustrate the matter. I am sure that we recall Mr T T Durai earned a total of $1.8 million over the same period. Some would say that amount is large, some would say that it is animal feed. But if NKF were a commercial enterprise, indeed, his take of 1% of net income is very reasonable.
Next, I would like to refer to the number of patients served by the two VWOs. The numbers were quoted from the Minister for Health in his disclosure in Parliament. In NKF, it was 1,512, and 147 in the case of KDF. Let us look at the number of employees of the two organisations, 996 for NKF and 20 for KDF. Therefore, the patient-to-employee ratio for NKF is a low 1.5:1 and a substantially higher number of 8.7 for KDF. Sir, imagine one NKF employee serving 1.5 kidney dialysis patients. Maybe, the comparison is not entirely appropriate but it gives us a scope of the efficiency or the purpose of the organisation and who and what they are serving.
Furthermore, the staff cost of NKF amounted to $27 million in 2003, while the total staff cost of KDF amounted to a very small $573,000, which is still a tag less than the $600,000 Mr T T Durai drew as an NKF CEO.
Yes, Sir, I understand that NKF and KDF operate on different clinical models. For NKF, clinical staff are on its payroll whereas for KDF, clinical service is contracted out. Indeed, according to a press report, close to 500 of the NKF staff are clinical staff. So if you just take the clinical staff and compute the patient-employee ratio, it is still a very low number of 3:1. Perhaps, I might be mistaken, but I hope our hospitals operate at a more efficient number than this.
Sir, one is prompted to ask: what is the other substantially large number of NKF staff doing in the organisation?
As the Minister has pointed out, some are dedicated to prevention programmes. But, presumably, a sizable number is deployed to canvass for donations. We do not know what is the number because NKF had not been too transparent about this.
Many have spoken up justifying the annual compensation of T T Durai. Indeed, he has done the nation service in building up NKF into an organisation looking after a great majority of kidney patients in Singapore - 44% to be precise. In looking after its 1,512 patients, it is also effectively self funding with very little subsidy from the Government. In fact, Government only provided $574 subsidy per NKF patient, while it provided a sum of $6,896 subsidy for every KDF patient. From that performance measure, we all would say that NKF has done a very good job. Yet, this comes at a cost to the patients. Despite its success in fund-raising, NKF recovers more from the patients than KDF. If Members look at the table, the average dialysis fee paid by the patients is $16,138 per year, a recovery rate of 67.4% while the corresponding figure for KDF is $9,195, or a recovery rate of 41.9%. Of course, KDF was able to do so because of Government's subsidy which amounted to $1.2 million in that particular year. But, on the other hand, if KDF were to charge the same fee as NKF from its patients, then the subsidy from the Government per patient for KDF would have dropped to $753. As to why they cannot charge that number, I think it could be a self-selecting exercise. Therefore, if we were to look more closely, I would say that NKF is performing not better than the new kid on the block despite its ability to benefit from economies of scale. Could NKF have done a better job, becoming leaner, slimmer and channelling more of its resources to the patients, thereby fulfilling its core mission for existence?
Sir, we all know that in one measure, NKF outperforms everybody - KDF and any other VWOs - and that is in fund-raising. Even in this area, many people are increasingly turned off by its hard-sell tactics and putting patients on display that sometimes borders on bad taste, an issue brought up by Prof. Ong. So, when one sings praise for NKF and T T Durai today, we are primarily praising him for his ability and his talent to raise funds. Sir, would it not be a sad day for Singapore when the value of an organisation - and a charitable one at that - is based entirely on its ability to accumulate surpluses? That we could justify a person's pay just because of the reserves accumulated from the small donations from millions of hardworking Singaporeans - money that we have parted because we believe it was meant for a good cause. Does that say something about ourselves, about our own value system as individuals and also as a society?
Sir, looking at the table I have given out comparing the two organisations, I would leave it to you to draw your own conclusions as to what kind of organisation NKF has morphed into. On good authority, I understand that donation staff of NKF have part of their pay based on commission, and they are able, when they are successful, to collect up to 12 months' bonus. We all read about T T Durai's work schedule - six days a week, up to 18 hours a day. If the bonus of the CEO of NKF were indeed tied to the amount of donations collected - and this is a question asked by every Singaporean - then considering the unusually top heavy staffing situation in NKF, a reasonable person would ask: in whose interest is T T Durai working so hard for? For the kidney dialysis patients who have to cough out 67.4% of his dialysis cost? For the kidney patients of the future, as he has reportedly said so? To build up the reserves of NKF for a rainy day, which happened to come but completely unexpected? Or could it be possible, just possible, that he is also partly motivated to meet a donation target? These are the questions, I think, the audit and the new board should enlighten us.
Sir, I am not here to bury NKF. By its own doing, NKF is now in the pit of a major confidence crisis. It would take the new team many months to restore confidence of its donors to the organisation. Furthermore, with the suspension of major donation drives like TV shows and telemarketing, I suspect NKF could not reasonably maintain the current staff strength of close to 1,000. If the redundant staff were to be retrenched, this would aggravate staff morale in the immediate future.
Sir, I am here to look at the lessons we could learn from this episode of how the largest and the most successful VWO in Singapore lost the confidence of the majority of Singaporeans overnight.
The revelations of the law suit have caused unprecedented disquiet amongst Singaporeans. Public confidence in the accountability of NKF has collapsed, but the Minister said "shattered", and close to 15,000 donors have cancelled their monthly contributions. Everyone had assumed that in well-run Singapore, as part of the VWOs under the auspices of the Commissioner of Charities, NKF would be properly supervised and monitored. The revelations show that this might not be the case. While T T Durai has stated that he has done nothing legally wrong, public outrage has clearly shown that there is a significant gap - a very big gap - between the code of governance he subscribed to and what the public expected of NKF, or for that matter, of all IPCs. I think it falls on this House to implore the Government to promulgate an enhanced code of governance for IPCs so that it is more in tune with the public expectation.
Sir, perhaps we can take one step back and ask: what is behind a VWO movement like the NKF? What gives a VWO life? In a word, it is our values. The purpose of a VWO is nothing short of making the world a better place, based on its vision of what that world should be. Thus, VWOs are the spirit and the conscience of our citizens. They raise funds by appealing to our value system. That is the reason why individuals, young and old, rich and poor, dig into their pockets and part with their hard-earned money to support VWOs. Therefore, a VWO is very different from a commercial organisation. It has a moral underpinning based on care and love. Individuals working for a VWO should get involved based primarily on their solidarity and compassion for the well-being of their fellow citizens. Pay should be a secondary consideration.
Sir, up to now, we still do not know how the bonus of the CEO was determined. If the bonus of the CEO of NKF proved indeed to be tied to donations raised, then I could understand why NKF became such a sleek fund-raising machine with close to half of its staff being non-clinical staff. We can also understand why NKF branched into fund-raising for other heart-wrenching medical conditions involving children, elbowing out other VWOs already engaged in those activities. If indeed NKF became what it is because of one person's drive to collect as much donation money as possible, and if part of that drive is to meet a certain bonus target, then I would surmise that there is a clear failure in the exercise of governance by the NKF Board, which the Minister had also referred to. It would indeed be a disgrace to everyone involved in that governance if the righteous cause of NKF got hijacked to serve a different agenda. Furthermore, we should also realise that the total pool of charity money in Singapore is a finite amount. And this fact is clearly evident from the impact to the other charities resulting from the donation drive for the tsunami victims of 26th December last year. Thus, when NKF takes more, there will be less in the pool for the other equally deserving VWOs.
Sir, until the acceptance of the recommendations of the Council of Governance of IPCs in May this year, I think governance of VWOs rests primarily on the fear of backlash of public opinion. This fear is a powerful deterrent, as amply demonstrated by the episode of NKF. However, the price of governance based on backlash is a heavy one. Besides the cost paid by the individual, such as the CEO and the Board, the future of NKF today hangs in the balance. If the damage to NKF.s reputation could not be repaired, it would be, as the Minister mentioned, a monumental loss to Singapore, as two out of three Singaporeans have contributed to its development and growth over the last 40 years. Furthermore, the collapse of public confidence in the accountability of NKF is affecting the public confidence of the rest of the IPCs as well.
Sir, we need to move on to a more rigorous framework of accountability. Already, we are holding key executives of public listed companies to a very high standard of disclosure and transparency. There are codes on insider trading and corporate governance. I do not think we should hold the individuals involved in the running of IPCs to a lower standard of transparency and disclosure.
Sir, in May, the Minister mentioned that the Government accepted 15 out of 19 measures put forward by the Council on Governance of IPCs. Some of the recommendations were rejected, partly because they were considered too stringent. The new rules are to take effect from January 2007. From the episode of NKF, I feel that these guidelines should be strengthened. It is regrettable that a key proposal to disclose the salaries of the top three executives of VWOs was not even included in the 19 recommendations. I suggest that this requirement be made mandatory, in particular, for the larger IPCs and for professionally-run IPCs like NKF.
Sir, the other parameter that did not receive mention is the 30% allowable expenditure of fund-raising of an IPC. Today, this allowable limit is the same regardless of how much money is raised. Whether we are raising $100,000 or $100 million, the allowable expenditure is still 30%. But, clearly, $30 million is a quantum leap from $30,000. In the case of NKF, it raised $193 million in three years
and spent 22.6% of this amount or $43.7 million doing so. I think, by any reasonable comparison, that is a lot of money to spend to raise such money. Furthermore, with so much money involved, I believe that in the regime of poor transparency and disclosure, problems can arise. This could be one of the reasons why NKF started down the road deviating from its key charitable mission. Of course, the question of limits on fund raising does not come about because no IPC in the past would have been able to raise so much money. Perhaps, my suggestion is that we could adopt a sliding scale based on the total amount raised, ranging from 30% all the way down to maybe a reasonable number like 15%.
Furthermore, today, the code of governance does not prevent NKF to branch into other activities. I believe that the code should be enhanced to hold the charity to its original terms of reference, its original mission. I see no reason why a charitable organisation with the name of National Kidney Foundation should engage itself with children cancer and other medical domains.
Sir, the Government has intervened and NKF is given a fresh start. There remain many kidney patients who need help. And a new Chairman and a new Board of very eminent persons have been appointed. If the public were to stop supporting the cause, the patients would be the ones who would suffer. For those who have cancelled their GIRO donations to NKF, I would urge them to reinstate them. But if they cannot find in their heart to do so, I urge them to switch their support to KDF. Furthermore, I also would urge the new Board of NKF to undertake a total review of its mission and operations and to benchmark perhaps its performance measures with another organisation, such as KDF.
It is time to restore confidence of the public in donating for charitable purposes. Not just for NKF but for all charitable organisations in Singapore. I am glad that a thorough audit is now ongoing in NKF. I am confident that if we could strengthen the code of governance along the line I have suggested, Singaporeans of all income groups will continue to donate to public charities when the current storm blows over. Many of us, Sir, give out of compassion. For those with meagre income, the amount they give, though very meagre, is a significant portion of their disposable income. They give from their hearts. It is our responsibility to ensure that their trust is not betrayed. Let donating to charity be the hallmark of Singaporeans. Let the compassion for an unfortunate fellow human being be what Singapore, as a nation, is known for. I urge this House to call for a more enhanced code of governance so that the debacle of NKF would not be repeated.
Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.25 pm.
Sitting accordingly suspended
at 4.04 pm until 4.25 pm.
Sitting resumed at 4.25 pm
[Mr Speaker in the Chair]
THE NATIONAL KIDNEY FOUNDATION
Mr Tan Soo Khoon (East Coast): Mr Speaker, Sir, the revelations in last week's court case between the National Kidney Foundation and Singapore Press Holdings have shocked Singaporeans like no other scandal in recent times. Because two out of three Singaporeans have donated to the NKF, the extent of public backlash over the way donors' funds have been used, the excesses of its CEO, the exaggeration over the number of patients it actually treats, and the misinformation over how long its reserves will actually last, is understandable. People from all walks of life, rich and poor, young and old, contribute to the NKF. For 36 years, they had unquestionable faith in the NKF and it has become Singapore's largest charity, and now they feel very emotional and they vent their anger.
They have every right to feel angry about what has happened. Nobody wants to see the hard-earned money he gives away, believing it would benefit a good cause, mismanaged in any way. But I want to appeal to Singaporeans not to let their anger cloud their judgement of the larger picture. Over the years, the NKF has saved countless lives. It has become a highly regarded institution, a brand name, so to speak. And as we heard earlier on from the Minister, other countries have even come here to learn about how the NKF runs its programmes. Even as we are appalled by what has been revealed, we must not overlook the achievements of the NKF. As an MP, I have on many occasions referred constituents who suffer from kidney problems to the NKF for dialysis treatment. I know that many of these people would not be alive today if not for the NKF. To withhold our support for the NKF, to cancel our automatic GIRO deductions, to even ask for our money back, as some had done in the past few days, cannot help those who are suffering. Two wrongs will not make a right. Patients, instead of being people who will continue to receive good quality treatment and care and who are given hope, well, they will just end up as victims of our own vitriol. Looking after the needs of the NKF's patients, and restoring the morale of the staff - because they are the ones who ensure that the patients are well taken care of - must now be our top priority, and this can only be achieved if Singaporeans do not withhold their support.
Sir, to regain public support, efforts must therefore now be focused on restoring public faith and confidence in NKF, in fact in all charities, because what has happened in this NKF episode has unfortunately made many people think hard about donating to charity, which should not be the case. One swallow does not make a summer. The Board members and its CEO have resigned and the Government has moved quickly to name a new Chairman and a new Board who will have the unenviable task of cleaning up the act. Many of us know Mr Gerard Ee well. He served as a Member of this House as a Nominated Member for four years and I have confidence that he and the new Board members will know how to put things right very quickly. But, having listened to the list of names announced by the Minister earlier on, and I must say that these are people who are well regarded, and I believe that they will certainly know what to do to help Mr Gerard Ee, I could not help but wonder why there is no representation
for a very important group of stakeholders, and that is the donors. Here, I would like to suggest to the Minister that he considers some representation from important donors like the foundations who give a lot of money to NKF and to charities.
Sir, no less than a full and thorough investigation into what has been happening in the NKF must take place; Singaporeans want to know what else could have come out if the court case had not abruptly ended after two days, and what else could have been rolled out from the many cartons of material that the defence lawyers brought into court. Many questions burn in the minds of the public: have there been other excesses or any misuse of funds; what is the exact number of patients treated by the NKF? Is it 1,500, 2,000 or 3,000? Do the NKF reserves last three years, or is it 30 years? Why does it cost the NKF $30,000 per patient a year to provide treatment when the Kidney Dialysis Foundation does it for about half that amount? If there have been management problems, then the new Board must seek to put them right. If individuals have committed wrong, then they must answer to a court of law, but we must avoid bashing an institution that has been around for so long and at its very core still remains an incredible organisation that has saved countless lives.
The second step towards restoring public confidence is to continue to push for better disclosure and greater accountability and this must apply not just to the NKF but also to all IPCs and charities. There was much debate in the past, both inside and outside the House, about the extent to which Government should regulate their activities. In finally accepting the recommendations of the Council on Governance of IPCs, the Government wanted to strike the right balance in ensuring certain mandatory requirements and minimum standards in critical areas on the one hand, and, on the other hand, the need to ensure that IPCs, particularly smaller ones, are not overburdened by too onerous requirements to the extent that they feel stifled.
But in the light of what has happened at the NKF, perhaps we can look into some of these areas. The Government agreed with the views of the IPCs that there is no need to disclose the salaries of the top executives of IPCs. I suspect that the furore over Mr T T Durai's salary was not just only about the amount that he got. Indeed, one can argue till the cows come home over whether his pay packet was too much or whether it commensurated with the work he put in, just as we will never stop arguing about salaries of our public officials and CEOs of listed companies, but herein lies the difference: even if you disagree with what our public officials or CEOs are paid, we know that there is transparency. So I suspect that the public outcry this time stems from a deeper frustration over the NKF's persistent and steadfast refusal in the past to reveal such information when asked. The NKF is, on record, as dismissing such queries as without merit and purely of curiosity value. This is where I could not understand why the Government turned down the recommendation of the Council on Governance of IPCs. Of course, we all know that it is necessary to pay competitive salaries to attract good people, and, of course, we know that salary is a sensitive matter, but in ensuring that we provide information on how much we pay people in Government from the top down, how much the CEOs of listed companies are paid, we established this unshakeable principle of transparency and accountability that we did not apply to IPCs. Minority shareholders in our listed companies - and they probably number a few thousand for each company or maybe tens of thousands - have access to such information and, yet, the NKF management failed to recognise all this while that, over the years, if you take two out of three Singaporeans, that works out to 2 1/2 million Singaporeans have made contributions to the organisation, and to the salaries of the staff, surely they have a right to ask and get answers.
So, when finally the truth had to be extricated in court, it came as a rude shock to all, not just for its amount, but more because people felt that, "See, I told you so, they had something to hide." I would, therefore, urge that the annual remuneration of top executives be disclosed in salary bands, the way listed companies are now required to do. Paying competitive salaries is an acceptable fact of life, but providing such information will ensure that IPCs will remove doubts in the minds of their most important stakeholders, the donors, who, in the end, are the ones who decide whether they survive or not.
Sir, IPCs must exercise extreme care over their expenditure. The cap of 30% on expenditure is generous but there is that old argument that smaller charities have to spend more to raise smaller amounts. This is not entirely correct. I know of charities and, at least one, which raised $5 million in the last few years, last three years I think, but whose annual expenditure is about $20,000 per annum. So while the 30% cap is loosely bandied about like a benchmark, it behoves well for IPCs to find means and ways to scrutinise closely their expenditure and their methods of raising funds. Sometimes, the ends do not always justify the means. They have to ask themselves: do they exercise prudence in expending public donations? Mere compliance with the rules and regulations may now not be enough to satisfy the concerns of the public. Present levels of disclosure may now show to be inadequate and we may have to enhance transparency levels. I would strongly urge IPCs to voluntarily conduct themselves with standards even higher than the official requirements. They must not balk at this by arguing that this will raise administrative costs. Do not wait for the Government to impose more stringent requirements. Instead, take steps yourself to boost transparency and accountability. Better still, welcome closer scrutiny, whether it is from individuals, the donors, or from the media. In the end, you instill confidence and ensure that donations continue flowing in for your causes.
Mr Speaker, Sir, charities in Singapore do a lot of good, that is what I want to remind everyone, and we must quickly remove any doubts and suspicions in our minds so that the anger can quickly dissipate. I have faith that when the dust has settled on this sad saga - and it must very quickly - Singaporeans will once again demonstrate their generosity and philanthropic nature and continue to help those who are less fortunate.
Mr Chew Heng Ching (East Coast): Mr Speaker, Sir, with your indulgence, I would like to raise a few comments. It is indeed of grave concern to all Members of this House and the public at large about the recent media reports regarding transparency and accountability of the administration and the governance of NKF. I am particularly concerned about the potential impact that it has on the viability of NKF in the long term and the direct consequence on society and the needy who continue to need the services of NKF.
In this regard, Sir, the steps taken by the Minister for Health to restore confidence and the immediate appointment of Mr Gerard Ee are timely and should be applauded.
I would like to raise a wider issue and which is the chorus of recommendations arising from this episode to further tighten up the code of governance of VWOs. Whilst I am in full support of greater disclosure and transparency which create an environment where the informed public can choose, decide and channel financial contributions to the causes that are worthy of supporting, I fear that without taking a more measured and well-considered approach, legislating many of these best practices or introducing even more rules and regulations may serve more harm than good.
Let me elaborate, Sir. As has been the case of other "corporate type" failures in the past and in recent times, CAO, Citiraya, among others, it is easy to suggest a further tightening of rules and regulations with the underlying assumption that rules and legislation alone will be the panacea to solve such problems and prevent further recurrence. Whilst legislation will serve to allow for penalties to be enforced and perhaps a deterrence, the impact on the actual practices of boards of governance for public, commercial or charitable organisations will only be as far as individuals who sit on the boards. It is, indeed, substance over form.
Fundamentally, we need good men and women of ability, integrity and credibility on boards of listed companies and VWOs, and who can conduct themselves in good faith and work to deliver the objectives of these organisations. This has to be balanced against a set of basic regulatory framework that encourages transparency and accountability, and not rigidity.
On this, I would like to make reference to the code of corporate governance that governs listed companies. I note that the authorities responsible for drawing up the Code of Corporate Governance for publicly listed companies, of which I must declare I am a party, have carefully considered the need to balance compliance costs versus leaving it to the market to reward and punish good or poor corporate governance, being mindful of the potential burden of too many rules on companies and the deterrent effect it may have on able men and women coming forward to serve as directors and lead these companies.
Sir, we should take note of this experience when we tighten up our rules on governance of VWOs. If we over tighten, the net effect could be that less able men and women would come forward to serve in executive positions and sit on the boards of VWOs, much to the detriment of society at large and the needy who require such support. I am therefore heartened when Minister Khaw opined that there is no need to further tighten rules and regulations regarding the management of VWOs. However, I would urge the Government to consider advancing the implementation of the new code of governance for VWOs by one year, perhaps as early as 2006, instead of waiting until 2007.
Sir, let us be clear that the NKF was successful in raising funds to deliver the cause. It was successful in creating enough surpluses for the long-term sustainability of the organisation to benefit the public. Beyond the emotive issues that have been raised and reported in the media, I believe they have done a reasonably good job and have helped many people. However, in so doing, the NKF could have been more transparent. The board should have exercised greater oversight in managing issues of potential conflict between staff and itself and act in good faith. These failures can be addressed in substance by encouraging the right people to come forward to serve and to lead, who can both deliver the results that the charities need and conduct themselves with greater integrity and transparency, like instituting best practices in the running of NKF. I am sure Mr Gerard Ee, with his many years of experience as a public accountant, dealing with boards of listed companies, together with the new board members, all of whom are competent, able and men of high integrity, would know what to do next.
In summary, Sir, I do not see the need for any "knee-jerk" reaction to fix the NKF
problem by introducing more rules or regulations or tightening legislation, as has been suggested by many. In so doing, we may have addressed the form of the issue at high cost to our charities, deterred some good people from coming forward to serve and to volunteer, but may miss out on the substance, which is the bigger picture, ie, what is the best means with reasonable level of disclosure and accountability to help meet the needs of the needy in our society?
The NKF has started a new chapter under the chairmanship of Mr Gerard Ee and his new members. They have a formidable task ahead. Let us give them all the support they need.
Mr Chiam See Tong (Potong Pasir): Thank you, Sir, for allowing me to join in the debate.
The NKF episode, in my view, is a good thing that has happened in Singapore. It is a wake-up call, a lesson to the people of Singapore. They have to be vigilant. They cannot completely trust people who hold high offices in charitable organisations and Institutions of Public Character. In the case of private commercial companies, we know that there are regulatory frameworks to check them. But as far as I know, where charitable organisations are concerned, it would appear that the rules are not that strict. The surveillance on political parties under the Political Donations Act is perhaps stricter than that for charitable organisations. The checks on charitable institutions come mainly from within. This, of course, can miserably fail, as shown in the NKF case.
The NKF Board seemed to have condoned or overlooked many things which are quite irregular for a charitable organisation. The NKF Board did not object to the payment of excessively high salaries, exorbitant bonuses or luxurious perks to its CEO, and also to allow the NKF to disseminate false information to gain sympathy from the public in its donation drives.
I think the public must be reminded that, for all charitable and public organisations, there must be elements of transparency, accountability and sensitivity to the feelings of the common man. The best form of transparency, of course, is to have independent checks on the finances and affairs of the charitable bodies. For this, I would recommend to the Minister to get the Opposition involved in the boards and committees of important charities in Singapore. I think that is the surest way of ensuring transparency.
On the issue of insisting on independent checks, I must say that this has always been the position of the Opposition in this House. The Opposition has, on many occasions in this House, called for independent committees to be formed to check on the functions of the Government, the latest of which is the call for an independent commission to supervise matters concerning the election. But the Government routinely dismisses such requests. This kind of action on the part of the Government sends wrong signals to the public. The Government is telling the public that they do not accept the practice of independent checks on public affairs, which I think is wrong. On the contrary, I think that this kind of practice must be made the norm in Singapore, because independent checks on all public affairs is the surest way to ensure transparency and to prevent abuse of power, corruption and nepotism.
Accountability is the second pillar to ensure that public bodies function completely above board. Again, in this area, there must be independent checks, without which the public will never know or find out the goings-on inside of public bodies. The public which supports charities must wake up to their duties in relation to them. The public must insist that independent checks be immediately instituted in all charitable and public organisations.
The third point which I wish to make is that people working in organisations of public character must have sensitivity to the feelings of the man-in-the-street. I think it is terribly insensitive to say that a salary of $600,000 a year paid to a CEO of NKF is peanuts. One must not forget that, in the case of charity, the salary of CEOs comes from donations. Donations do not only come from wealthy people but much of them also come from the hard-earned or sweat money of working people. To a working man earning $800 or $1,000 a month, a salary of $600,000 a year is quite incomprehensible, and it is certainly not peanuts.
I now take the opportunity to pay tribute to the people of Singapore for being so supportive of worthwhile charities. I hope this unpleasant saga of the NKF will not make the public lose confidence in the NKF and other charitable institutions. I would urge all Singaporeans to continue to donate to the NKF, because its main function is providing subsidised kidney dialysis which is a truly worthwhile cause. The NKF has saved many lives.
Dr Amy Khor Lean Suan (Hong Kah): Sir, like many Singaporeans, I am shocked and saddened by recent disclosures about the affairs of the NKF. I have always had great respect for the work that the NKF is doing in providing affordable, accessible and high-quality dialysis treatment and care for its patients. In fact, its innovative ways of fund raising and publicising the NKF cause, which some criticise while others praise, has made the NKF easily the most recognisable charitable organisation in Singapore.
Perhaps, this is why the public outrage against these disclosures has been tremendous and the revelations were a bombshell to many who have loyally supported and sacrificially donated to the NKF.
Sir, I would thus like to make two key observations and recommendations:
Firstly, the formation of an independent committee of inquiry. Sir, although the potential fallout of the NKF disclosures is now, I believe, contained, with the resignation of the previous CEO and the Board and the swift appointment of a very well-respected volunteer and philanthropist, Mr Gerard Ee, to helm the organisation, numerous questions remain unanswered.
For instance, it was revealed that, of the $31.6 million expended for dialysis and transplantation treatment in 2003, the fees collected from patients were $22.9 million and the actual out-of-pocket expense by NKF was only $7.2 million. One wonders why the overall average subsidy level is only 23% when the NKF has managed to raise large amounts of funds and amass huge reserves of $262 million.
I fully understand the justification for reserves in that, when one takes on a dialysis patient, it is for the long term and hence NKF is committed to the patients for their lifetime. However, what then is enough as reserves since fund-raising activities are also ongoing, what is the reserve policy, who sets and approves the policy, and how is its adequacy measured?
Furthermore, whilst it continues to be very successful in raising funds, why has the NKF's share of kidney patients dropped from more than 50% in 2002 to 44% in 2003? As mentioned by the Minister for Health, have the subsidy levels set been so stringent that many patients have been driven away? Some of the revelations appear to be serious violations of public trust, such as the apparent inflation of the patient number to 3,000 when, in fact, it is only about 2,000.
Sir, although we should not go on a witch hunt, the public disquiet over the many unanswered questions regarding the NKF must be fully addressed, with no stones unturned. Otherwise, this could lead to a very cynical public with deep mistrust for charities and, hence, lower philanthropy participation rate and giving. Although our philanthropy participation rate of 97%, according to an NVPC survey, is very high, our donation per capita is actually very low, compared to countries like Hong Kong, the US and UK. So, we can ill afford to have a cynical public that cuts back on their giving for charity. Already, due to the tsunami relief efforts, many charities are lamenting that they are not receiving the charity dollars they need.
Sir, I therefore propose that, besides an internal probe, an independent committee of inquiry be set up to thoroughly investigate the issues and concerns that have been raised as a result of the recent revelations in court. The committee should comprise members who are experts in the area of volunteerism and philanthropy, senior civil servants from the relevant Ministries, experts in corporate governance and accounting standards, and well respected by the public. And I think these clearly may not be the Opposition, as Mr Chiam See Tong tried to suggest.
There should be a timeline set for the completion of the committee's inquiry, so as not to allow the public disquiet to fester longer than necessary. The committee's findings and recommendations should be made public. We should face the issues and mistakes made, if any, squarely, learn from them, and then move on.
Secondly, fine-tuning and tightening regulations. Sir, the Council on Governance of Institutions of Public character, which was appointed by the Minister for Finance, had in May 2005 made recommendations to promote good governance and transparency among institutions of public character. These relate to board governance, fund-raising and financial controls.
Sir, it may be presumed that the charities themselves were supportive of the original 19 recommendations made by the Council, as they recognise that greater transparency and accountability would earn them the trust of the donating public. In the light of the recent revelations and feedback from the public, more comprehensive rules and regulations should be drawn up, especially for large IPCs. These should be as rigorous as for any listed companies, to ensure a high standard of corporate governance, transparency and ethics. As there is a wide range of charities, it is recognised that we clearly cannot have a one-size-fits-all set of rules. Hence, we should look at a tiered approach and even some customisation.
Sir, whilst I generally agree that charities should be regulated with a light touch, as otherwise they would be overburdened with tight regulations which could stifle volunteerism, light regulation certainly does not mean that we allow our charity sector to run like the wild, wild west. In relation to the NKF fiasco, for instance, there have been some sentiments on the ground that the Government could have been more pro-active and intervened earlier when there were already some grumblings from members of the public and the charity sector.
With regard to the further review of rules and regulations governing charities, I would like to make three proposals:
Sir, while voluntary welfare organisations are required to submit their year-end audited accounts to the NCSS and post them online, there is no requirement for independent audits to be conducted on these non-profit organisations to ensure that the funds are used prudently. Such
independent audits would lead to greater transparency and accountability for the funds raised.
The Government should thus consider making it mandatory for large IPCs to undertake independent audits. Additionally, they should be required to publish annual reports and audited financial statements which should be made available online to the public for greater accountability and transparency.
The recommendations recently made by the Council on Governance of Institutions of Public Character only recommend this as a best practice and not made compulsory. It is also proposed that they hold annual meetings where the public can ask questions regarding their operations to keep the public fully informed of their activities.
National agency watchdog
In fact, there should be, without exception, a national overseeing agency or watchdog for all VWOs to streamline and ensure that minimum standards of ethical practice and prudence are adhered to. Currently, there are various Central Fund Administrators (CFAs) appointed by the Ministry of Finance to grant IPC status to institutions in their respective sectors. The CFAs are involved to some extent in promoting good governance amongst IPCs but these are limited.
The national agency watchdog could be a Ministry like MCYS or the Ministry of Finance or the NCSS. It could issue practice guide to VWOs from time to time and be empowered to investigate any complaints that the public may have regarding the practices of certain charities.
A framework for investigations and penalties for those who flout the rules could be incorporated, say, into the Code of Governance. Those who abuse the trust of the Government and the public must be taken to task.
Disclosure of key officers' salaries
Sir, the size of Mr Durai's pay packet is one of the key causes of the public outburst although obviously there are many other contributory factors. Currently, there is no requirement for charities to disclose the salaries of their key officers.
As IPCs are largely run by volunteers together with some paid staff, there have been some notions that IPCs need not be held to a higher standard of accountability and transparency than listed companies. However, large charities are really not any different from listed companies. Their donors are akin to the shareholders of listed companies. In the case of listed companies, directors' pay is revealed to help ensure that board remuneration policies are fair and less prone to criticism. The level of transparency of large charities should not be any lower than that of listed companies since the funds they receive are from the public and they are thus accountable to the public. The Government should thus relook at the whole issue of remuneration disclosure in the light of the NKF fiasco.
In 2004, the second Minister for Finance then, Mr Lim Hng Kiang, had noted the dilemma NKF faced in deciding whether to disclose their CEO's pay. He said that if they do not disclose, then there will be critics who say they are not transparent. But if they did disclose, there will be critics who will say that whatever they pay are too high.
However, I think that revealing the pay of key officers of VWOs is no different from those of listed companies. If there are sound bases and justifications for the pay given, then the organisation should be prepared and able to stand up to public scrutiny. The benefits of greater transparency, accountability and building up of better understanding and trust with the donors through the publication of administrator's pay, amongst others, should outweigh the concerns over public scrutiny and criticism.
Sir, the NKF saga comes at a time when corporate governance, transparency and accountability are buzzwords in the corporate world due to recent high profile debacles, such as China Aviation Oil and Citiraya. Judging by the huge public outcry, public confidence and trust even in charities have definitely been shaken now. However, this should not stop us from volunteering or giving to charities as there remain countless genuine needs out there of the needy and the sick who depend on our every little effort and donation for their survival.
Hence, now that a new chairman has been appointed and a new board constituted, let us continue to support the good work that the staff and volunteers of NKF had done and continue to do. In fact, I salute the staff of NKF who had steadfastly soldiered on with their work despite the public outbursts and pressure they faced. There is much experience, expertise and value the NKF had built up over the years which we should cherish and protect. Indeed, this saga can be taken as a wake-up call to all charities as well as the donating and volunteering public.
Let us all learn from this most unfortunate episode and make changes to the charity sector so that it will become more resilient, efficient and effective in promoting their worthy causes and delivering aid to those in need.
Dr Lily Neo: Mr Speaker, Sir, thank you for allowing me to speak, but I shall be very brief. I only want to pose the following eight questions to the Minister for Health. But before I do that, I would like to declare that NKF's patients' welfare is my main concern and I hope that this unfortunate episode will not deprive them the continuum of care.
(1) May I ask the Minister whether he should check on the practices of NKF with regard to patients' eligibility for care?
(2) How many kidney patients have been rejected over the years?
(3) What have been the criteria used to admit dialysis patients?
(4) Is NKF too stringent on its minimum health criteria on patients' eligibility for admission?
(5) Should NKF take the responsibility on which patients to save?
(6) Is it justifiable for NKF to collect about 80% co-payment for its dialysis cost amounting to about $24 million a year from needy dialysis patients to whom the public is donating to help?
(7) How many dialysis patients have been turned away for the lack of funds to co-pay due to their co-payment requirement?
(8) Is it true that Kidney Dialysis Foundation (KDF) was set up in 1995 to take in rejected NKF dialysis patients?
Mr Gan Kim Yong (Holland-Bukit Panjang): Mr Speaker, Sir, thank you for allowing me to join in the debate on the Ministerial Statement on NKF. First, I would like to declare my interest as a director of a voluntary organisation, Care Corner Limited.
[Mr Deputy Speaker (Mr Chew Heng Ching) in the Chair]
Sir, first, I would like to commend Minister Khaw for his handling of the issue. His swift, firm and transparent approach has helped to stabilise the situation and restored calm to the community. A new Chairman was quickly identified and put in place. The Minister just informed us that a new board has been appointed and soon, a new CEO will come on board and NKF, hopefully, would be able to start on a new sheet and put its troubles behind. However, there are lessons to be learnt from this incident and if we can learn from this unfortunate event, we would help NKF to be stronger and we would also be able to help other charities to mature and grow. Sir, I would like to urge the Minister to consider three aspects.
Firstly, we need to conduct a thorough investigation by way of a board of inquiry or otherwise. The NKF incident has generated a lot of public interest. I can understand the anxiety as many Singaporeans have donated to the charity. They are genuinely shocked by the turn of events and wanted to know the truth of the matter. There are many rumours and stories circulating around, which can be quite damaging if they are not properly addressed. I think, in the interest of transparency, we should carry out a thorough investigation into NKF's affairs.
I am not so concerned with the debate on the salary and perks of the CEO, as this is a matter for the NKF Board to determine, and for the people to judge whether they have been overly generous. But we need to determine, through the investigation, whether there has been any breach of governance, any impropriety or misconduct on the part of the CEO and the Board. I am not suggesting for a moment that there is any impropriety or fraudulent practices, but it is important for us to determine conclusively to have closure to that matter. If there is, then appropriate legal action must follow. If there is not, then we should conclusively put this matter behind us. This is a crucial step towards restoring credibility of the NKF and rebuilding confidence of its supporters and donors. Arguably, it is also in the interest of the CEO and the Board to have the whole matter clarified through an independent investigation so that their role and credibility could be restored. It is no doubt a painful process, but it is inevitable.
Secondly, I would like to suggest that the relevant Ministry should review the regulatory system governing charitable organisations. Sir, I appreciate that there is a need for some balance. We should not over-react because of one incident. We need to ensure that certain basic rules are followed, yet allow sufficient flexibility for the organisations to develop and grow. We can understand that charitable organisations depend, to a large extent, on volunteers at many levels. This is not wrong as volunteerism is the foundation of charity. But as volunteers, they cannot operate like commercial enterprises with very elaborate governance procedures, rules and regulations. It is just not possible to operate.
However, they are similar in many ways to commercial enterprises. They raise funds from the public to pursue commercial interests. Charitable organisations also raise funds from the public to pursue their charitable causes. The requirement for accountability is the same. Certain basic rules must be there to ensure that essential information is disclosed. We have hitherto left it to the community to decide. We hope that people will be wise in donating their money and support the transparent organisations so as to put natural pressure on others to improve their transparency. However, unlike commercial enterprises, charitable organisations often appeal to the emotional side of the donors, which is not always rational.
Therefore, I feel strongly that there is a need for us to specify certain minimum disclosure requirements. We should include an indication of what proportions of the donations go directly to serve the stated cause and what proportions are spent on fund-raising efforts and overheads. There should also be some checks and balances in the operation of the charity. For example, there should be certain requirements for independent directors on the board as well as regular internal audit processes. A possible model could be one that separates fund-raising activities from the provision of charitable services and each separately accounted for. I would suggest that a review panel be set up, comprising IRAS, MCYS and other relevant Ministries to thoroughly review the governance issues of charitable organisations.
Thirdly, we must not lose sight of the need for professionalism in the charitable organisations. My fear is that this NKF episode may have a severe negative impact on the overall landscape of charitable organisations. I hope that our charitable organisations, which have been pushing for greater professionalism, will not take a step backwards. Charitable organisations need to continue to inject greater professionalism into their organisations. This is the only way for these organisations to develop and grow. The NKF problem is not one of professionalism, but one of transparency, or rather, the lack of it. We must all thank Mr Gerard Ee for agreeing to work as Chairman of the NKF for free. But we cannot expect the next CEO to also work for free. It is important that we pay the new CEO appropriately, taking into account the charity's affordability, the job's responsibility and the candidate's capability. The new Board must weigh all these factors and decide accordingly and be ready to defend its decision publicly. The public can then decide whether the Board has been reasonable and whether they deserve continuous support and donations. Only this way can our charitable organisations grow in professionalism.
In conclusion, Sir, I would like to urge the Minister to carry out a thorough investigation into the affairs of NKF to ensure that there is no misdeed, to review our regulations governing charitable organisations, to ensure basic disclosure and governance rules are adhered to, and continue to encourage our charitable organisations not to let up in their pursuit of excellence through professionalism.
Ms Irene Ng Phek Hoong (Tampines): Sir, the public outrage over the NKF saga is really quite unprecedented in Singapore.
We can see the outpourings of anger in newspapers and also in terms of the way they demonstrated in drawing graffiti on boards and buildings, which I feel is something quite terrible and should not be encouraged in Singapore. While I think public outrage in most cases is justified, I feel that the way that some Singaporeans have responded to this should be lamented and should be discouraged, because it does not help us to build confidence in VWOs and give confidence in how we respond to difficulties and crises that charities will go through again and again.
Sir, I am sad that some Singaporeans have chosen to take out their anger on staff and volunteers as well. This does not say much for our sense of community spirit. The issue, I feel, revolves around, as my colleagues before me have pointed out, transparency and accountability because, at the end of the day, this involves public money. To my mind, this NKF saga marks a defining moment. It is a defining moment because it challenges us in a deeper way by asking us to choose between two ideals which we hold both equally worthy. It is not choosing between right and wrong. Nobody is accusing NKF or its former CEO of being corrupt. It is about balancing our notion of meritocracy which is about paying the right amount for the right man, given the value of the job, and social justice, which is about creating a fairer and more just society. This is why I feel this debate is important. It is more than just about good governance of NKF or charities, but we form our national character in defining moments like this because we commit to irreversible courses of action that sharpen our collective identity. And we test ourselves because then we will discover what we will live up to and what we hold dear to us.
Sir, we do not have a quarrel with meritocracy as an ideal - paying a person according to his performance and the value of his job. But still many Members of the public were outraged at the $600,000 annual income and perks of T T Durai. I must confess that I myself was taken aback as I know of few people who are paid such generous 10-12 months' bonuses. So the question that arises is: what has he done to deserve this generous pay? And for the public to make an enlightened judgment, we need more facts, and the facts that come out through litigation are not the best way to disclose such sensitive information. We need VWOs to be transparent, to be ready to put out such facts without being cross-examined in the witness box. At the same time, we need to be clear in our minds about whether we think CEOs of large charities should be paid according to their talent and capabilities that they bring to the job.
Sir, I must admit that I can understand how a person living in a 2-, 3- or 4-room flat will feel about his public donations being used to pay a CEO with such high salaries. The question is not how much or who donates, but the question is whether the person who does the job is doing it to the best of his ability and bringing the maximum benefits to the patients and to the causes that they support. My understanding is that the members of the NKF Board are not paid. So it is a volunteer spirit. They are very community-minded men who are helming the Board of NKF. And the CEO - I do not know him personally - my understanding is that he believes in the cause of NKF. But the question is whether he has lost focus, whether he has been excessive in the way he runs NKF.
Sir, at the heart of the issue is the need for transparency. And I am glad to hear from the Health Minister that benchmarks have been provided for disclosure practices, but the benchmarks have been shown to be flawed in NKF's case, and the result is a credibility gap that will undermine people's trust and confidence in our VWOs. The world might be moving in the direction of more professionally-run VWOs with business models, but the trust that the people have in the biggest player which personifies this has weakened. This is a contradiction that is bound to cause serious problems if it is not resolved quickly. What is the use of wanting better-run charities with better paid staff when our largest charity is starting to be viewed as being out of step with everyone in ways that damage people's trust in them?
Sir, I would like to address a sticking point, which is the CEO's salary. Many donors are understandably interested in how much the leaders of charities earn. In the US and the UK, this information is public record and can be found in websites. There is a website called CharityNavigator which provides the CEO's salary as a percentage of total expenses so that donors can quickly put the salary in perspective. The CharityNavigator is America's largest independent charity evaluator. Its position is that the compensation for a charity CEO should be not small. It should be commensurate with how much the organisation spends and raises.
The Minister mentioned Oxfam as a charity worth emulating. Sir, Oxfam is one of the world's foremost aid agencies, experienced in delivering emergency relief to trouble spots, such as East Timor, as well as managing long-term projects all around the world. Oxfam America pays its top man about $300,000 in 2003, which is about 0.67% of the organisation's total functional expenses. How does this compare to NKF? T T Durai's pay is $600,000 out of total expenses of $84 million, which means he makes about 0.71% of total expenses. It is arguable whether it is too high, given that NKF's role and reach are not quite that of Oxfam America.
The Minister mentioned that he has already in mind a candidate to be CEO, and the candidate that he has in mind is someone who has experience in running hospitals and in healthcare services. The question then arises whether perhaps the benchmark for the pay of the CEO of NKF should be that of a CEO of a hospital rather than a CEO of a social service VWO, which is what the public has in mind.
The Minister also mentioned the dilemma of making public the salaries of senior management in charities. He is worried, and perhaps rightly, that people will not join VWOs as senior management if their pay is made public. Perhaps a way out of this is to present it as a ratio rather than the nitty-gritty of dollars and cents. This is also done in some websites I found just a few minutes ago while I was scrolling through. Many of the websites that track charities maintain that it is unrealistic to expect organisations to spend very little on management. And according to one reliable website which tracks charities, it mentioned that, typically, charities spend between 5% and 13% of their total expenditure on senior management. I am not sure if NKF falls within this range because the pay of its senior management is not made available. But the key is accountability. Donors should be able to ask the charity what is spent on administration and, if appropriate, ask them to justify their performance and not wait until they are called to court proceedings in a witness stand.
I would also like to stress on the function of the Board. They must know their function and their roles, which are to provide direction to the CEO. In this case, I am not sure whether the NKF Board of Directors are calling the shots or is it the CEO that is calling the shots. I think it is important to have some independent directors on the Board as well.
Sir, my last point is on the need to convey to the media and the public the role of charities and the changing faces of charities. In the UK, just this month on 11th July, their National Council for Voluntary Organisations has come out with a new coalition, which is called Impact Coalition. "Impact" stands for improving accountability, clarity and transparency, launched on 11th July, to improve public trust and confidence in their sector, their values and the way they work. Their main task is to convey to the public why they raise money the way they do, what is the fund-raising ratio, why do they pay their top people the way they do. It should not be the role of Government only. The VWOs should engage with the public actively, to form their own coalition, to build public trust and to convince the public that, indeed, if you are a complex organisation needing high pay to attract the people, then that should be the way to go. And I think it should not be the job only of this Parliament but also for VWOs to band and stand together to build public trust.
Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Deputy Speaker, Sir, thank you for allowing me to join in this debate.
Minister Khaw Boon Wan has given a very clear and comprehensive statement on the affairs of NKF and what he considers need be done going forward.
The Minister said that about half a million Singaporeans donated to NKF last year. This means that many Singaporeans, including students and young children, have been donating to NKF. This includes poor and low-income families who were touched by the emotional appeals of NKF fund-raising exercises. Even though they could be having barely enough money for themselves, many still give a few dollars a month to NKF. This generous gesture of all Singaporeans to donate to help the kidney patients is indeed most heartening and praiseworthy. We should all salute them.
The donors are what I would call "stakeholders" in NKF. When it became public that certain practices of the NKF were indeed excessive and not so prudent in the use of funds, it was therefore natural that the public, especially the donors or "stakeholders", were outraged and betrayed - to quote the word used by the Minister. Why is there a need to have a golden tap, first-class travel and a fleet of eight cars? I would say that even very large local companies and MNCs do not have such extravagant practices.
Need for high transparency and good governance
I agree, therefore, with the move to install a new CEO and a new Board in NKF. The purpose is to enable the new CEO and the Board to introduce a high level of transparency in NKF, so that donors are aware of how and where the funds are spent. I am pleased that the Minister has said that the framework of governance and code of conduct for the charities and IPCs will be reviewed further to allow for more transparency and good governance.
I wish to suggest that there should be guidelines on how much the charities and IPCs should raise each year, and how much reserve they should generally target to achieve. The purpose is not so much to restrict their fund-raising per se. We should definitely not curtail the competent and professional fund-raisers who can raise more funds than others. But this is to allow fund-raising activities to be spread out so that all charities can have a reasonable share of public donations. Public donation is finite. There is a limit on how much we can raise from corporations and the public each year. We cannot tap from the same sources every time, because they get exhausted. What we should aim for is to achieve more orderly and balanced fund-raising activities by all charity groups.
Charities, like public-listed companies, approach the public for funds. Hence, I would strongly advocate that charities should adopt closely the good governance practices of public-listed companies. They should have a majority of directors on the Board who are "independent directors". These are people who are not appointed by or friends of the executives and therefore are obliged or beholden to the management. These independent directors can help to check against excesses and wrong practices of the management. I feel that there should also be a proper Audit Committee and internal audit teams if their size justifies it.
The revised guidelines should indeed be applicable and practised religiously by all charities and IPCs seeking to source donations from the public.
Guidelines on fund-raising methods
I would also like to urge the Government to consider issuing guidelines on the fund-raising methods by charity groups. People are prepared to donate to help the poorer segment, under-privileged and medically unwell. However, most people would prefer that the "marketing tactics" of these charity groups to be within reasonable bounds of sensitivity and humility. There should not be "pressure selling", aggressive or pushy methods, and insensitive marketing to people who are either too young, very old or uneducated.
More importantly, the charities seeking donations should explain clearly what are the objectives, the uses and the target sums to be raised. The manner and process of donation should be clear and transparent. For example, we, as MPs, have received many appeals by residents to cancel their telephone donations to NKF because they were not aware that each phone call to donate cost $1 or $5. I have a case of a poor resident whose children unwittingly made many calls, and ended up having to pay $2,000 donation to NKF, which they obviously can ill afford to pay. Although the donation was eventually cancelled by NKF, the entire episode caused much distress and acrimony within the family unnecessarily.
On-going investigations into the affairs of NKF
We hear from the Minister that a thorough investigation will be conducted to ensure that there are no serious wrong-doings in NKF. This is commendable and necessary as the public wants to know whether there are other skeletons in the NKF's cupboard. More importantly, the exercise is not so much a witch-hunt, but to clean up the organisation and restore confidence of the public in NKF. Many people have lost faith with NKF. Many thousands have withdrawn their donations.
Thus, the cleaning up exercise is to tell the public that there is nothing else wrong with NKF. Please come forward to support and donate again to this charity. Of course, the public should be aware that there is the alternative of donating to the Kidney Dialysis Foundation (KDF), as mentioned by my colleague, Dr Wang Kai Yuen. The KDF is also doing an excellent job to help kidney patients.
We read that an investigation is now being conducted by the IRAS. The IRAS is very competent in investigating tax matters. The Minister has said that the PWC are the current auditors of NKF.
I wonder why the auditors did not uncover and surface some of these financially non-prudent practices of the management to the Board. And why did the Board not object to these practices if they were so informed?
I am pleased to hear from the Minister that the new Board has appointed another set of auditors, KPMG, to do a thorough audit of NKF. I hope that the proposed audit will cover both operational and financial matters, and be very comprehensive. In addition, I would like to suggest that the audit, when completed, should be made public, as this is of high interest to the donors. It is required to be transparent to restore confidence. I wish to ask whether NKF currently has an internal audit team and an Audit Committee. If they do not have, maybe they should consider doing so since they are holders of such a huge amount of funds and do such large collections every year.
Therefore, there are presently many unanswered questions on the past practices of the NKF. Notably, why has the Board of Directors not checked on Mr Durai? We need to know, and we need to see what are the undesirable practices that can be removed before public confidence can be restored to NKF.
Sir, I read that the NKF has a huge reserve of $220 million. This is quite a remarkable achievement. Now that this huge sum is sitting in NKF, I would like to know what safeguards are in place on the use of this fund. Is there a sound and prudent investment policy? Who decides on the fund management and usage? As it is said that the reserve could last over 30 years, then how is this fund being invested meanwhile? What checks and balances, and controls are there to ensure that the money is prudently and safely invested? Perhaps the Minister or NKF can enlighten the House and the public on this matter.
Mr Deputy Speaker, Sir, I wish to touch on the matter of political patronage. Many charities, temples and IPCs like to seek out Ministers and MPs to be their patrons, so as to provide prestige and political patronage to their organisations. This is understandable. If a charity can get the President, Mr Nathan, or the Prime Minister to be its patron, it can gain enhanced recognition and stature immediately. It is definitely of great help to their fund raising exercises. Spouses of Ministers are also sought to give such patronage.
In the case of NKF, the wife of SM Goh was the patron. Unfortunately, because of her presence at the two days of court hearings and the remarks she made to the press, it created much unfavourable reactions.
In principle, I do support patronage given by Ministers, MPs and their spouses to worthwhile charities and IPCs. There are many worthwhile charities deserving support and patronage. However, I feel that patrons should generally stay above the fray and not involve themselves in executive matters. The Prime Minister has recently issued fresh guidelines to Ministers and PAP MPs on their dealings with the public, rules on accepting of gifts, and roles and obligations as company directors. I wish to propose that the Prime Minister consider including in his directive, new guidelines for Ministers, PAP MPs and their spouses, on rules when they agree to serve as patrons of charities and IPCs. These guidelines can include types of bodies to give consent to be patrons, expectations and involvement level as patrons, and immediate withdrawal of their patronage at any hint of misdemeanour by the organisation. This is another step towards achieving greater transparency.
We hope that the end-result is to restore public confidence and support not just for the NKF but for all other charities in Singapore. All these charities do need our help and our generous donations. So may I urge all Singaporeans, go forth and donate.
Mdm Halimah Yacob: Mr Deputy Speaker, Sir, thank you for allowing me to join in this debate. First, let me thank the Minister for his Statement outlining the measures that will be taken to restore stability and confidence.
Sir, when news first broke out about Mr T T Durai's pay and that the NKF's figures on the number of its patients and how long its reserves would last were misrepresented, I felt as if I was under siege. As wherever I went, people demanded to know what the Government would do. So I was quite relieved when the NKF finally invited Minister Khaw to assist them. The Minister's intervention has restored some amount of confidence because people trust the Government and believe that the Government will get to the bottom of things and put the house in order. But looking ahead, I also wonder what would have happened if the NKF had decided not to involve the Ministry of Health. Is there a mechanism for the Government to intervene to protect public interest? This points out to me the importance of having a system in place to ensure proper checks and control so that intervention can be made much more earlier, and not only when the situation has become so serious.
Sir, I can understand how Singaporeans feel. At every union meeting that I attended over the next couple of days after the story broke, I was besieged with a deluge of questions about NKF. There were many angry words, frustration and, above all, a sense of betrayal. These feelings are to be expected. Almost two out of every three Singaporeans had donated to the NKF. Among these were many low-income workers who had donated a part of their hard earned money to the NKF because they believed that their money would be put to good use. A unionist recounted how his unemployed son who had used his savings to donate had quarrelled with him for accidentally throwing away the NKF pledge form during house-cleaning. Such was the intensity of feelings that the NKF was able to invoke through the many years of their fund-raising efforts to appeal to Singaporeans to help the kidney patients. When events turned out this way, Singaporeans were angry, particularly because the last few years had been tough years for them as many had lost their jobs, suffered wage cuts or enjoyed lower increments. Many were outraged to find out that in 2003, during SARS when some of them had to take no-pay leave or work reduced hours to keep their jobs, the CEO of NKF was paid 12 months of bonus and all in the name of charity.
It is true that we cannot expect those who work for charity full-time to be lowly paid. If we want the best people who can mobilise others, raise funds and run effective programmes for worthy causes, we have to pay them a reasonable or decent salary. But the real issue here is how much is enough or reasonable, especially when payment is made out of charity dollars. Singaporeans have overwhelmingly voiced their opinion that $600,000 is excessive. I think that any attempt to try and justify this amount would only make things worse.
But, Sir, we are all agreed on one point - we, as a society, should move ahead. We should not allow this whole incident from deflecting support for the NKF or the worthy cause that it is promoting - a mission to save the lives of fellow Singaporeans afflicted with kidney disease. We should also not let this affect our support for other charities as it would be unfair and unthinkable if Singaporeans were to stop helping the needy one day. We would be a very sad and uncaring society if this day were to come.
In moving ahead, Sir, the real issue that we need to deal with is not the question of how much we should pay the CEO of NKF. Of greater importance is the issue of how should charities, which are given autonomy to raise money from the money, be governed. What accountability should there be to the public which provides such charities and, more importantly, the needy constituents their lifeline? What are the checks and balances that are in place to ensure that there is no misuse of public funds? Who should test the system periodically to ensure that the rules are not flouted? Is it reasonable now that we can see how much money in charities, such as NKF can amass, to leave everything to self-regulation? When questioned during cross-examination as to why he did not disclose to the public about his pay and other perks, Mr T T Durai replied that he had no legal obligation to do so.
Sir, I think that this is a fundamental issue. We need to decide on the kind of regulatory regime that we want to put in place. I believe that charities should be governed by legislation, particularly those of a certain income size, if regulating all would be too onerous. If we want charities to upgrade and professionalise themselves and to be run as companies, and if we argue that their staff should also be well-paid to attract the best, then surely they should also be subject to the same rigours of accountability as companies, which are governed by legislation. I do not believe that introducing laws would make the system more rigid. Certainly, it would introduce some amount of administrative work but charities which are well-run and organised should not be concerned about this. If we do not think that legislation is the way ahead and still opt for the self-regulation mode, then we need to have a system in place where full and complete disclosure is possible, and the public is given sufficient information for it to make an informed decision and to have trust and faith in the charities.
Applying this principle to the NKF, the kind of disclosure that the public would like to see would cover the following areas: How much reserves does it have and how long will those reserves last? How many patients does the NKF have? What is the subsidy policy? And is the subsidy adequate, as some of us have been approached for assistance by those turned away by the NKF? What percentage of the fund-raising should be used for expenditure and how much must go towards helping the needy? What are the disclosure guidelines and processes that charities must adopt to improve on their transparency and accountability? Is there an audit committee? What does it audit and what is its responsibility? Are independent auditors already appointed, and are they performing a reasonably good job? What is the role of the Board of Directors? As in the NKF's case, the Board's supervisory role is clearly absent. Is there a system where volunteers or staff can raise concerns, bearing in mind that one such volunteer was sued in court for raising the very same issues that are now the subject of today's debate? Are whistle-blowers protected, Sir? For the Government is now thinking of protecting whistle-blowers when it comes to corporate governance for companies. It seems to me that what is lacking now is that we have opted for a scheme of self-regulation, but there is no system in place to check whether this is working. This has resulted, in the NKF's case, in a serious lack of transparency and accountability.
Sir, I call upon the MOH to conduct a thorough investigation of the affairs of the NKF so as to restore trust and confidence in charities which have taken a severe beating. At the end of the day, I must also say that no matter what checks and balances are put in place, a lot depends on the integrity of those who run these charities. We have seen that even in America, despite the more rigorous corporate governance laws that are in place, fiascos such as Enron can still happen. In Singapore, businesses are subject to thorough and tough business and company laws, financial guidelines and regulatory practices to ensure that they carry out their businesses properly and honestly and are answerable to their stakeholders. What about our charities who are dealing with public donations and funds? Should they not be more well-governed than private companies?
What is equally important is also our own vigilance. As donors, we should be more discerning, discriminating and demanding, to quote Mr Gerard Ee's words. Perhaps, as donors, supporters and contributors of NKF, we also cannot completely absolve ourselves from blame. How many of us must have felt somewhat uncomfortable with the glitz and gloss associated with the NKF's fund-raising efforts, including the television shows? We must have wondered and asked ourselves many questions, but never took the trouble to seriously articulate them. Or have we allowed ourselves to be intimidated by the law suits that we knew NKF could well bring against critics?
On the positive side, this whole NKF episode is actually a good lesson on the importance of good corporate governance for all charities. I hope that other charities will also take a leaf from this and do their own housekeeping if their house is not in order.
Let me conclude, Sir, by appealing to all Singaporeans - I understand your anger and frustrations. But let us not add more confusion to the already complex situation. The Ministry of Health has promised that it will do a thorough investigation together with the new Board. And we should give them our support so that they can do their work effectively without hassle.
Sir, notwithstanding the recent fiasco, the NKF has done good work and can continue to do so after some rigorous housekeeping. What we need to do now is to focus on the lives of those Singaporeans who need kidney dialysis and for whose sake, we need to support the NKF. For the NKF is not about Mr T T Durai, it is larger than that. It is about saving the lives of fellow Singaporeans, many of whom are low income workers who need the support of the NKF.
Mr Ang Mong Seng (Hong Kah) (In Mandarin ): Mr Deputy Speaker, Sir, since it started in 1969, the National Kidney Foundation has expanded significantly and contributed substantially to help kidney patients in
Recently, the series of revelations has sparked off much controversy in
I would like to make the following suggestions.
Firstly, appropriate use of the funds raised. Each year, NKF receives huge sums of donations. Town Councils put aside 30% to 35% of the service and conservancy charges collected from the residents for redevelopment and reconstruction of facilities in the towns they manage. Similarly, NKF can consider setting aside about 30% of the funds raised as its reserves. Part of the reserves could be deposited in the banks to earn interest and part of them could be used to build new dialysis centres, purchase new equipment, and make cyclical improvements to the facilities of these centres.
Secondly, in terms of administration, Town Councils generally spend about 20% of the service and conservancy charges on administrative expenses, such as staff salaries and daily operational expenses. So I would like to suggest that NKF also spends about 20% of the donations on administrative expenses.
According to NKF's Annual Report 2003, the income was $100 million. For a staff of 996, the total salary was $27 million, accounting for 27% of the total income. This is rather high. Perhaps, the new Board of Directors can review these administrative expenses. In addition, besides this 20%, the balance of 50% of the funds should be spent on the kidney patients. According to the report, of all the donations received by NKF, only 12% is spent on the patients. This is rather low. Public donations must be used to help the patients, especially those from lower income families because they are sick and unemployed and do not have any income. According to statistics, there are 4,000 patients in
Some donors to NKF told me that the NKF Directors have recently deleted the Chinese name of NKF. I have read the Chinese newspapers, Lianhe Zaobao, Shin Min, but I do not see a Chinese name for NKF. They just use NKF. What is the reason for this? Why delete the Chinese name? Every year, during the Hungry Ghost or âSeventh Moonâ festival, the participants would donate generously to NKF. During these Seventh Moon dinners, they use Mandarin or even Hokkien to raise funds for NKF, and they have received the generous support and response from the residents.
This recent episode has made many donors unhappy and they remarked, "When you wanted money, you talked in Hokkien. Now that you have money, you speak in English." In other words, they speak our language only when they need our money. Since much of their support comes from the Chinese community, why do they abandon the use of the Chinese name for NKF? I would like to know whether the new Board of Directors will explain the reason for this decision so that the public at large will understand why the NKF's name in Chinese has been abandoned.
Finally, I support the suggestion to look at the whole cause and effect of all these donations raised by PM Lee. By doing this, we can provide a good opportunity to let the Board of Directors and the former CEO, Mr Durai, to explain their position, and I am confident that the new Board appointed by the Minister will be more effective and transparent in carrying out the work and make NKF more effective and visible, in order to serve the patients and protect the international brand name and image of NKF.
Mr Steve Chia Kiah Hong (Non-Constituency Member): Thank you, Mr Deputy Speaker, Sir, for allowing me to participate in this debate. I also thank the Minister for Health for allowing us to speak in this debate today.
Like all Singaporeans, I am troubled to read of what the former NKF's CEO had been forced to admit in court. Sir, what troubles me and many other Singaporeans is not that Mr T T Durai is earning $600,000 salary a year. It is that he is earning this very high salary and 10 months' bonuses from the charity donation money without informing the public donors about it. If NKF and its CEO had been transparent about the CEO's pay and the other expenses, then the donating public would know who and how the money is being used, and there will be no anger as we had seen in the last week.
Sir, it is this betrayal of trust of the public. The public had trusted the NKF management to be honourable in their dealings. They had implicit trust that the money they had donated was being put to good use, by subsidising and helping the kidney patients. Singaporeans, young and old, healthy and sick, are constantly encouraged, urged and, to some extent, pestered to donate their limited hard-earned money to the NKF to help the needy kidney patients, and they have done so, not knowing how the donated money is to be spent.
Some members of the public had worked out the NKF figures and emailed me. In the 2003 NKF Report, NKF had spent $31.6 million on dialysis and transplantations but collected back $24.4 million from its patients, thus spending only $7.2 million on subsidising the patients. Yet, it collected $68.2 million in donations with a fund-raising expense of $16.6 million. Sir, this worked out to a cost of 24.3 cents per $1 raised, which is within the charity fund-raising law. However, if you include the public relations, education, administration and salary expenses, we realise that the non-clinical-related expenses are actually $37.5 million. This is 55% of the donations received and that means, for every $1 that the NKF raised or received, 24.3 cents go to the fund-raising exercise, 30.6 cents go to the public relations, education, administration and salaries, 34.6 cents go to the NKF reserves and, I repeat, only 10.5 cents go directly to subsidise the patients.
Mr Deputy Speaker, Sir, only 10.5% of each dollar raised goes to help these needy patients. More than 50% of the money goes to non-clinical expenses that do not help the patients. Like what Dr Wang said earlier, the NKF model is highly inefficient and, to some extent, I would say, unethical. They are highly successful in their marketing campaign, but clearly unethical in the way they market for charity donations. As we all now know, they lied about patient figures. The amount of subsidy money used and the extent the funds will last the existing operations of NKF, their pre-occupied concerns seem to be fund-raising, fund-raising and more fund-raising - raise as much funds for the NKF as the public stays ignorant. Telling the truth to the donating public is not important and totally irrelevant, it seems.
Transparency and public accountability seem to be out of the vocabulary of the past CEO. I do not know, but he seems to have learnt it somewhere in Singapore. Everything can be hidden in the name of personal privacy and the bigger national agenda, and entitlements can be constantly extended and maximised with a compliant and supportive board, as the fund-raisings go up. It seems that greed had taken root in the NKF leadership.
Sir, I do not know, but is there a possibility of fraud or violations of our laws with regard to the NKF? I hope the investigative agencies will do a very thorough investigation and a full report presented to Parliament as soon as possible. Sir, I am not proposing fraud or corruption here. I am pressing hard for a full inquiry on the NKF and their past dealings and practices now because, like many Singaporeans out there, we believe that the truth is somewhere out there. The public needs to know the truth, nothing but the whole truth, whatever the truth is, whether there is fraud or there is no fraud. If there is no fraud, we have to give a certain clarification back to Mr T T Durai. We need to know all these, so that there is proper closure and every one, ie, the donors, helpers, volunteers, including the new management of NKF under the leadership of Mr Gerard Ee, can move on with the good work of caring for the sick.
Sir, I am not trying to destroy NKF with the speech here. I do not believe in destroying any established charitable institution that is doing good work for the sick and needy. What I press for, and as what the Minister had also earlier agreed, is greater transparency and accountability. This is to provide closure and to regain the public's trust in the NKF. No one, no matter how good, hardworking or how much he or she had contributed to our society or to the needy, is above the law. If there are legal violations, they should be dealt with by due process of law. But let us, citizens, not take the law into our own hands with vandalism and such.
Finally, Sir, I have four nagging questions which I hope the Minister and the Government can help to answer and address.
First, why is NKF allowed to be registered as a private limited company here? Why was the public not informed of this privatisation process? As a private limited company, are they allowed to ask for charity donation dollars from the public and are there any more other charities registering themselves as private limited companies here?
Second, will the charity fund-raising law be tightened to ensure that, for those institutions that raise much money from the public, especially with the help of the mass media and their artistes, will more be demanded of them, ie, will a greater level of transparency and accountability for the funds raised be asked of them, including the salaries of their top management?
Third, what is the Minister's philosophy on charity fund-raising? Should charity institutions be allowed to keep raising funds and as much as they like, despite having more than enough money to cover their operating expenses for "x" number of years, say, five, seven or maybe 10 years? Will there be a limit? Should the law be amended to place a cap on how much a charitable institution can continue to raise funds if its existing funds can last their operations for, say, five years? I believe this practice is already well practised in the US since their biggest charity fraud case in 1992.
Fourth, I hope the Minister can also clarify if it is the Government's thinking that a CEO's salary should be pegged to the amount of money a public institution has in its reserves, ie, the more they have in their reserves, the more the CEO and/or the management team should be paid. Is this the Government's thinking? This is in relation to the issue of paying peanuts for top management.
Lastly, Sir, I believe there is one big insight that we and all Singaporeans can learn from this saga, ie, that every one of us needs to constantly demand greater transparency and accountability from the private and public institutions, be it the NKF, NCSS, ComChest, the Tsunami Fund, the Town Councils, GLCs, even Temasek Holdings and the Government Investment Corporation. The management should also learn to be more forthcoming with greater transparency, public disclosures and accountability, if they want continued public support.
Mr Deputy Speaker: Dr Ong Seh Hong. Please be reminded that we are adjourning by 6.30 pm today. Do make your speech short.
Dr Ong Seh Hong (Aljunied) (In Mandarin): Mr Deputy Speaker, Sir, thank you for allowing me to participate in this debate. First of all, I would like to declare that I am working at Renci Hospital, which is a charitable hospital operated by a voluntary welfare organisation.
Fortunately, from the reports I read yesterday, it would appear that after the initial response, some members of the public are restoring their donations to NKF, after Mr Gerard Ee has taken over control of the NKF. I think people are beginning to respond in a calm and rational manner now. In fact, we should learn from this episode and derive valuable experience, so that it would benefit everybody.
I hope, first of all, that members of the public will have a better understanding of the challenges and difficulties faced by the local welfare organisations, particularly the problems they have in raising funds and getting the right talents to work for them.
Thirdly, I hope that the Government and the relevant authorities could propose some recommendations on the remunerations and welfare of the staff of these voluntary welfare organisations, and also some guidelines on fund-raising and the building up of reserves. In this way, we will be able to clear the doubts and suspicions of the public.
Mr Deputy Speaker, Sir, for any organisation to succeed, we must, first of all, have sound management, outstanding leaders and good workers. The same applies to the voluntary welfare organisations. They face the big challenges trying to get enough funds and talents, and talents would include the leaders and other professionals who are required for these organisations, plus some ordinary workers. For example, in a hospital, apart from a very competent CEO, we must also have a good supply of experienced doctors, nurses, therapists and social workers to satisfy the needs of the patients 24 hours a day. We should not expect all these people who join voluntary welfare organisations to work on a voluntary and unpaid basis.
Indeed, the VWOs have problems attracting people to work for them. Are their salaries attractive enough? What are the career development prospects for these people? Can they be promoted to better and higher positions? What about their welfare and benefits, and so on? In fact, some people are worried that the organisations may not be financially stable, and would close down if they cannot raise enough funds to sustain their operation, and the staff will not get their salaries. These are some problems faced by the voluntary welfare organisations. No doubt, we do have people who join these VWOs because they want to do charitable work and good deeds. However, we should not expect every one of them to work for free. I think, for some of the big charitable organisations, this is all the more not feasible.
Like anywhere else, the employees of these organisations have families to look after. Their children have to go to school, they need to eat and pay for their bus fares and utilities. I think they should be compensated reasonably. While we want charitable organisations to be professionalised, we should not fall into the trap of expecting the professionals to be doing charity all their lives.
20 Jul 2005
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Click here to view Day 2 of the parliamentary debate
21 Jul 2005
"That the Ministerial Statement on the National Kidney Foundation be considered by Parliament.". - [Minister for Health].
Mdm Ho Geok Choo: Thank you, Sir, for allowing me to participate in this debate.
Sir, my colleagues before me have spoken of their shock and sadness over the NKF saga. Many have also suggested ways to address the lapses. I would like to suggest four measures for adoption:
(1) To give a voice to workers on the NKF Board
Sir, thousands of donors to the NKF are ordinary workers whose altruism has led them to put the interest of charity before theirs. Even with a meagre income, they still fork out regularly in whatever way they could to give to charity.
Sir, I feel strongly that these magnanimous workers ought to have a voice in the affairs of NKF, especially on how the funds are to be used since the bulk of donations are from these ordinary folks.
Contrary to the call by Opposition MP, Mr Chiam See Tong, for Opposition Party representation on the NKF Board, I would propose for the ordinary workers to be represented on the NKF Board because they are a majority stakeholder of the funds and donations. Therefore NTUC, which represents several hundreds of thousands of workers, could nominate a representative to be on the Board of NKF. Coming from the NTUC, he would be one whom thousands of ordinary workers would be able to relate to.
Sir, as my colleague before me, Dr Amy Khor, had said, if public disquiet over the many unanswered questions is not fully addressed, it could lead to a cynical public with deep mistrust for charities and less giving. Giving a voice to the ordinary workers on the NKF Board is one way that we can regain the confidence of the public in the NKF as they can see themselves through the representation by being involved in seeking out the answers to the many unanswered questions and satisfy themselves with such involvement.
Sir, I applaud the new Board and I have no doubt in their experience and competence. However, their composition and representation can be made even more robust with the inclusion of representation of ordinary workers.
(2) To imbue a culture of integrity, trust and respect in our charities and IPCs over and above existing code of governance, regulatory framework and guidelines
Sir, charities and IPCs are not Government entities and should remain as such. They thrive on the spirit of voluntarism and philanthrophy. Therefore, it is understandable when charities and IPCs are not too ready for an over-regulated and over-supervised system. In place, we should inculcate a culture of integrity and responsibility that will breed trust and respect for men and women who have stepped forward to serve the Board gratis and voluntarily. This culture of integrity, responsibility, trust and respect should prevail in the character of professional people working for the IPCs or charities.
The debate that follows the salary of the NKF CEO has brought up another dimension (rightly or wrongly) and that is, the Government is no longer in touch with the feelings of the ground and the allusion that the NKF mirrors the culture and system of its operating environment. These ground sentiments have got to be corrected and to allay these misgivings, it is important that, going forward, the Government must set the tone and expectations for IPCs and charities. It would be good practice to encourage charities and businesses to conscientiously work towards setting up a code of conduct and ethics befitting their respective operations. Such a code of conduct and ethics should be evolved into the culture and ethos of the operations and where compliance becomes second nature to the people of the outfit.
Perhaps the Government should start a yearly campaign on code of conduct and ethics. Just as we have done so for our "Keep Singapore Clean and Green" campaign and the "Courtesy" campaign, such a campaign on "Integrity, Responsibility, Trust and Respect" will go a long way to build a gracious society where the greedy will not get greedier and where power will not corrupt power.
We should start a campaign with our young in schools so that they can be moulded into the right values. At the same time, these young ones should be able to see the people, public and private sector agencies as model organisations exuberating qualities of integrity, responsibility, trust and respect.
(3) To establish a compensation framework driven by KPIs for professionally run charities and IPCs
Sir, my third point touches on key performance indicators, or KPIs, and the proper due process for establishing a compensation framework for professional staff working in charities, or IPCs. Minister Khaw had said, in his statement, that the varying needs and scale of operations of the various IPCs and charities will mean that we have varied needs.
Sir, I am of the view that indeed there is nothing wrong to adopt the concept of social entrepreneurship which is akin to running a charity like a business. Such a model has indeed grown an outfit, such as NKF, from a small entity in the SGH premises when it first started, to a successful formidable charity organisation that it is today. Many have criticised NKF for adopting a business model in its operations. This is not its mistake. The mistake NKF made was its lack of transparency. It is unfortunate that the image of success, which NKF has painstakingly built up over four decades, was tarnished over just two days and the success factors abolished along with it.
I agree that a system of checks and balances for due diligence on funds utilisation and accountability be instituted for regular audits by the Board. Therefore, it is good that the list of key performance indicators with regard to the leadership and performance of NKF has been set out for the next Board and management team.
Sir, I hope that this list will include indicators, such as the fund-raising target, number of patients or beneficiaries and the quantum of funds raised that would directly benefit patients vis-a-vis operational expenses (including executive compensation). Such KPIs should be audited regularly for proper accountability. This will help restore confidence amongst donors.
Sir, I understand that speaking from the head (that is, right pay for the right person) is not the same as speaking from the heart. Many will argue that charity is a matter of the heart. To my mind, paying a competitive salary to a top-notch CEO is fair but, in the case of the NKF, the misrepresentation and lack of transparency are what bother many of us, especially since Singaporeans have been faced with retrenchments and pay cuts over the past few years.
Sir, the remuneration of the CEO is often determined by the Board and it would be helpful to know the terms of employment and the key criteria or performance targets for incentive bonus before we can make any meaningful judgment on the CEO's pay package. As a charitable organisation, the performance incentives of the CEO should be related to various key performance indicators of the organisation such as providing quality care to its patients other than indicators of profit generated, donations collected or size of reserve.
Sir, it is important that salaries of key staff who are working in charities and IPCs are properly rationalised for greater accountability. Nonetheless, it is the opinion of many Singaporeans (as pointed out by a reader) "that there is such a thing as public service where people, informed by their sense of civic-mindedness, offer their services not for high salaries but more for the satisfaction of a fulfilling life caring for the poor and needy." It is my hope that the new management team of the NKF are not only professionals but will embody these qualities as well.
(4) To empower the new Board to carry out its duties
Sir, the NKF debacle has uncovered many shortcomings in the current system and I urge that the new NKF Board pay heed to these lapses and the feedback of the public and to work on improving the effective management of the NKF. I hope we will no longer sensationalise and agonise further the NKF fiasco but to put all our efforts to support the new NKF team in regaining the confidence of donors and supporters for NKF. At the same time, we ought to confer our confidence in the new Board and empower it to proceed with the necessary investigations of the lapses and provide the recommendations to close the gaps. This would require an overhaul of current systems leading to greater improvements of the operating systems, procedures and policies of the NKF.
In the course of this entire exercise, the new Board will be able to learn from the experience and do an even better due diligence in the future. Therefore, it is important for the Board to go through this exercise of investigation and review without further interventions. In my opinion, it is not necessary to install further supervisory committees for the Board as it is already accountable to the Commissioner of Charities and so long as the Board itself is compliant with the code of conduct that I have expounded in my second suggestion, and, as the Board champions for such a culture in the NKF, we can be more assured of closing all gaps.
In conclusion, Sir, Singaporeans should not be deterred to continue with their "spirit of giving" so long as they can be assured that there is transparency and proper accountability on funds raised and that they can breathe a culture of integrity in the behaviour and spirit of the people running charities and IPCs. It will be to our credit that charities and IPCs will continue to be able to attract the best and credible talents to work in their organisations hand-in-hand with our invaluable volunteers and supporters for the greater good of society.
Dr Tan Sze Wee (Nominated Member): Mr Speaker, Sir, I would like to thank you for the opportunity to speak and comment on the Minister's Statement on the National Kidney Foundation.
The recent events in NKF have shown that we need better governance and transparency in VWOs. However, I would like to take some objections to the arguments put forth by the SPH's counsel on the funds in NKF that are needed to fund kidney dialysis in this country.
I fully expect that the legal counsel of SPH would try his best to defend his claim and demolish the plaintiff's case. After all, the Singapore's legal system is an adversarial one and this is his job. However, the argument he put forth that the $262 million will last NKF for 30 to 40 years is overly simplistic. It is based on historical facts and figures. However, it conveniently ignores the disease load that Singapore has to face in the future. With a rapidly ageing population, the incidence and prevalence of chronic renal failure and patients requiring dialysis will rise rapidly. I would like to ask the Health Minister the following questions:
(a) What has been the year-on-year growth of kidney failure patients on dialysis in the last 10 years?
(b) What is the number of patients on dialysis now and what is the expected number in five and 10 years' time?
(c) What is the average expected life expectancy of a renal failure patient on kidney dialysis?
(d) What is the expected number of kidney dialysis patients claiming MediShield
that will exceed the lifelong cap on MediShield claims in the next two, five and 10 years?
In addition to the advance in medical science and better care, dialysis patients are expected to live longer than what the MediShield planners already anticipated. MediShield is not bound to cover them once these patients exceed the lifelong withdrawal limit for MediShield. When this occurs, patients and organisations, such as Medifund, NKF and maybe KDF, will have to take up this very substantial burden.
In addition, the NKF has, with the support of the Health Minister, branched out into other areas of service. Some of these other areas include kidney disease research, cancer and paediatric health. I think these are very laudable objectives. Despite the setback in public confidence, I urge Singaporeans to continue to support in these NKF areas of work.
The troubling facet of NKF saga is not how much wealth NKF has, but how little it has, in terms of transparency. In this respect, it can be clearly seen that Singaporeans demand transparency in how public money is spent. This is because most Singaporeans do not realise the costs involved in dialysis care and the implications in the long term, that is, in view of the ageing population and the projected dialysis care costs. Furthermore, what if NKF uses the funds raised for cancer and children's medical care and lumps them into a single pool of funds and takes some of the funds out for operating expenditure, or for other purpose? The public does not know how the funds raised will be used or projected for the future, hence they have demanded accountability from the NKF Board.
From what I understand, directors' fees in some private and public listed companies are published openly in their company websites and annual reports. So, why does NKF not publish its directors' fees, since it has accountability to its stakeholders, that is, both the public and the donors? I would even suggest that the same criteria be applied to directors for VWOs as well.
Finally, one last comment on the infamous $600,000 annual salary package for Mr Durai. We should not criticise Mr Durai for taking home this amount, especially since the previous NKF Board approved it. But I do question the wisdom of the NKF Board. On what basis and benchmarks was this amount arrived at?
I was told that the annual salaries of CEOs of our public acute hospitals range from about $300,000 to, maybe, $500,000 a year. Please bear in mind that these hospitals treat hundreds of thousands of patients a year, have thousands of staff and an annual turnover of anywhere from $100 million to almost $600 million a year.
In fact, I think with the exception of maybe two very senior CEOs, most of our public acute general hospital CEOs earn substantially lower than $500,000 a year, let alone $600,000 figure. The NKF CEO package should get a reality check by some objective benchmark. We can start by perhaps comparing it with, say, the CEO, COO or even the CFO pay packages of our public acute hospitals.
I think the job responsibility of the CEO of the NKF should be equivalent to the job scope of the CEO of a smaller acute public hospital or, perhaps, the CEO or CFO of a larger hospital. I would question really hard the rationale behind the pay package if the NKF CEO job pays as well as the CEO of SGH or Tan Tock Seng Hospital, which iare two of our largest public hospitals.
In conclusion, Mr Speaker, the recent events in NKF have shown that we need better governance and transparency in the VWOs in Singapore. However, it should not distract us from the bigger picture of the rising trend and the subsequent burden of renal dialysis patients in Singapore, in the years to come. We need effective and responsible leadership in NKF to fulfil its purpose to serve the needs of kidney failure patients in Singapore.
Prof. Ivan Png Paak Liang (Nominated Member): Thank you, Mr Speaker, for allowing me to join in this debate. I have two comments and they relate to the financial reporting structure for Institutions of Public Character (IPCs). IPCs are required to post financial information annually using a prescribed format. My first comment regards operating and administrative expenses. Consider a big institution like a university or a hospital. It has multiple activities spanning some profitable, some charitable and some non-profit. All of these are lumped together and we get one big lump sum operating and administrative expenses. I think it would be much better for everyone and much more transparent if there were proper segregation of these operating and administrative expenses between the charitable and the non-charitable and the profit-making activities. This would ensure full transparency. We talk in the House a lot about expense ratios. We can see some expense ratios looking very good and that is because things have been commingled with one another. So I do not think we want to have too much clever accounting. We should rather have these segregated so that the public can understand the picture much more clearly.
Sir, my second comment relates also to the financial format prescribed by the Commissioner of IRAS. "Income" is divided into a number of categories. Members would have seen the chart performance shown by the hon. Member Wang Kai Yuen. One of the categories is "Other Income". Let me call attention to NKF that "Other Income" in 2003 was $25 million, which is a lot of "Others". So my second suggestion is that in this prescribed format by IRAS, if the so-called "Others" indeed becomes so large and exceeds some particular level, it would be much better for us to see a further breakdown. So maybe "Others" and sub-others and sub, sub-others, depending on how big these are.
Dr Warren Lee (Sembawang): Mr Speaker, Sir, I am pleased that this issue has surfaced and is being discussed at great length in this House. I would like to declare my interest in the field in that I am from the VWO sector. I was the President of the Diabetic Society of Singapore from 1996 to 2002 and has since become the Chairman to the present time. I am also a Board Member of the International Diabetes Federation which is based in Brussels and was previously the Regional Chairman of this same organisation. I am also an Advisor to the Singapore Children Society. I have been following the work of NCSS and NKF for some time.
I feel that through this sorry episode, Singaporeans would be able to get a better appreciation of the work of charitable organisations in our country, their various modes of operation and field of service and they will be better able to make informed choices about which charities they choose to support. Singaporeans should remember that there are many other charities, besides the NKF, when it comes to opening their wallets. According to the Minister, there were 1,800 charities in Singapore and, I think, it is over 500 IPCs. I trust that more and more Singaporeans will realise that the continued maturation and progress of our society will depend on our continued support of the many voluntary welfare organisations in our midst and make the necessary commitment to support these VWOs financially and, also, by coming forward to serve as volunteers.
This episode will also be a catalyst for local VWOs to clean up their acts and to discard outmoded management and fund-raising practices while adopting the best practices of both the corporate and non-profit sectors, even the models of social entrepreneurship, in particular, the concept of a professional run fund-raising arm and the concept of having paid staff to deliver professional standards of day care to their clients with the aid of volunteers coming in at management and, perhaps, even at care giving levels. Far too many VWOs are hampered by having their volunteers divide their time and energy between efforts to raise funds and efforts to provide services, such that they do not do a good job in either field.
I agree wholeheartedly that it is certainly not helpful for us to take out our anger against NKF's staff, many who continue to soldier on as they always have, motivated only by a desire to help those under their care. They and their patients deserve our continued support. However, there is a caveat.
Secondly, with regard to Mr Durai, the outgoing Board and their practices, I think let the law take its course and we should not rush in to judge too quickly or to support too quickly before the full facts are known.
With regard to the famous $600,000, I agree that a good man should equate to good wage. But as a VWO person and as a doctor, I strongly wonder about how it is that somebody can forget the difference between 3,000 patients, 2,000 patients and 1,500 patients. To me, that is simple misrepresentation, especially when somebody has got a reputation for being very obsessive with details. However, I would like to urge a full and thorough investigation with no attempt to cover up or protect any person or organisation. If mistakes had been made, let us face up to them and move on. Some of these issues may be new to the investigators and to erstwhile supporters, but they are old sores to those who have been watching the situation unfold over the years.
The Prime Minister has urged transparency and good governance in all aspects of the society, beginning with MPs and Ministers. We have said that we would not tolerate wrong-doing in Government or commercial sectors. Let us also do the same for the civil society and charity sector. We know that we have branding, even in the area of charities. I, for one, know that one of the organisations I represent, the International Diabetes Federation, chose to have its regional representative office in Singapore, partly because of our reputation for good governance in as much as for the connectivity that Singapore brings.
The NKF was viewed by the man-in-the-street as somehow a Government-backed organisation, despite its status as an independent NGO. Statements by leading establishment figures, as the saga unfolded, have only added to this impression. Let us then see to it that we resolve all doubts in the minds of the man-in-the-street and, also, to the many who are watching us from afar.
I would like to congratulate the Minister for his choice of interim Board Chairman. I would like to express my full confidence in Mr Gerard Ee and his team. I know that they will do an excellent job of exposing and rooting out any questionable practices and restoring public confidence in what has become a Singapore institution. Nevertheless, there are many people who are unhappy, although their reasons are varied.
Sir, those who think that the public anger has been directed solely at the former CEO's pay packet may have missed the point. Public sentiment about Mr Durai's salary and perks may be a proxy or lightning rod for anger and resentment about deeper problems besetting the organisation's policies and practices and the feeling that the Government could have done more to discover and remedy the problems that various members of the public have observed but have not yet spoken out against.
The NKF has undoubtedly done good work in raising the standards of treatment of kidney disease, in setting up 21 dialysis centres around the country. Like any other responsible publicly funded healthcare provider, it has had to rationalise the process of care and make tough choices on whom they would treat, whom they would subsidise and whom they would need to reject. Not everyone could have been happy with some of these tough choices. But in the process, the NKF has also indulged in what many regard as questionable practices, both in the area of fund-raising and in the area of application of these funds.
Many Members have, before me, spoken of some of these points. I would not repeat them. But let me give you a little bit of feedback from one of my senior grassroots leaders. This man participated in a "free" healthcare screening, a couple of months ago, at Suntec City. After going through the entire health screening procedure, he was informed that if he were to take a battery of tests from a clinic, it would cost him X dollars. And if he wanted to obtain the results of the tests which he had just undertaken, he would need to agree to contribute $6 through GIRO deduction through the NKF. Although this grassroots leader agreed to make the contribution, another of my grassroots felt that the NKF had manipulated people by stating that the
screening was free. I have also received signed feedback from another retired lawyer who pointed out to me that the NKF does reject many people. While I, as a doctor, realise that not everybody can be treated, we also do realise that many of the people rejected go on then to be treated by the KDF or private dialysis centres at much greater cost.
Turning to the point made by my colleague Dr Tan earlier, he said that, actually, one must look at the NKF's reserves in the light of an increasing disease load. This argument only holds if it is true that the NKF actually increases the number of patients that it is going to be treating in relation to the disease load. I think it is very important for us to ask hard questions about who is being rejected, what is the basis for rejection, and where can these people go. If the NKF, with its vaunted high standards, is unable to look after these people, and if they go elsewhere, then something is wrong with those figures as well. And, speaking as a doctor, I know it is very easy to get good healthcare results, if you first choose your patients. If you choose patients who are less sick and you treat them, they are more likely to get well. So, again, this question of the reputation for good healthcare must, in the light of what we know, be taken perhaps with a pinch of salt, until and unless it can be proven that, yes, we are actually comparing apples with apples.
I am also told that this gentleman who was going to be charged more than private rates for dialysis treatment - well, these things are a little bit difficult to prove - and, furthermore, he informed me that there are patients who are in financial difficulties, whose rates of subsidy had not been reviewed for three to four years, that there are patients who dared not complain about the NKF because they were afraid of being blackmarked, of patients who were compelled to participate in public functions because, if they did not turn up, it would go against their record. This is a signed statement, and I am happy to pass this on to the Minister.
There are, I am sure, many more stories, both the ones I have heard within this House and also outside, but I think this question of transparency is not only about transparency of the board. Any committee of inquiry or any sort of investigation must really go down to what was happening on the ground, because the man-in-the-street is not so much worried about questions of board governance but what an organisation really does. So, I think, before we can really talk about restoring confidence in the NKF as an institution, one must not only look at board governance, but also look at what has actually been happening, right down to who the service providers are. Coming from a Government hospital, under the able leadership of a Minister, I know that many of these things which I am hearing of would certainly not be allowed. So, I do not see that an NGO, especially one of this nature, should be having any different standards.
Sir, individually, many of the stories recounted to me may have been explained away as one of excesses. But I think we really need to get to the bottom of the matter and expose any legally or morally wrong practices and change them for the better.
What else can we learn from this sorry episode? I hope the NKF would consider setting aside its reserves as a professionally-run endowment fund, with the proceeds to be used for direct patient care. This is a model that has been taken by many Ivy League and overseas universities to manage large endowments. Everything is hands-off, and you make applications to the funds and funds are made available accordingly. I hope also that we may find a way for the National Council of Social Services (NCSS) and NKF to join forces, and thereby help out a good many VWOs to put them on a firmer financial footing, leaving these volunteers and staff to focus on delivering services to clients.
I feel it is also timely for the National Council of Social Services to put forward its case for funding and to examine itself to see which of its funded agencies should continue to get funding from the Community Chest, and then for the Community Chest itself to take some good lessons from the way NKF has been raising money and actually be a bit more commercial about how it is doing things.
Turning to the funds actually already raised by the NKF, it appears to me, Sir, that some of these funds may have been raised perhaps, under what might be charitably expressed, as "false pretences". Some of the funds may have been put up by donors based on erroneous and inaccurate figures and, therefore, we should give donors a chance to indicate if they would still place their funds in NKF coffers or, perhaps, reprogramme them to some other charity like the Community Chest.
I hope that the incoming CEO and his team would conduct a thorough examination not just of the accounts but of the practices, and also to speak widely and seek wide feedback about these other questionable practices, some of which I have highlighted.
In the final analysis, Sir, whether or not we are talking about charity, business or government, we have to say that the end cannot justify the means.
Dr Geh Min (Nominated Member): Thank you, Mr Speaker, Sir, for allowing me to join in this debate. I think I can promise to be fairly short, as the other hon. Members have covered most of the points that I was going to bring up. But I would like to speak on the deployment of staff and, therefore, funds in charitable organisations.
From the figures that we have of NKF, they have, to be accurate, 996 staff members treating 1,800 or perhaps 1,500-plus dialysis patients. Of course, the primary function of NKF is to prolong or save the lives of kidney patients by providing dialysis. I am given figures on the number of renal specialists that NKF has. This varies from three to four. Two sources tell me they have three renal physicians, another source says four but that one is mainly concerned with administration, and another one says that the fourth is actually a surgeon. Whether it is three or four, this works out to a ratio of approximately one renal physician to 500 dialysis patients. I am told that the recommended ratio is one renal physician to 60-80 patients. These are figures given to me by a renal physician and they are based on recommendations from Japan, Korea, Taiwan and the US. So, in a rough estimate, NKF provides one renal physician to about 500 renal dialysis patients.
Just as a further comparison, according to the figures given by NKF on the number of dialysis patients they have, this amounts to about 50% of all patients in Singapore requiring dialysis. The total number of renal physicians, I am told, in Singapore is 26. So, obviously, NKF has just a small fraction, ie, three out of 26.
I am not giving these figures to question the quality of the medical care that is given to NKF dialysis patients. By the Minister's account and by all other accounts I have heard, it gives good medical care. But what I am raising is: from the other figures which were quoted by Dr Wang Kai Yuen yesterday, the staff-patient ratio and the total staff of NKF is extremely high. The ratio of staff to patient is approximately 1,000:2,000. Therefore, the question is: if NKF is so effective and economical in the deployment of its medical specialists, where are all the other staff deployed? Why is it not equally efficient and economical in the deployment of its other staff? Like Dr Wang said yesterday, I would naturally wonder how many of the staff are deployed in other areas. For example, do they have a top-heavy administration or are they even focused solely on fund-raising? I think these figures raise three issues that I would like to address today.
Firstly, should a voluntary welfare organisation or charitable organisation remain faithful to its original vision, eg, in the case of NKF, providing dialysis? Or should they be permitted or even encouraged to be entrepreneurial and creative and branch out into other areas? If these other areas are closely related to its primary mission, I think one would not quarrel with this. But supposing these areas are very different from its primary mission, or if it chooses to be moved into a fund-raising machine, I think we should question this, because the IPC status was given in the first place, I presume, based on what its original mission was. And if it has changed that mission, should it re-apply for IPC status?
The second point I would like to bring up is how many of its staff members and how much of their time should be occupied with fund-raising. I think the 30% cap on expenditure given to IPCs is not sufficient to address this issue, because this is not a water-tight thing. Some staff may not be directly deployed to fund-raising but, as recounted by the hon. Member Dr Warren Lee, you could do a medical screening and at the end of the medical screening, the staff may ask the patient or potential donor for a donation. This is obviously not done by fund-raising staff but by clinical staff. Related to this is the issue of whether the fund-raising should be done by a separate and presumably, therefore, professional or department, or whether it should be integrated in the whole fabric of the organisation and every one is expected to chip in, from the CEO down.
I think this has wide implications. It is not just VWOs and charitable organisations. We now know, as has been mentioned, that a lot of other institutions, including Government institutions and statutory boards, do have endowment funds. They do have to enter into fund-raising activities. Older universities now have endowment funds. NUH has an endowment fund, so also has SGH. So, I think there should be clearer guidelines as to who does the fund-raising and how it is done.
My third point, and this relates to values, is, ultimately, do we, as a society or even as a nation, value an institution for the excellence of its service, the service that it exists to do, or do we value it for the excellence of its fund-raising? Or, which is more likely, do we feel that the two issues are inseparable? Do we think that the net worth and the true worth of an organisation cannot be separated? In my personal opinion, an organisation or institution or individual should be judged primarily by how it or he performs its mission and not by how effectively it fund-raises or how impressive its reserves are. If it feels it needs a large budget and reserve to be effective in its mission, that is its prerogative and, sad to say, I think this is the increasing reality of the situation. But it should not be judged by
its funds. It should be judged by the effectiveness of its delivery. The money is the means, not the end. And until it is put to effective use, I do not think we can say that an organisation that has more funds is therefore more effective than an organisation that has less. In fact, if another similar organisation manages to achieve the same mission as successfully with less funds, I think it deserves more credit for doing so.
At this point, I would like to join some of the other hon. Members to pay tribute to all the many charitable organisations that have been running on a shoe-string budget, perhaps as the Minister said, using cottage industry techniques for raising funds, but still deliver sterling service to society. Ultimately, service is not easily quantifiable. It is easier to look at a bank balance but we should not just value what we can easily quantify. We should, in fact, learn to value what is not easily quantifiable.
May I conclude here by saying again that I concur with the other Members of the House by endorsing that transparency, accountability and integrity are of the utmost importance. To me, transparency and accountability is the free flow of information in both directions, ie, a two-way flow of information. This keeps both parties in touch with reality. It enables them to self-regulate and to fine-tune their practices and their responses. Without this, we are likely to lose touch with reality and come down to earth with a bump or even a crash landing.
Ms Eunice Elizabeth Olsen (Nominated Member): Mr Speaker, Sir, thank you for allowing me to participate in this debate. First of all, I would like to declare my interest as a volunteer to a few voluntary welfare organisations in Singapore.
This past week, it has been almost impossible not to walk past groups of people without overhearing snatches of conversation that mention the National Kidney Foundation, Mr T T Durai and peanuts. It is no surprise, given the generous space the media has devoted to this issue, the courtroom revelations and comments about the NKF and the resultant public emotion that has been stirred up.
I can understand why people have been so demonstrative about this issue, although I shall not go into the merits or demerits of the NKF's practices. Many people have already either defended or criticised the NKF, and many more will continue to do so.
My concern is how the aftermath of last week's lawsuit will impact other voluntary welfare organisations in Singapore, especially with regard to the implications for their ability to raise funds for their beneficiaries. I would like to look at how the Government, the VWOs and the public can each play a part to contain the fallout from this incident.
First, let me cite two examples. A friend recounted how, whilst she was in a cab last week, the taxi driver commented the NKF episode illustrated why he only donates to his church, which does volunteer work overseas, but not to Singapore charities.
Last week, when I spoke to someone from one of the VWOs, I was told that when its members tried to collect donations for a walkathon, members of the public had reservations about the intent behind the fund-raising.
I recall it was only in February that the Minister of State for Foreign Affairs was giving this House an update on the aid to Aceh and he said that the Singapore style is to be very transparent and gives as much information as possible. Now, unfortunately, the truth is many people believe that the NKF epitomises the Singapore style and vice versa.
Sir, I firmly believe that what needs to be done starting from today is to reassure the public that what has gone on at the NKF is not the norm for VWOs. In some ways, I am sure people recognise how unique is the NKF's fund-raising machinery and professional, corporate set-up. But their greater concern, it would seem, is public accountability of public funds and good charity governance.
I would like to ask how the Government intends to play its part in attending to these two concerns. If the State wants to adopt the "many helping hands" approach as its social safety net for the underprivileged, it must recognise that if one of those hands - in this case, that belonging to its VWO partners - is weakened, the social cracks in our nation will widen.
I was looking at the Annual Report of the Commissioner of Charities for 2004, which is, by the way, a grand total of two and a quarter pages and all of nine paragraphs plus two appendices - which is not that inspiring - and I noted there were only nine field visits for the entire year to better understand the VWOs and their operations, and to advise them on how to meet the regulatory requirements. There was no increase in the number of visits from the year before.
The report also said the authorities would continue to work with other regulatory agencies and the Ministry of Finance to promote good practices in charity governance. I would like to ask which agencies these are and how specifically MOF is promoting good governance practices. I would add my reservations that nine field visits a year, when there are about 1,750 charities, are hardly adequate. If I may, I have one suggestion as to how we can encourage best practices within charities. Why not recognise VWOs for these practices, regardless of the charity's size, to make it easier for those charities with a seal of excellence to gain the public's trust when they raise funds? This is one way to encourage VWOs to strive for the highest of governance standards.
Mr Speaker, Sir, I read the Prime Minister's remarks that he does not see a need to adjust the guidelines for charities now and that it is the personnel that matter. Well, I admit I looked at the Charities Act and it was quite lengthy. But if Singapore's biggest charity, the one touted to be the most professional of them all, has fallen victim to questionable practices, then I say if we can do more, we should do more. And in the first place, how is the public to know that VWOs are abiding by the guidelines? I would like to ask what will be done in this regard and what public education initiatives can be introduced so that people better understand the role of VWOs and the ways in which they function.
In addition to tightening the regulatory framework, we should take a leaf from the Monetary Authority of Singapore. I recall from Tuesday's sitting how the Monetary Authority of Singapore is focusing on a supervisory approach, for example, towards the banks. In a case like the NKF, where there may or may not have been a breach of the Charities Act or the law, but definitely a breach of public trust, might it not be better for the authorities to keep closer watch on the VWOs - especially the 47 large charities whose income exceeded $10 million, representing more than 80% of the $5 billion in total income of all registered charities in 2004? I agree with the Minister for Health that the bigger VWOs should and could observe higher compliance standards. In fact, with only 47 out of about 1,750 charities receiving 80% of all donations, there is definitely a need for differential regulations. This way, the smaller VWOs will be unencumbered by unnecessary regulations which could hamper their fund-raising and the good they do for their beneficiaries. I would also like to ask the Government to make public the charities whose incomes exceed $10 million a year.
Sir, like the other hon. Members, I would like to urge VWOs not to shy away from transparency and greater scrutiny. I would imagine that these will be seen as plus points for fund-raising, more so now and going forward than ever before. VWOs should put their financial and profile information online as soon as possible and strive to bring forward the targets for good charity governance. They should inform the public on how donations are used and share their plans with donors. A VWO should educate its volunteers and fund-raisers to be able to know enough of its work to provide information to potential donors.
As for the public, I hope they still believe in helping those who are less fortunate. Speaking as a volunteer, I can testify that whatever amount you donate, no matter how small, can really make a marked difference in a person's life. Charities are one of the best vehicles to bring help to those who need it and charities cannot survive without public funds. The underprivileged would bear the brunt if the public were to extrapolate that the practices in most VWOs are similar to those in NKF. Even so and even now, I do not doubt that donations to NKF ultimately do benefit their dialysis patients.
Maybe, this is an opportunity for Singaporeans to become more informed donors, not to make it difficult for VWOs when they raise funds, but for us to take greater interest and perhaps, get more involved in causes which we believe in sincerely. This way, our money goes a longer way and has more impact. This way, we can play a part in determining whether another NKF will happen again. Perhaps, this entire saga could pave the way for Singaporeans to step forward and volunteer with the organisations that serve the community to which we all belong. For it is when people volunteer that they truly appreciate the importance of giving.
I can still remember the Prime Minister's Budget speech and the plaudits it received for expanding the scope and raising the profile of volunteerism in Singapore. It would be a pity, though, if we allow this NKF incident to detract from the ideals of becoming a more compassionate society, one which is determined to forge a true sense of nationhood. That would be the biggest disfavour we could do for ourselves.
Assoc. Prof. Ong Soh Khim (Nominated Member): Mr Speaker, Sir, thank you for allowing me to speak and comment on the MOH's Ministerial Statement on NKF. Many hon. Members ahead of me have spoken on many issues related to the governance and the transparency of NKF and I will not repeat those points and issues again. I would like to still focus on the fund-raising activities, ie, the large-scale charity shows, as well as the "show-casing" of patients in such activities.
Too many large-scale charity TV shows
Sir, I am of the opinion that we have too many large-scale charity TV shows. Yesterday, during Question Time, I asked the Health Minister on whether there are any regulatory guidelines for VWOs to carry out large-scale charity shows through the TV and the radio media, as recently there have been a great number of such large-scale charity shows, leading to a donation fatigue syndrome in the general public.
Sir, the NKF Cancer Fund charity show this month was carried out in three parts, effectively three charity shows, and the coming President's Star Charity show will be carried out in two parts. Earlier in April this year, we had the NKF Charity show for the kidney dialysis patients, and in the pipeline are the Singapore Cancer Society show, the NKF Children's Medical Fund show and the Heart Charity show for the Singapore Heart Foundation. On the average, we are having about 10-12 such charity shows per year. A friend from Hong Kong told me that the average number of charity shows in Hong Kong is about five per year. Sir, besides the large number of charity shows, these are in addition to the numerous flag days, fund-raising activities and distribution of donation cards in our schools.
Sir, we need to analyse why the charity bodies in Singapore, especially NKF, need these large numbers of charity shows, whether there are genuine needs for these large numbers of charity shows. Sir, many Singaporeans have many questions unanswered.
(1) Is it because the cost of medical treatments and dialysis services in Singapore is too high, such that Singaporeans cannot afford?
(2) Is it because Singaporeans do not have enough savings or medical insurance coverage to meet such needs when illnesses strike?
(3) Is it because the charity bodies are not receiving enough subsidies from the Government?
(4) Is it because the current subsidies received by each charity body have not been used optimally to serve its beneficiaries?
Sir, I can go on and list out many more "is it" questions. Sir, we need to look at this problem from a broader perspective rather than simply just focusing on the NKF saga alone, so as to find out the root causes.
Quality of large-scale charity TV shows
Yesterday, the Health Minister informed the House that there are rules that guide the organisation of large-scale fund-raising activities, namely, the Media Development Authority's Free-to-Air Television Programme Code requires all TV programmes, including charity shows, to observe standards of good taste and decency. Sir, I have a few queries here:
(1) What are the specific requirements and criteria, besides good taste and decency, that a charity body has to satisfy before it is allowed to carry out a fund-raising large-scale charity show over the TV media?
(2) At the point of applying to carry out a fund-raising large-scale TV charity show, do the charity bodies have to submit a statement of their financial standing for the relevant authorities to assess whether they have a genuine need to carry out this activity? And which are the relevant authorities that assess the needs of these applications to determine if these applications for fund-raising are genuinely in need of funds, and what are the criteria in the assessment?
Sir, the "donation pie" in Singapore is fixed, as there can only be that much of donation dollars in Singapore. By assessing whether a charity body has a genuine need to carry out a large-scale fund-raising TV charity show before approving such activities will allow a more even flow of such donation dollars among the various charity bodies in Singapore, as well as give a chance for the more needy charity bodies to canvass for such donation dollars, as opposed to what is happening now when NKF has a large slice of this donation pie and is keeping this large slice of pie in its fridge, ie, as reserves.
Sir, I hope the relevant authorities can review their current guidelines and regulations and jointly come up with a set of more comprehensive and stringent guidelines to prevent the exceedingly large number of such charity shows which, in a way, is wasting the precious donation dollars as expenditures for such charity shows are high. As has been reported in the Straits Times today, 21st July 2005, in the case of NKF, for every $1 donation received, 24.3 cents go to the fund-raising expenses. Sir, more unnecessary large-scale TV charity shows will waste more precious donation dollars although the expenses have been kept at 30%.
Sir, if there are no proper checks for assessing the needs to carry out such fund-raising activities and charity shows, no proper control over the numbers and quality of such shows, these can lead to unhealthy competition among the charity bodies to compete for the "fixed" pie.
Third, on the methods of soliciting donations, some of these large-scale TV charity shows have become lottery shows rather than charity shows, with mega prizes, such as $500,000, condominiums and cars to be won, so that callers will call in as many times as possible. Some have even commented that the odds are better for the charity shows than buying lottery! In addition, look at the stacks of vouchers, claimed to be worth hundreds of dollars for each set, which were sent to the donors from NKF as "an appreciation of their support". If these vouchers are indeed worth the amounts claimed, why not channel the money back to NKF?
On these TV charity shows, if one actually pays closer attention, one would notice that the host of these shows, eg, in the recent NKF show, would always be shouting out a number for the viewers to call to make donation, and that number that he shouted out each time was incidentally not the call number to make the minimum amount of donation, eg, $5, but a number to make a donation of, say, $50. Sir, there was insufficient information being displayed to help the viewers differentiate the amounts of donations that would be made with different call numbers, neither did the host specify that the number that he had just shouted was for a donation of $50 rather than $5. Sir, is this not a form of misleading the viewers and the donors?
In the case of donation cards being distributed in our schools, I recalled once when my niece came back from school with a NKF donation card. And with her young mind, she insisted that I made a 3-digit donation on her card, so that she could receive a gift which was an electronic gadget. On further queries, my niece also reluctantly disclosed that there was peer pressure among her classmates to each go home and request for donations from their parents so that each could receive such a gadget. And my niece felt very disappointed that her classmates would receive such a gadget except her if she could not get that 3-digit donation on her donation card!
Sir, perhaps one would argue that the teachers need to explain to the students. However, looking at the root of the problem, should gifts even be offered in the first place in exchange for donations? Sir, by providing such gifts to students in exchange for donations, we are not cultivating the correct attitude towards donations in our young minds in schools. Hence, Sir, we need more stringent rules and regulations on the methods of soliciting donations.
Fourth, lottery-based charity shows. The Common Gaming Houses Act allows Institutions of a Public Character (IPCs) to conduct no more than one public lottery per year, via charity shows or otherwise. Those which wish to conduct more shows need to apply for a waiver and there are criteria to be satisfied before a waiver is granted.
In the case of the recent NKF Cancer Fund charity show, it was carried out in three parts, which was as good as three lotteries. It has also carried out a similar lottery-based charity show for its April charity show for its kidney dialysis patients and would probably be intending to carry out another similar lottery-based charity show for its Children Medical Fund Show. How is it possible that NKF can carry out more than three lottery-based charity shows in a year? Sir, can the Minister for Health inform the House under what conditions will a waiver be granted and why has NKF been granted a waiver in each instance? Are the criteria sufficiently stringent?
The Health Minister said that donors should "vote" with their donations. However, given the overwhelming numbers of such large-scale lottery-based charity shows, it might not be easy for donors to vote correctly with their donations.
Fifth, on exploiting patients and stirring feeling of guilt in public. Sir, there is a need to set guidelines to prevent VWOs from exploiting patients, whether cancer or kidney disease patients, by wheeling them out in public places and large-scale charity shows for publicity campaigns or "show-casing" them in their donation soliciting campaigns, such as mailers and letters.
Sir, many of these charity shows that we have seen recently are effectively selling the pain, suffering and sad stories of these patients to obtain more donations. Some of these shows made the patients cry and show them in a state of pain. Many of these shows have crying patients appealing for donations. This is a cruel act as patients, though sick, are humans and need to have some minimum self-respect and privacy.
In the Straits Times on 16th July 2005, Ms Tan Sai Siong, a former editor of the Business Times, wrote, and I quote:
"My ignorance about how much NKF collects, spends and squirrels away from the donation pie is mostly my fault. This is because while I want to help those I perceive to be less fortunate, I am reluctant to get too close, as heartbreaking tragedies make me uncomfortable.
So I am a perfect target for those tear-jerking letters describing unimaginable misfortunes that dog NKF beneficiaries. I speed-read their tragic accounts without too much absorption or analysis and sign a cheque to assuage the guilt I feel at my own lucky escape from the caprice of fate.
I quickly switch channels whenever the images of their saddest cases flash on the TV screen but, to compensate for my refusal to hear out yet another gut-wrenching hard luck slice of life, I quickly make that donation phone call."
Sir, these are large-scale charity shows by NKF exploiting the patients to play on the sympathy and guilt of the public to make the donation phone call, that donation cheque. These charity shows do not seem to be in line with the set of best practices that has been recommended by the Council on Governance of IPCs in May 2004 on the conduct of charity shows, ie, not to stir the feeling of guilt in the public who may not wish to donate.
The Health Minister informed the House yesterday that the Media Development Authority's Free-to-Air Television Programme Code requires all TV programmes, including charity shows, to observe standards of good taste and decency. Sir, I do not think that making the patients cry and showing them in a state of pain is "in good taste". Will the relevant authority take a more stringent control before approving such charity shows in future?
Yesterday, I also asked the Minister if there have been patients who have been psychologically threatened to come out and participate in the publicity of the charity shows; otherwise, they would not receive subsidy from their respective charity bodies. And, whether those patients who have volunteered to participate in the publicity campaigns of the charity shows been briefed in detail of what exactly would come out and how their story would be portrayed on national TV. Sir, I am of the same opinion as the Health Minister that it would be totally unethical and unacceptable if patients have been pressured to feel obliged to participate in these publicity activities for the charity shows.
Yesterday, the Minister, in his Ministerial Statement, announced six top priorities for the NKF Board. Hence, I would like to propose a seventh priority for the Board to address. This seventh priority is for the Board to review the NKF's relationships and communications with its patients.
Sir, besides taking good care of the patients in the clinical aspect, there is a need for NKF to treat their patients and beneficiaries with utmost respect and dignity. Have the suffering and the mental and physical distress of these patients been exploited by NKF in the fund-raising charity shows and publicity? Has NKF, in its communications with its patients, unknowingly pressurised, or perhaps misled and/or instilled a fear in these patients, such that these patients have been emotionally blackmailed into coming forward to participate in the publicity of the charity shows? Sir, these apply to other charity bodies as well when carrying out large-scale charity shows over the TV media.
The Minister for Health (Mr Khaw Boon Wan): Mr Speaker, Sir, I took this assignment on July 14th to shepherd the NKF through its crisis. I knew it would be a big challenge, but I had faith that the good sense and charitable nature of Singaporeans will prevail. Yesterday was day six of my assignment. I heard the speeches by 13 Members of this House. Today I heard from another seven.
I must confess that when I came to this House yesterday, I was not sure which views would prevail. Would they be negative and destructive: going for blood, witch-hunting, demolishing the NKF through speeches? Or would they be positive and constructive: taking the helicopter view, seeing the larger picture, rising above the fray, and shining the light forward?
The 20 speeches cheered me up considerably. I was happy enough to go for a hair-cut last night! All noted the gravity of the situation. All conveyed in no uncertain terms the public anger over the revelations. But all noted the larger issues at stake. Although views on approaches to address these issues inevitably differed, by airing and debating these views openly in this House, we can then begin to find the answers and start the process to re-shaping the NKF and the charities landscape in Singapore.
Future of the NKF
We are all agreed that the good work done by the NKF must continue. There are real patients out there and much of NKF's activities genuinely save lives.
Thankfully, nobody called for the NKF to be shut down. As Dr Wang Kai Yuen put it, the destruction of the NKF would be a "monumental loss to Singapore". All Members spoke on the charitable side of Singaporeans. Otherwise no amount of marketing skills and TV shows could deliver tens of millions of dollars, from all walks of life, to the NKF every year.
Helpfully, Mdm Halimah, Mdm Ho Geok Choo and many others have urged calm and patience, lest we all get lost in the woods. Mr Tan Soo Khoon wisely reminded Singaporeans not to direct their anger at the patients or the NKF staff. As Ms Irene Ng pointed out, coming together to express public outrage is one thing. But vandalising NKF buildings is unbecoming of a society which we want to belong to.
I fully support these sentiments.
Regaining public confidence
All Members agreed that the best way for the NKF to regain public confidence is to pursue greater transparency and accountability.
I am sure Mr Gerard Ee has taken this message back to his Board and they will do their best to bring this about. I note and am thankful for the ringing endorsement of the new Board of Directors. This is important, for they must be assured that they have the backing of the House and the public. At the same time, they would have noted the lofty expectations which they must meet.
And I am optimistic that they can deliver. Given the professional competence of the NKF staff, the NKF could be a shining example of good governance, of transparency and accountability. This is my intent. Outside of Singapore, NKF already has a reputation as a pace-setter in kidney dialysis. In Singapore, I would like the NKF, as our largest charity, to now be the pace-setter of what good governance, transparency and accountability ought to be, for all charities and IPCs.
As a refinement, Mr Tan Soo Khoon suggested that key donors, like the Foundations, ought to be represented in the NKF Board. Mdm Ho Geok Choo suggested that unions be represented on the Board. We will bear these suggestions in mind, when the final Board is constituted after the current priorities have been fully discharged.
I know for a fact that many of the new Board Members are long time donors and regular supporters of not just the NKF but also other charities. More importantly, the NKF donors are best served by knowing that the NKF would now have a strong Board which will make the right decisions, and often tough decisions.
But I am not sure if it is a good idea to politicise the charities by inviting opposition Members on the Board, as suggested by Mr Chiam. Let us keep politics out of charities.
Investigations into allegations
All Members have called for a full and thorough investigation.
As Dr Amy Khor put it, many questions remain unanswered and public unrest should be addressed. We certainly intend to do so.
Dr Khor suggested that a committee of inquiry be convened to look into the matter. The Commissioner of Charities has the powers to initiate such investigations. But due process must be observed. The Commissioner must first establish clear evidence of wrongdoing, which includes getting the charity's side of the story.
At the end of the day, it is the substance of the investigations that matters, and not the form, whether it is called a commission of inquiry, an investigation or independent audit. We are all committed to finding answers to the many questions raised by Singaporeans and getting to the bottom of this matter. That is what counts.
The various Government agencies are comfortable at this point to have the new Board lead the investigation into past practices. Knowing the new Board members, I know they will get to the bottom of the issues. Precisely because of the high standing and reputations of the individuals serving on the Board, this House and the public can feel confident that their review will be full, thorough and that sound judgement will be applied.
In the course of the review, if it is found that laws have been broken, the relevant authorities will certainly step in. I fully agree with Mr Tan Soo Khoon that any wrong-doers must face the law. If there has been any criminal act, the law will take its course. If there have been poor judgements, they will be acknowledged. If there are systemic flaws, they will be fixed.
As I said before, I do not condone fraudulent practices. But we cannot conclude, a priori, that there were criminal acts on the basis of what has been published to date. We are a law-based society. Let us follow the due process, as advocated by Dr Warren Lee just now too.
Let us also try to look at this issue from the perspective of Mr Durai's family. His daughter emailed the Prime Minister. Let me quote a few lines from her email. She is a young student in JC but, I think, mature for her age. She wrote: "I was adversely affected by this fiasco". She went on to say: "Since I was young, my father had very little time to spend with us â¦ I always asked myself why my father had no time for us. Were we less important to him than his patients? Was his work more important than us?" She went on to ask the Prime Minister: "After the review by the new Board, you will help him to restore his reputation and honour", if no wrong doings were found.
From the media reports on the man, Mr Durai looks to me to be an arrogant man. His achievements are real and significant. But maybe the ego and arrogance went to the head, leading to poor judgement and insensitivity.
I think there are lessons for all of us here. No matter how great our achievements are, we live for others. Look at the late Mr Hon Sui Sen. You could see no ego in the man. He completely personified humility. Likewise, the late President Wee Kim Wee and hence the huge outpouring of emotions at his funeral. President S R Nathan is another such humble man who has done great for society, for Singapore, but remains exactly his past self. I am so glad he decided to seek a second term.
I scanned through the local media today. I could not help noticing the different spin the Straits Times put to the MPs' speeches yesterday, compared to all the other local media, like TODAY and Zaobao. Let us hope arrogance has not also gone to the head of the victor in the court case.
Regulation of IPCs
Coming back to the debate, not surprisingly, ensuring a robust regulatory framework for the IPCs was a central theme of Members' speeches.
Striking the right balance
Many Members have noted the need for balance between regulation and flexibility. Mr Chew Heng Ching, Mr Gan Kim Yong and Dr Ong Seh Hong cautioned against knee-jerk reactions. They advised that we do not over-react and introduce new and tighter rules that may inadvertently cause more collective harm than good, particularly for smaller charities. On the other hand, Dr Wang Kai Yuen, Mdm Halimah, Dr Amy Khor and Mr Tan Soo Khoon argued for additional and tighter rules. They felt the existing regulatory regime would appear to be too loose for large charities, if episodes like the NKF could occur.
As always, you know my preference, I think the best way forward is the middle path. We should not rush or force an immediate solution. Let us dive into the problems at the NKF first, grasp the full details, weigh the options and assess the implications, before we decide on the way forward.
As I said yesterday, I see value in differential regulation, to apply different degrees of regulation and compliance to different charities. This is particularly so for quantitative controls like the expense ratio which many Members touched upon. Dr Wang Kai Yuen suggested a sliding scale for limiting expense ratios, ranging from, say, 15% for the large charities to 30% for the small ones. Dr Amy Khor suggested a tiered approach which sounds similar in concept. We would certainly have to give all these suggestions serious consideration.
In any case, the recommendations of the Council on Governance of IPCs on a set of mandatory rules for all IPCs, which the Government had earlier accepted, will kick in by 1st January 2007. But we will see if we can advance this implementation deadline, as proposed by Mr Chew Heng Ching. But I myself will challenge the new NKF Board to achieve compliance within six months.
In terms of regulatory structure, Dr Amy Khor proposed a national watchdog to investigate and punish charities which flout the rules and abuse public trust. This is actually the purview of the Commissioner of Charities. The Charities Act gives him extensive power to investigate any abuses. He has power to remove trustees and de-register charities. Whether we need to strengthen his teeth, we can study. After we have completed the independent review on the NKF, we can ask the Commissioner to go for a dental appointment.
Mdm Halimah wondered whether the Government would have intervened, if the previous NKF Board had not sought my involvement. This is now a hypothetical question. But looking back at the sequence of events, I would be surprised if the Commissioner of Charities would have sat on his hands and let the crisis fester.
Dr Khor asked if it was more effective to have a single body guiding all VWOs, instead of spreading the work among the various Central Fund Administrators (CFAs). She has a point, but there are arguments both ways. The CFA model was adopted to better spread out resources in assessing IPCs. Each of the 12 CFAs handles a number of IPCs, specific to that Ministry's area of expertise. If all 1,700 charities, from temples to churches to nursing homes, were to be centrally managed by a single agency, I worry that the required Government machinery would be huge, cumbersome and unresponsive.
On the other hand, there may be some gaps in regulating a complex institution like the NKF, as noted by quite a number of speakers today. It is a company limited by guarantee, a charity and also an IPC - three in one. For instance, as noted by Prof. Ivan Png, the NKF also receives donations which are not tax-exempt and outside IPC purview, and therefore it is not under the purview of my Ministry as the overseeing CFA. A learning point here for Government is to have a more coherent approach to guiding the larger and more complex institutions, like the NKF. We will bear in mind the observations made by Prof. Ivan Png just now about ambiguous definitions of terms and the reporting format.
Transparency and disclosure
Mdm Halimah, Dr Wang Kai Yuen, Dr Amy Khor felt strongly that salaries of top executives should be disclosed as a mandatory requirement of all IPCs. This was in the original recommendations of the Council on Governance. But the Council discarded it, after extensive consultations with the IPCs.
As I mentioned yesterday, all charities face this tension between protecting the privacy of their top executives and maintaining transparency with their donors. It is not an easy dilemma to resolve. I heard from Ms Irene Ng yesterday that this dilemma, of course, is also faced by other international charities, like Oxfam. Somehow, according to Ms Irene Ng, they seem to have found some satisfactory ways to resolve the dilemma. She mentioned a particular US charity website which was able to release such sensitive information, not so much in terms of dollars and cents but at least as a percentage of something. I intend to study these various models to see if we can emulate it here.
Ms Eunice Olsen asked for greater transparency along the same light, and we intend to do so. And the message to the VWOs is - to voluntarily, as part of their clients' servicing, and the donors are their clients, be open with them. My own belief is that the more open you are with your donors, greater public trust is bound to yield greater support - cause and effect. The Buddhists would say yin guo (the cause and effect).
Dr Amy Khor proposed that all IPCs undertake independent audits and publish their annual reports and statements online. All IPCs are actually already required to provide their CFAs with annual independently-audited financial statements. We should certainly push the larger ones especially to publish accounts online for greater transparency.
Many Members spoke on the public disgust over Mr Durai's $600,000 pay packet, especially the reported reluctance of the NKF to have this made public. $600,000 is certainly not a small sum. But whether it is too large depends on: (a) the size of the job; (b) on how the pay package is determined; (c) on whether the Board had a proper process such as a staff compensation committee and salary benchmarks; and (d) on the actual measured performance of the CEO. These are serious matters which an independent and competent Board should have properly established so that their decision could be defended in public. The review of the NKF will shed light on this subject.
Going forward, let me assure Mdm Ho Geok Choo that I have no doubts the new Board under Mr Gerard Ee has the expertise and the experience to help install a high-standard HR remuneration system for the new NKF.
As for the interim CEO, I have said yesterday that our hospital would second a senior hospital administrator to the NKF. If the NKF Board approves the selection and the arrangement, the NKF would have to fully reimburse the hospital for the services of the seconded staff. Public hospitals have established policies of seconding staff and receiving seconded staff from other organisations. There are clear rules governing inter-agency reimbursement for seconded staff. We will follow the rules strictly.
Dr Wang commented that the NKF appears to have gone overboard with its fund-raising activities. He felt that "Singaporeans are increasingly turned off" and he commented, and Prof. Ong Soh Khim too, that some of the NKF shows are "bordering on bad taste". Yesterday, we had some discussion with Prof. Ong on this issue of TV shows which she raised it again this morning. I am just the Minister for Health. Ministry of Health does not govern TV shows. TV shows come under MICA, but I did the Question yesterday because originally we were not sure that there would be a Ministerial Statement. So, may I suggest that the Member file a proper Question to the right Minister.
I am sure he will give her a full reply, including from the Minister for Home Affairs. But I have noted her proposed new priority for the Board. I have suggested six priorities for the Board, and she said quite rightly that there ought to be a priority too on how NKF ought to deal with its patients.
I heard and I am worried about some of the comments and feedback by Dr Warren Lee that, apparently, patients are being coerced to do certain things, otherwise the line may be pulled. Let me repeat myself here. I find it completely and totally unacceptable and unethical to do so. But I think with the new leadership, I am sure if, indeed, that was the case, the matter would change overnight. Once I have settled down - I still got the Ministry of Health to run - I plan to visit the dialysis centres again, talk to the patients, and hopefully in a candid way, let me gather some of the feedback directly from them. But let me caution on one point. Some of the feedback might be motivated by wanting NKF to provide services for free, a point which I have addressed yesterday. I do not think that is the right approach. The need for co-payment is there, provided the criteria are open and objectively applied, and not unduly stringent, I am sure Singaporeans can accept.
Several MPs speculated that the NKF incentive structure might have fuelled the management's drive to collect donations at the expense of everything else. I do not know at this point. Until the review of the NKF's processes is concluded, I would not like to speculate as to whether staff bonuses were indeed based on funds raised and, therefore, led to perverse incentives. We need to understand their HR policy and the remuneration system. This is an aspect which the review will uncover.
Dr Geh Min asked some questions. What is the life expectancy of dialysis patients? If I am not mistaken, the first patient on dialysis in Singapore is still alive. How many cases are there in Singapore today? I think we have something like 3,500 dialysis patients. NKF's market share is about half, 1,800 or so, and every year about 200 patients are added, and this is cumulative.
However, Dr Wang raised a more fundamental question about whether NKF should not just stick to kidney dialysis, and not wander to other areas. I keep an open mind on this issue for the moment. I see values in some competition between charities, provided competition is properly applied. Already, there have been suggestions that we merge NKF with KDF. I am not sure if this is a wise move.
Currently, dialysis patients have some choices: NKF, KDF, public hospitals, private hospitals, private dialysis centres, a certain range of prices that they can go to, depending on their needs and different levels of service - some have aquariums and some do not, some are very basic. But if they all compete to deliver the best value at the lowest possible cost, what is wrong with that?
Dr Wang Kai Yuen, and I think Dr Geh Min, also questioned the cost-effectiveness of NKF in kidney dialysis and some data were produced to show the comparison with KDF. We will bear this observation in mind. We need to dive into the cost details in due course. I share Dr Wang's objective that NKF should try to be as lean and slim as possible, so that the savings could be passed on to the patients. After all, this must be the basic mission of NKF: to deliver kidney dialysis services to the patients at the lowest possible cost, commensurate with a good standard of clinical care.
Mr Speaker, Sir, we have had two days of fruitful debate in this House. Unfortunate though the entire NKF saga may be, I am cheered by the fact that all Members saw this as an opportunity in the way we collectively handle this crisis, for both the NKF and, in fact, the entire charity sector to emerge stronger and more resilient. More broadly, Ms Irene Ng described this incident as a "defining moment", an opportunity for Singaporeans to sharpen our collective identity. I agree. And I am not the only one. Members may know of Mr Jack Sim, an active Singaporean volunteer, who is passionate about toilets. He started the WTO: not the one in Geneva, but the World Toilets Organisation based in Singapore. He sent me an email to say that he saw the NKF incident becoming a nation building exercise. Let me quote him: "Now you know we are not Bo Chap Singaporeans. Everyone is a patriot at heart â¦ and maybe a stronger Singaporean identity will emerge, including Singlish."
Mr Speaker: Pursuant to Standing Order No. 44(2), the motion to consider the Ministerial Statement on the National Kidney Foundation lapses at the conclusion of debate.
21 Jul 2005
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Health Minister Khaw Boon Wan has identified six crucial areas which he says the new National Kidney Foundation (NKF) Board must address quickly to restore public confidence in the charity.
A top concern, he says, must be to ensure that patient care and existing clinical services in NKF's 21 dialysis centres is not disrupted.
Another area is a review of the NKF's reserves, and its adequacy before embarking on new fund-raising activities.
Thirdly, corporate governance must be reviewed to ensure the Board maintains sufficient independence from the management.
Mr Khaw stressed that the organisation has to fully address the public unease over allegations of questionable practices and inappropriate spending of charity funds.
Although no issues had been raised following previous audits of NKF's accounts through the years, he says it would be helpful to commission a fresh and detailed review of financial controls within the organisation.
The new Board has already appointed the audit firm KPMG for this and the findings will be made public.
In addition, Mr Khaw says NKF's communications with donors should be scrutinised to make sure there were no misleading statements.
And finally, the charity's pricing and subsidy policies for its dialysis programme should be reviewed to ensure adequate assistance was being provided.
He rejected the idea, however, of NKF providing dialysis services for free.
Mr Khaw says patients and families should take co-responsibility, so they could retain their self-esteem and live their lives more confidently.
Noting the impact of the NKF controversy on its staff, Mr Khaw says staff morale would also have to be restored.
21 Jul 2005
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SINGAPORE : The National Kidney Foundation has handed over the NKF Cancer Fund to the Singapore Cancer Society.
Both charities say the transfer will benefit cancer patients, as programmes are now streamlined and provided by one central organisation.
With the move, the NKF Cancer Fund will cease to exist.
Its patients, along with a balance of some S$2.95 million under the NKF Cancer Fund, will now be managed by the Singapore Cancer Society. The society offered to help take care of the Cancer Fund when a public outcry in July threatened the viability of the NKF.
As part if its restructuring exercise to focus on helping kidney patients, NKF decided that the society, which has 40 years of experience caring for cancer patients, is the perfect fit to take over its cancer charity work. Said Gerard Ee, chairman of NKF, "Singapore Cancer Society is well-known for its mission of helping cancer patients. And after talking with them, checking on their background, the board, their mission, their capabilities, we're very confident that they'll do a good job of continuing the work for the Cancer Fund.
"For the community, from the public's perspective, it's so much easier to have one organisation focused on cancer. So anyone who needs help because they are a cancer patient, go to the Singapore Cancer Society. There's no confusion -- why do you go to an organisation that's supposed to help kidney patients for help relating to cancer?"
The NKF Cancer Fund was set up in November last year. In July, the first NKF Cancer Fund Charity Show raised S$11 million. The $5 million spent on the NKF Cancer Show campaign covered production costs by MediaCorp as well as advertising and promotions over the various TV channels. It also covered advertising and promotions in various newspapers like Straits Times, Lianhe Zaobao, Wanbao, Shin Min, New Paper and TODAY and with other NKF partners during the one-month-long campaign.
Some money has been used to help 113 cancer patients, which will now come under the Cancer Society. But patients under the NKF Cancer Fund will not be affected. The National Kidney Foundation and the Singapore Cancer Society say the patients will continue to receive the subsidies promised to them. The amount of subsidy they get may change, though, after the society irons out the kinks from the handover.
Said Dr Koo Wen Hsin, chairman of the Singapore Cancer Society, "When we looked through the programmes and the beneficiaries that were handed over to us, we noticed a little bit of discrepancies between NKF and Cancer Society's criteria. We will comb through all the details once we receive all the documents, so that we make sure that every single dollar of public donation is well spent; every single item is well accounted for. "For example, there are patients who receive assistance from Cancer Society and at the same time they also applied for assistance through NKF. So we will review their eligibility and criteria to see whether they should continue to receive assistance from both sides."
He added, "If there's indication for them to receive medical treatment under the assistance of the Cancer Society while receiving welfare from NKF, I think that's perfectly in order. But if they're receiving the same assistance from both organisations then it's justified for us to review the criteria." The handover means the society will have over S$11 million to care for 800 over cancer patients.
Said Dr Koo, "This is certainly no windfall, because this amount of money is not going to last a long time. We will continue to raise funds so that we can continue to support these people."
NKF says the transfer will not result in any lay-offs, since none of its staff was employed to solely oversee the year-old NKF Cancer Fund.
NKF is now in talks with potential parties to take over the NKF Children's Medical Fund by early next year. This comes as the foundation continues on its journey of rebuilding public trust.
As part of its transparency exercise, NKF has revamped its website. The public can now look up information on its basic operating costs, donor and patient numbers on the website.
Mr Ee says four months since the public furore over former NKF chief executive TT Durai's bonuses and pay packages, fewer people have called to cancel their donation pledges.
But the foundation urgently needs to raise funds to build two dialysis centres, each costing S$2.5 million, to serve kidney patients in Woodlands and Ang Mo Kio.
NKF is expected to make public its reserves situation in December. - CNA /ct
16 Nov 2005
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The 2004 financial statements of the National Kidney Foundation (NKF) are out and some $6.3 million may have to be written off.
At its first Annual General Meeting on Wednesday, the NKF's new Board explained the write-off is due to some accounting inconsistencies under the previous management.
About half of the write-off - $3.28 million - was paid to Forte Systems, an IT company that NKF had contracted to develop software for the Foundation.
Forte was a subsidiary of Protonweb, a telemarketing company run by Matilda Chua Li Hoon, a former NKF director.
Ng Boon Yew, chairman of NKF Audit Committee, said: "If you look at the rationale for the write-off, a lot of this relates to the contract. In fact of the $6.3 million, $3.3 million relates to the contract."
"It's actually being reviewed by our lawyers, as to how we can recover those costs," he said.
Going forward, Mr Ng added, the NKF has put in place the proper procedures so that it would not commit itself to unnecessary projects.
Other adjustments include $1.969 million in Goods and Service Tax and $1.645 million in corporate cash sponsorships and donations.
Auditors say these adjustments were due to "cut-off errors and the incorrect deferment" which meant that the money was not charged in the right financial year.
But the amount to be written off could have been higher, if not for another set of 'adjustments' from the incorrect deferment of rebates from medical supplies.
NKF received over $3.4 million in rebates from medical suppliers.
Under the old management, rebates from medical suppliers were put into the donation fund.
The new Board has stopped this practice, and the rebates now go directly to patients to help defray their drug costs.
NKF's Interim CEO, Goh Chee Leok, said: "We felt it was unfair to the patients, that they're not getting the rebates. So we've stopped the practice once we got to know about it."
As for the state of NKF's reserves, its financial statements showed some $162 million has been set aside for dialysis use.
NKF says it's now supporting 1,862 kidney patients on dialysis.
NKF chairman, Gerard Ee, said: "If you ask for ball park, we think it'll only last for five to six years because, don't forget this is as of December 2004. Between December 2004 and now, the patient load has jumped by more than 10%, and the costs have gone up.
"In addition to increase in patient load, we've reduced the fees we charge, we've also reduced the amount we charge for medications as well.
"So on the one hand we're collecting less, and (on the other) we have more patients, and we have a big drop in donations."
But the public won't have to wait long for the answers.
Independent auditor KPMG's report will be out in mid-December.
The report is expected to review whether NKF's reserves built up for dialysis patients are enough.
It'll address allegations of questionable practices, and inappropriate spending of charity funds.
30 Nov 2005
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Improving patient care, reducing operating costs to pass on savings to patients, enhancing corporate governance, accountability and transparency.
That's what the new National Kidney Foundation (NKF) board has done since taking over four months ago.
The new Board gave this progress report at its first Annual General Meeting on Wednesday.
It was the 8th such media conference held by the NKF over the past four months to keep the public and donors updated about changes at Singapore's largest charity in a move to boost transparency.
All these came after the NKF's former CEO TT Durai and the entire NKF Board resigned in the aftermath of revelations during a high-profile defamation suit in July.
Since then, there have been sweeping changes by the new board.
The charity has been restructured into 24 departments reporting to six divisional leaders, compared to 48 department heads answering to just the CEO previously.
The Board said the old structure concentrated too much power in one man.
Before, there was no proper budgeting with purchases approved on an ad-hoc basis.
Now, there are clear policies on finance procedures, with corporate credit cards cancelled.
Some legal contracts which were signed by the former management have also been terminated.
Some of these contracts were unfavourable to the charity which is also trying to recover payments in certain cases.
And to ensure transparency, it has also kept an open channel of communication to inform the public and donors about changes, including releasing its audited financial accounts for 2004 online at www.nkfs.org.
But the main priority, says the Board, is caring for the patients.
Dialysis costs have been reduced from $200 to $162 per session, with each patient getting some $1,200 in subsidies monthly.
NKF staff numbers have also been reduced by 20% and the savings passed on to patients.
Also, all rebates from pharmaceutical companies are now passed to patients.
Under the old NKF management, rebates from medical suppliers were put into the donation fund.
The new Board has stopped this practice, and the rebates now go directly to patients to help defray their drug costs.
Hence, medication fees are lower and patients can get treatment at more affordable prices.
NKF's Interim CEO, Professor Goh Chee Leok, said: "They can come to us and say 'doc, I can't afford it'. In the past, they said 'I don't want injections' and a lot of them went away without injections and continued to be miserable. But now we tell them it's not as expensive, it's cheaper. What NKF is trying to do is to maximise whatever funds donated."
One example is that erythropoeitin injections now cost 30% less, saving patients at least $60,000 per month.
Kidney patients can also look forward to a Joint Admissions Clinic at the Singapore General Hospital soon to reduce their waiting time to get on the dialysis programme at NKF.
The NKF is also building two new dialysis centres at Ang Mo Kio and Woodlands to cater to growing demand.
One concern is that patient numbers are rising from more than 1,600 haemodialysis patients in January to nearly 1,900 now.
But donations have been on the decline since July.
Looking ahead, Professor Goh said there is still very much work in progress.
But the NKF's prime objective is to continue to provide good quality care for patients while being accountable to donors and keeping its activities transparent.
An independent audit by KPMG into NKF's affairs was commissioned in July.
It is expected to be made public in the middle of next month.
30 Nov 2005
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The National Kidney Foundation (NKF) says its reserves can some six over years, and it needs to resume fundraising as soon as possible.
The NKF says it has $206.2 million in reserves for dialysis use.
This amount could last about 6.7 years if the amount of monthly public donations does not fall further from the current level, it says.
NKF says this is 'not tenable', and its Medical Advisory Committee Chairman says NKF needs to resume fundraising immediately.
It will cost NKF $50 million a year to operate.
This is lower than the previous $73m, thanks to its restructuring exercise in the last four months.
About 69% of that goes to providing dialysis to patients, a vast improvement from the past when about half of NKF's total expenditure was spent on fundraising.
The remainder is spent on public health screenings and other administrative costs.
As at end of October, the estimated reserves of NKF stood at $260.3 million.
$54.1m is designated as Restricted Funds meant only for specific purposes such as the Children's Medical Fund.
And the balance is estimated to last 6.7 years, according to the NKF.
This is because it expects an annual increase of more than 300 new kidney patients (or 10% increase in patient load).
Medical and operating costs are also expected to increase by 2 to 5% every year.
And unless it resumes active fundraising soon, NKF says, it will be the kidney patients who suffer as most of them (57%) live beyond 10 years.
At the outset, it does seem that NKF is in no dire need for new donations.
In fact, NKF chairman Gerard Ee admits that not many charities can lay claims to having reserves that could last beyond 6 years.
But he also highlights the fact that not many charities deal with life and death situations where patients would die without their support.
Mr Ee said: "You don't look for support only when you're in a crisis. The time to build support is when you can afford to go out there and get people to support you. We aim for 10 years all the time. If you have 8 to 9 years, we don't have to lose sleep over it."
Pending approval from the Health Ministry, NKF hopes to start active fundraising from beginning of January.
Currently, 248,532 LifeDrops donors contribute about $1.7m a month.
Since the public outcry in July over its former CEO's salary and perks, some 50,000 LifeDrops donors have cancelled their monthly donations.
NKF estimates that assuming the number of LifeDrops donations drop to zero in 2006, the projected reserves of $206m will last about 4.5 years.
So NKF hopes it could resume active fundraising soonest, such as at public health screenings so as to sign up more LifeDrops donors.
08 Dec 2005
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SINGAPORE : A highly-awaited 300-plus page report on suspect practices by a Singapore charity, the National Kidney Foundation, is out.
The findings by KPMG are startling, from revelations that only 10 cents of every charity dollar went to subsidise patients' direct treatment costs, to wasted opportunities by regulators to commence investigations earlier.
It took 40 professionals 10,000 man hours and five months to piece together the story of what was going on at NKF.
The story they put together was one of an organisation that was losing its way.
First, the report found that there were "deficiencies in meaningful governance" of the foundation.
On the face of it, the not-for-profit charity adopted a business-centric model.
There was a Board and a proliferation of committees in Finance and Audit that could have checks and challenge the management -- all giving the picture of good governance.
But in fact, the reported noted that "there was no truly effective governance mechanism capable of challenging executives in their management of the business, and re-directing the NKF to its true purpose as and when needed."
The auditors found the former NKF Board delegated all powers to the Executive Committee, which in turn delegated most, if not all, powers to the former CEO TT Durai.
"The NKF appeared to run and operate, and in fact did run and operate, on the ideas, whims and caprice of the chief executive" TT Durai, the report said.
"Power was centred around one man, and was exercised in an ad-hoc manner through Mr Durai and his coterie of long-serving assistants," it said.
Said NKF Chairman Gerard Ee, "When I presented some of the major points, I saw some of the staff shaking their heads in disappointment. Don't forget the old structure -- he operated with 48 heads of departments and everyone only knew their bits; no one had a complete picture."
As for the Board itself, the reported noted that since its incorporation in 2001, it only saw two departures and the directors were never replaced.
What is more, out of 21 members in the former board, only eight attended the foundation's annual general meetings, and all of them sat on the Executive Committee.
Effectively, that meant the former Board was further concentrated in the hands of five directors, of whom four were given executive powers.
According to the report, the Audit Committee was ineffective because it hardly met regularly.
From June 2002 to January 2005, there was only one informal meeting in 2004 to discuss the revival of the Audit Committee.
KPMG also found figures relating to the number of kidney patients, patient subsidies and treatment costs inflated or misleading.
One startling revelation: NKF's report said that in 2003, 52 cents for every dollar raised went to beneficiaries and programmes for the year; but KPMG calculated that only 10 cents out of every dollar went to subsidise patients' direct treatment costs.
Investigations also showed extravagant spending such as frequent first-class travel by staff and a CEO who received more pay while appearing to accept less.
The report also pointed to "missed opportunities" by regulators to fix the problem earlier.
Said Tham Sai Choy, auditor at KPMG, "It is not every regulator (who) had a carte blanche to deal with all the issues happening at NKF. There were bits of it in different places; it was not pulled together; and there was a lot of room for misunderstanding between the different bodies involved to make sure the regulation was effective. In theory, it might have been enough but in practice, there was a lot of room for misunderstanding as to who did what."
Lapses were also found in multi-million dollar software contractors not delivering, and this is one big area where NKF money has been lost.
Compounding it, several directors in the former NKF Board and key management personnel had interests in, or were involved in companies with business relationships with the NKF.
So what happens now?
The new NKF Board is seeking legal advice on whether there were corporate practices which crossed the legal or regulatory line and on the appropriate course of action to be taken against former NKF Directors, Exco members and others, where applicable.
NKF Chairman Gerard Ee stressed, however, that any action taken will have to be weighed against the costs of such action, as this involves donor money.
As for any criminal liability, bodies like the Commercial Affairs Department and Inland Revenue Authority are still carrying out investigations.
Meanwhile, the new NKF Board says the reserves are expected to last just 6.7 years.
With the ideal being 10 years, they will have to start raising funds again; but it won't be in the way of large shows and raising lots of cash in the short term.
And while the old NKF focussed a lot on fundraising, the new NKF wants to shift the focus to patients.
It hopes to build back its support base of donors from 250,000 to the pre-July level of 300,000.
While it recognises the public may be unhappy with the revelations, it hopes they won't take it out against the new NKF.
19 Dec 2005
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SHOULD action be taken against Price- waterhouseCoopers (PwC) for failing, since 1999, to detect the National Kidney Foundation's (NKF) inadequate accounting practices?
The question, posed several times to Health Minister Khaw Boon Wan during a media conference yesterday, received no direct answer - but not without Mr Khaw expressing his disappointment with the NKF's former auditors and laying upon the accounting regulator the onus to respond.
He noted that despite certified public accountants having pored through the charity organisation's books, "weaknesses in the NKF's corporate governance went unnoticed".
Even last year, when the Ministry of Health asked KPMG to do an ad-hoc review of the NKF's tax-deductible receipts, the audit firm found no large-scale weaknesses, he said. This year, in contrast, KPMG dug up a history of atrocious governance during its extensive independent probe into the organisation's internal processes. The auditor had been engaged by the NKF's new board after some shocking revelations about the practices of former chief executive T T Durai.
So will the Government or the new NKF board take issue with PwC for overseeing financial manoeuvres such as the backdating of expenses?
Mr Khaw said he is sure that the NKF was looking into the matter. The regulator - the Accounting and Corporate Regulatory Authority (Acra) - should also be looking into the matter, he added.
However, Mr Khaw stressed that PwC, unlike the KPMG investigators who could deploy enormous resources, faced certain constraints as an external auditor.
"With the former NKF board and CEO having resigned, the KPMG auditors were able to go through every file and read every email without people looking over their shoulders or obstructing their way," he explained.
But Mr Khaw added that "it is not impossible" that the truth could have been uncovered earlier with extra effort, "hence my disappointment with the former NKF auditors".
When contacted yesterday, a PwC spokesman 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.
"We have noted the Minister's comments and will take them constructively."
An Acra spokesperson said the agency "will look into the matter and take appropriate action if necessary."
Over at the Institute of Certified Public Accountants of Singapore (Icpas), which upholds professional standards here, an eight-man team overseeing corporate governance matters moved into action yesterday. The body will soon air its view on the NKF findings publicly, Icpas vice-president Ernest Kan told Today.
"This matter is very pressing because it involves issues concerning the role of auditors," he said, while cautioning against any knee-jerk calls for the overhaul of an auditor's role.
Mr Kan added that current standards here are already in line with international best practices.
Still, an industry observer noted that accounting firms are likely to "start exploring new methodology to ensure higher quality in audits".
"Spotlight on PwC"
22 Dec 05
Minstry Press Release
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The KPMG report has been widely reported. Their assessment and their conclusions are out in the open. I am glad that the KPMG has not pulled any punches. Our priority now is to collectively learn from this episode and to act on it.
First, anyone found in criminal breach will be prosecuted to the full extent of the law. This will be done. Ministry of Manpower (MOM) has completed its investigations. We will be pressing for charges to be made. Commercial Affairs Department (CAD) and Corrupt Practices Investigation Bureau (CPIB) are still in the midst of their investigations. They will proceed thoroughly as usual. There will be no cover-up of any wrong-doing. As their investigations are still in progress, we should not comment further at this stage.
Cleaning Up NKF
Second, we will clean up the NKF. We have now a strong Board and they are delivering results. Their job is unfinished but they are committed to seeing it through. Mr Gerard Ee and most of his Directors have agreed to stay on for 3 years to complete the transformation of the NKF. The Government appreciates their national service. I am confident that in 3 years' time, NKF will have a standard of corporate governance that is first class.
Strengthening Regulatory Regime
Third, we will strengthen the regulatory regime on Voluntary Welfare Organisations (VWOs). Yesterday's Business Times (BT) commentary by Conrad Raj asked a question: why did no one heed the signs? Let me spend some time on this important question.
To do so, we need to go back to the origins of the NKF. How did it all start? What was its purpose? How did it become a household name?
The Original NKF
The NKF was the brainchild of Prof Khoo Oon Teck. He was the father of dialysis treatment in Singapore, a wonderful man with a charitable heart. As a young doctor, he witnessed first-hand how his brother, the late Rev Khoo Oon Eng, suffered long years of kidney failure and eventually succumbed to it. Prof Khoo was to recount years later that his brother's suffering and premature death provided the impetus for him to devote his whole life and career to caring for renal failure patients.
In 1969, he founded the NKF as a society under the Societies Act. Shortly before that, he had set up the first kidney dialysis unit in an attic above Ward 23 in the old Singapore General Hospital (SGH) Bowyer Block. The Bowyer Block has since been largely demolished, but I retain memories of that attic which I visited as a young officer in MOH.
From that humble beginning, Prof Khoo went on to build up the NKF. He strongly advocated a publicly-funded dialysis treatment programme for patients. He felt that this would better inculcate a spirit of self-help and caring for one another. He was tireless in fund-raising, despite a heavy clinical workload. He was a selfless volunteer and an inspiration to many.
He chaired the NKF until illness forced him to retire in 1995. Over 26 years, the NKF under his leadership contributed tremendously to renal treatment in Singapore. It did very good work and mobilized the entire community, from churches to temples, from hawkers to professionals, from students to housewives.
As we read the KPMG report on the abuses of the NKF in recent years, let us not lose sight of the original NKF and its accomplishments. For a quarter of a century, NKF was a model of success for voluntary organizations. Concerned citizens coming together to initiate and provide much needed care to fellow citizens. People caring for people with a level of compassion and love that for-profit organizations and bureaucrats cannot possibly match. It was the model of the people sector at its best. We had all supported the old NKF whole-heartedly and for many years our trust was not misplaced. Even after Prof Khoo left in 1995, the NKF continued to work to the benefit of many patients.
Losing the Moral Compass
That is probably why no one took serious heed of earlier signs of trouble. I do not know when the NKF began to shift its strategic focus and, along the way, lost its moral compass. It might be in 1999 or thereabouts, when it progressively transitioned from a society to incorporation as a company in 2001.
Around that period, I understand that the regulators did occasionally receive informal but often anonymous feedback on the NKF. Some criticized it for being arrogant, while others complained against its aggressive fund-raising tactics. There were some anonymous allegations of the CEO's lavish lifestyle.
Where appropriate, regulators did follow up on the complaints. Criticisms were set aside after the NKF leadership was able to convince the regulators that they had not done anything improper. The regulators were also reassured by periodic assessments given by the NKF auditors that the financials did not show any unusual transactions.
And when the NKF continued to deliver tangible results - the large number of grateful dialysis patients and the healthy reserves being progressively built up, the regulators assumed that the criticisms were probably due to discomfort at the unconventional means of fund-raising. We now know that we have been misled. Perhaps, we were coloured by our deeply-held and positive view of the original NKF under Prof Khoo Oon Teck.
But we were not alone in missing those early signs. I asked for a scan of media reports on NKF around that period. There were many, and the strong support and praise of the NKF were palpable. Even as late as this year, during the trial on the Singapore Press Holdings' (SPH) defamation case, many still came forward to defend Mr T.T. Durai. In particular, the NKF staff was sure that he had been victimized. Now that the KPMG report has been published, Straits Times (ST) today reported that many now feel betrayed.
Even Prof Khoo who has the greatest interest in the NKF was misled. In July, he described Mr Durai as "hardworking, loyal and honest man who volunteered his time for the NKF at the expense of his own family". He was not wrong to say that Mr Durai worked hard for the NKF. But the way Mr Durai captured the Board and ran the organization was fundamentally flawed.
Mr Durai obviously had strong views on how the NKF ought to be run. If the NKF were his privately-owned company, he could perhaps be excused for running it as he pleased. But the NKF was not his little empire. It was a public organization supported by public funds. No matter how good you believe your ideas are, you still have to subject them to continuing and open debate with your Board of Directors and your fellow colleagues. This did not seem to be the case.
Board Has Failed
As a lawyer, he would understand the need for sound corporate governance. Indeed, the old NKF publicly declared that it was a pioneer amongst charities in introducing strong corporate governance practices. But it was merely a structure in form. Mr Durai's actions could not absolve the former NKF Board, whose fundamental failing was in not fulfilling their duties as Directors. Regrettably, they delegated practically all their powers to the CEO. As a result, they did no more than endorse his decisions with little or no challenge. Consciously or otherwise, they constituted a facade of good corporate governance, but without much substance to back it. This allowed serious problems such as mishandling of contracts and conflicts of interest to happen. They have badly let down the donating public which trusted them, just as much as the former CEO has.
Bizarre HR Policies
Mr Durai's HR administration was also highly unacceptable. For his part, Mr Durai was obviously embarrassed by the high salary that he took from the NKF. So he chose to suppress transparency and consciously stayed out of Board membership. His exchange of letters with his Chairman, rejecting the latter's repeated offers to raise his salary, but only to get paid more than what was formally offered, was bizarre, to say the least.
Mr Durai's handling of his own staff's remuneration was equally questionable. All CEOs value good employees and would rightly strive to attract, reward and retain them. But to reward certain employees with ad-hoc salary increments, exit bonuses, back-dated salary adjustments is strange for any entity that has grown far beyond the size of a small family-run company.
Auditors Found Wanting
Over the years, the NKF had been audited by certified public accountants, both as per routine corporate reporting requirements and in response to specific requests by the regulators. However, the weaknesses in NKF's corporate governance went unnoticed. Different groups of auditors have been commissioned to peep into the NKF. Even last year, when my Ministry got KPMG to conduct an ad-hoc review on the NKF's tax-deductible receipts, that review had not uncovered any large-scale weaknesses. It certainly did not suggest the pervasiveness of poor governance and mismanagement.
That the current KPMG audit could now reveal so much is the result of deploying enormous auditing resources and under exceptional circumstances. With the former NKF Board and CEO having resigned, the KPMG auditors were able to go through every file and read every email, without people looking over their shoulders or obstructing their way. I appreciate the challenge of auditing an organization which we now know was completely dominated by its CEO. If he deliberately set out to mislead, it would take some efforts to uncover the truth. But it is not impossible and hence my disappointment with the former NKF auditors.
Regulators Could Have Done Better
On Government's part, we accept KPMG's sharp comments on the regulators. There were many agencies involved, each with its specific roles and responsibilities. This created a lack of clarity in the regulatory structure, which became vulnerable to exploitation. We will fix this within 3 months. This may require legislative changes.
We have learnt a sharp lesson from this episode. We will tighten the co-ordination across agencies and close the gaps in our current system. We will provide clarity on the roles and responsibilities of each agency. We will clarify the 30% rule on expense ratios and make it unambiguous. An inter-agency committee has started working on this. And as a regulatory philosophy, we cannot be overly-trusting that others will behave honourably, nor be swayed by the apparent success of the parties we regulate. If regulators are suspicious, it is their responsibility to follow through robustly even if it causes unpleasantness and unhappiness.
Within my Ministry, I have restructured the unit supervising healthcare Institutions of Public Character (IPCs) and beefed it up with more staff, including additional accountants.
But at the end of the day, let us remember that we are dealing with an NGO, a non-government organisation. The NKF is not a government department. Like all other charities, the primary responsibility for the proper running of the NKF lies with its Board of Directors.
The Government has a duty and it is to ensure that there is no criminal misconduct, and that the basic rules, such as the 30% expense ratio cap, are complied with. However, in the case of a large entity like the NKF, because of its scale of fundraising, and the patronage that Government leaders lent to the NKF, the Government had a heavier responsibility to satisfy ourselves that the organization was properly run. We failed in not doing so earlier.
Now that NKF has a new Board and is making a fresh start, we will work with it to institute tighter checks and balances on the NKF to prevent any future recurrence. However, we must not because of the NKF, tighten up on the rest of the charities with a heavy hand, or we will stifle their initiative, their public spirit and their community-building instincts. The Government must strike a balance between regulatory rigidity and operational flexibility.
We have a basic choice to make. Either we get the Government to be more involved and shrink the role of volunteers and civic society. Or within the framework of privately-led VWOs, we strengthen checks and balances to ensure better accountability.
We think the right way is not to have the Government take over. That will change the character of the organization altogether, and choke off the volunteer spirit and the motivation for the public to donate to worthy causes. Instead we should prevent the Board from being captured by a dominant and charismatic CEO, mainly by putting reliable and dedicated people and ensuring proper succession. There is no 100% solution to this problem. But we will do everything practical to reduce the chances of the problem recurring.
In closing, let me again thank Mr Gerard Ee, his Board and the interim CEO for the excellent work they have done while under the most difficult of circumstances. I also thank the NKF nurses and other staff who have bravely and steadfastly cared for their patients through these difficult months. Indeed, they have been badly let down and misled by their former bosses. They deserve our sympathy, not our anger. The NKF has lost its way in recent years. Let us all help the new NKF team to bring the NKF back on track.
Annex A: Fixing Regulatory Gaps
The Government will tighten the co-ordination across agencies, close the gaps in our current system, and provide clarity on the roles and responsibilities of each agency.
In May 2005, Ministry of Finance (MOF) accepted the recommendations made by the Council on Governance of Institutions of a Public Character (IPCs), with some moderation in view of IPCs' concerns on compliance costs and implementation time.
However, KPMG has pointed out weaknesses which are not adequately addressed by the Council's recommendations. For example, there are no implementation guidelines for the application of the 30/70 Rule on fundraising expenses, or the determination of the number of years for an IPC's reserves to last.
The Government will review this, in particular to tighten rules and raise standards in areas of public concern and for larger charities. Ministry of Finance (MOF) will announce the revised rules in due course.
KPMG also observed that the regulators rely largely on auditors' reports and formal complaints to identify non-compliance by charitable organizations, and that there could be more active follow-up on instances of non-compliance.
The Inter-Ministerial Committee (IMC) on Regulation of Charities and IPCs is reviewing the regulatory framework to rationalize the existing regulations, as well as the roles and powers of the various agencies. Preliminary recommendations are expected by Feb 2006. It will consider KPMG's suggestion that regulators conduct compliance inspections. This may require expanded legal powers and resources.
In line with the work of the Council on Governance of IPC, NCSS (National Council of Social Services) plans to make some parts of the NCSS Code mandatory.
Since Nov 2005, MOH has increased manpower and resources for a new Division dedicated to the regulation of IPCs under MOH. MOH will formulate strategies to promote sound financial management and accounting best practices among VWOs under its purview.
Annex B: Central Fund Administrator for the National Kidney Foundation (NKF)
KPMG's report stated that NCSS earlier had some concerns about NKF's accounts, and described it as a "wasted opportunity" that the issue was not addressed 4 years ago.
NCSS had been the Central Fund Administrator for the NKF in the 1990s. By 2000, NCSS found it difficult to assess the use of NKF funds because the NKF's programmes were predominantly medical and health-related. For that reason, a more logical Central Fund Administrator to oversee the NKF was MOH. NCSS also had concerns on the NKF's use of tax-exempt donations and its fund-raising expenses.
NCSS informed the Commissioner for Charities and MOH in 2000 of its concerns over the NKF. The regulators collectively assessed and found nothing which would lead to the conclusion that the NKF's financial track record and fund management track record were less than satisfactory, and would justify the removal of its Institution of Public Character (IPC) status. The NKF had provided reasonable responses to queries on its financial statements, which were accepted by the regulators. In addition, the NKF's auditors then, PwC, expressed the professional opinion that NKF's financial statements were in order.
Taking into account the above factors, MOH granted the NKF its IPC status from 2002-2004. MOH subsequently commissioned KPMG to do a one-time review of the NKF's FY03 tax-deductible receipts. KPMG at the conclusion of its review surfaced a number of observations, which the NKF addressed.
Health Minister Khaw Boon Wan
21 Dec 05
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Oral Answers to Questions
Mr Steve Chia Kiah Hong asked the Minister for Health (a) if he can clarify his public comments that the Government accepts KPMG's sharp comments on the regulators in respect of the NKF saga; and (b) whether some Government officials will be dismissed, charged or reprimanded for their failings.
The Minister for Health (Mr Khaw Boon Wan): Mr Speaker, Sir, Mr Steve Chia wanted my clarification on KPMG's sharp comments on the regulators in respect of their handling of the former NKF.
I encouraged the KPMG auditors to take a thorough, objective and critical approach as I wanted the right lessons to be learnt from this episode. Actually, the KPMG had sharp comments on practically everyone who had anything to do with the NKF, from its former CEO, Board of Directors, the auditors and the regulators.
But while many were criticised, the NKF problem was essentially created by a small group of people, led by the former CEO, who exploited their Board's weak corporate governance. This was the crux of the NKF problem.
If the auditors were more alert and the regulators more persistent in investigating the former NKF, the problem might have been discovered earlier. But of course, it is easy to criticise such shortcomings on hindsight. When you have a CEO who was determined to cover up his unusual conduct and who was supported by a captured board, it would take some time for outsiders to uncover his deeds.
The regulators accepted the KPMG criticisms and they have learnt from this incident. But were the regulators responsible for the NKF problem? Remember that the NKF was, and still is, a non-Government organisation, a private company.
Was there gross or wilful negligence on the part of the Government officers who regulated the former NKF? Did they fail to take reasonable efforts to look into the former NKF under the prevailing regulatory framework?
Let me take Members through the KPMG report where it spoke on the regulators. The KPMG commented on the regulators in three areas. First, KPMG felt that the regulators could have coordinated their duties better and streamlined their regulations for greater clarity. This is a structural issue and we will fix it. Hence, the Inter-Ministry Committee on Regulation of Charities and IPCs has proposed a revised structure, comprising the Commissioner of Charities and six Sector Administrators, with clearly-defined roles and responsibilities.
Second, KPMG noted that the appointment of a Ministry of Health's representative on NKF EXCO in 2000 had not helped to uncover the NKF's problems. But that was not her mission, nor the reason for MOH inserting a representative there. MOH was concerned over the rapid promotion of haemodialysis by NKF and thought that a representative on the NKF EXCO could help influence NKF's clinical policies away from that direction. But after four meetings, when she found that the EXCO did not discuss such policy matters and dealt largely with daily operations, she withdrew from the NKF EXCO.
Third, KPMG felt that when the National Council of Social Services (NCSS) transferred the NKF to MOH in 2002, the regulators had not conveyed their concerns over the NKF's use of funds and fund-raising expenses. But they did. What were the concerns of the NCSS? The NCSS acknowledged that the former NKF fund-raising expenses were in compliance with the 30/70 rule but wondered if they were unduly high. But as kidney dialysis was medical in nature, NCSS felt that MOH would be more competent to assess this and that was why NKF was moved from NCSS' supervision to the Ministry of Health.
After taking over as a Central Fund Administrator, MOH has dutifully checked on the NKF's compliance with the IPC rules. It did so by relying on the NKF's former auditor, Pricewaterhouse. In addition, in late 2004, MOH also commissioned another auditor, KPMG, to conduct a review of the NKF to assess its compliance with IPC rules. In that 2004 review, KPMG identified several deficiencies, such as inactive funds, funds with overlapping objectives and some internal control lapses. These deficiencies were duly rectified. Please note that the 2004 KPMG review did not reveal the major problems in the old NKF that it subsequently uncovered in 2005, a few months later, with massive resources after the former NKF Board and CEO had resigned.
So overall, there was no deliberate, irresponsible behaviour on the part of the officers who regulated the NKF. But they have learnt a valuable lesson from this episode and indeed we all have.
We must continue to develop our voluntary sector and give it ample space to grow. Regulators will tighten rules where appropriate, but no amount of regulation can guarantee that no unscrupulous individual or group will ever attempt to abuse the system. However, such abuses will eventually still be found out, and the wrongdoers punished in accordance with the law.
Mr Steve Chia Kiah Hong: Mr Speaker, a point of clarification. In my original submission of the Question, I asked about the Minister making a comment during his public press conference over TV that the Government accepts responsibility for the NKF issue. My question was to clarify what does it mean by "accepting responsibility". Does it also entail the Government issuing a public apology to the people? What does it mean by "accepting responsibility"?
Mr Khaw Boon Wan: "Accepting responsibility" means that we acknowledge the problems as defined and identified by KPMG, that there were problems of various kinds at different levels, and let us extract the lessons from there. At the same press conference that Mr Steve Chia mentioned, I did apologise because all of us, in different ways, have contributed to this outcome. NKF's mode of fund-raising has been around for quite some time. There were pluses, and now, we have uncovered that there were also minuses. But the key point is for us to get to the bottom of it. And what is the bottom of this? The crux of the matter is that a small group of people deliberately, through various means, misled, in a way, the entire society, including Mr Steve Chia and myself.
17 Feb 2006
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SDP's Chee Soon Juan has issued a media statement (Apr 19) to say that the charges against the former NKF CEO and management are only one aspect of the NKF scandal. "The other concerns the Government's handling of the entire saga", he said.
How the Government has handled the entire saga was fully discussed in public and also in Parliament. His fellow Opposition Party Members were also in Parliament. They had full opportunities to question and speak on this subject. What they said, which was little, is on public record in the Hansard.
Mr Chee asked why MOH renewed NKF's IPC status (in 2002). This question was also raised by Mr Steve Chia in Parliament and a full reply was given. Briefly, the National Council of Social Services had earlier wondered if NKF's fund-raising expenses were unduly high. MOH had investigated but found them in compliance with the 70-30 expense ratio. Subsequently it even commissioned KPMG to do a review which did not reveal any major problems. Hence, there was no reason for MOH not to renew their IPC status.
Mr Chee noted that I said I took "my hat's off to the NKF". This was in Apr 2004 when media asked for my comment on the large amount of donations that NKF was able to raise. I said "My hat's off to the NKF. They have been able to raise that kind of money over the years." And I added: "if they run wild, and start spending money on the wrong things, then I think donors have the right to ask questions."
I also offered this advice to then NKF. The best way for NKF is to be "totally transparent". "If there are still more questions, then come up with more answers."
This was reported by ST, ZB and others on Apr 11, 2004. I stand by those statements.
If Mr Chee and the SDP still accuse the Government of wrong-doings in the handling of the NKF saga, then they should come out to make and substantiate their accusations now, instead of vaguely alleging some non-specific wrong-doing.
Why wait until the elections? It shows that they are not really interested in NKF or the public interest, only in scoring points in the elections.
If they still accuse the government of wrong doing, then I will ask the PM to set up a Commission of Inquiry to inquire into the Government's handling of the NKF case, and look into allegations that the Government has not been thorough or has covered up wrongdoings.
Mr Chee and SDP should then bring their evidence before the Commission. I will of course appear before the Commission to give evidence and be cross examined.
I also understand from Shin Min that WP's Mr Low Thia Kiang has urged the Government to seriously consider withdrawing the NKF court case until after the election, so that some of the political parties can debate on this issue which is of concern to many people.
The NKF incident did not happen yesterday. Over many months, it has been extensively debated. As I said, there were several occasions when it was also discussed in the Parliament. Mr Low was in attendance but he did not speak much on this matter. What he said could be found in the Hansard.
What other things about the NKF which he wanted to raise now which he had not already raised given the many opportunities?
As for the criminal charges, Mr Low should know that the public prosecutors are independent entities. They act on their own and as soon as they have completed their investigations and when there is evidence, they would proceed with their charges.
How can we ask them to withdraw?
Khaw Boon Wan
Press Release, Ministry of Health
21 Apr 2006
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The National Kidney Foundation's former chief executive TT Durai has filed his defence for the civil suit brought against him by the new NKF board, denying most of the claims made against him. He also denied that the executive committee had delegated absolute power to him.
The new NKF management has alleged that Durai engineered a structure within the organisation that subverted proper checks and balances which should have acted to restrain excesses.
But in his 40-page defence, Durai claimed he had kept the executive committee informed of all that was going on in the NKF. He said that the committee had free access to all records and could query anything that was being reported and decide on any proposals put forward.
On his pay, Durai denied that his bonuses depended upon the success of fund raising, saying this factor was only one consideration. He claimed all salary increases, bonuses, overtime payments and unutilised leave compensation paid to him were decided by the exco. He added that NKF's policy of not disclosing the salaries of its employees was not to mislead the public or conceal any improper benefits.
The new NKF alleged that Durai inflated the monthly treatment costs of patients and misrepresented patient numbers to gain public sympathy and increase donations. Durai claimed, in his defence, that he was never involved in the computation of treatment costs of dialysis patients and that patient numbers were given to him by the various departments, which obtained the information from external administrators of programmes funded by NKF.
The old NKF had also awarded contracts worth over S$5 million to Protonweb Solutions and Forte Systems, both owned by Pharis Aboobacker. While Durai admitted that Aboobacker is a friend, he claimed he took no part in NKF's evaluation to award an IT contract to Forte Systems. He added that the executive committee had awarded the call-centre project to Protonweb Solutions because it was the cheapest option.
The new NKF said that both companies were paid despite Forte not delivering the software on time and Protonweb Solutions not fulfilling the contract terms fully. Durai also denied allegations that former chairman Richard Yong and former treasurer Loo Say San were his associates, and acted on his instructions. Durai alleged it was Dr Khoo Oon Teik, who founded the NKF in 1969, who invited Yong to become a member of the exco.
As for former director Matilda Chua, Durai claimed it was "not unusual to make ex-gratia payments to departing staff". Chua had received generous pay performance bonuses after she declared her intention to resign. Her monthly salary was increased to S$12,500 in June 2000, and backdated to April 2000, without any exco approval. Durai said this was because of her contributions in running the charity shows, and he claimed that the person who took over her position was paid even more.
As for expensive business trips, Durai said he flew first class as the tickets were available at a price not exceeding business class fares, and it was NKF policy that senior personnel were allowed to purchase such tickets.
Four pages in the defence statement were also spent documenting Durai's contribution to NKF, which included setting up 21 dialysis centres and three prevention centres, tying up with top medical institutions to improve the quality of medical treatment, helping the Health Ministry in setting up an emergency dialysis centre during the SARS crisis, and spearheading a five-year multi-organ donation campaign.
In their defence, Yong, Loo, and Chua claimed Durai was singularly responsible for the NKF's day-to-day operations. The three are also being sued by the new NKF, which is seeking more than S$12 million in damages.
8 June 2006
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4 more former board directors of the National Kidney Foundation have been included in the civil suit filed by the new NKF management.
The High Court on Monday granted an application for the new NKF to sue Alwyn Lim, former chairman of the NKF finance committee; Chow Kok Fong, CEO of Changi Airport Managers and Partners; Kweh Soon Han, partner at law firm Kweh Lee and Partners; and Lawrence Chia, Associate Professor at NUS.
The 4 men join Richard Yong, Loo Say San and Matilda Chua who are currently facing charges.
The High Court agreed with lawyers for Yong and Loo that ALL directors should be held accountable for the lack of corporate governance and not just a select few.
The lawyers will now proceed to make claims against the 4 new defendants in the case on July 3 at the High Court. The 4 men will then have 2 weeks to file their defence.
19 June 2006
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Ex-NKF directors explain decision and claim he didn't have free hand
A FORMER board member of the National Kidney Foundation (NKF) has explained the rationale behind the hefty pay package given to Mr T T Durai, the controversial chief executive who stepped down last year.
Several factors were considered before the board approved the package, said former NKF remuneration committee member Associate Professor Lawrence Chia, in court papers obtained by this newspaper.
These included the level of donations the NKF was able to secure, as well as Mr Durai's "extensive and concerted efforts" in educating the public on kidney donations - especially from the local Muslim community - and in setting up an "outstanding nationwide dialysis programme" that won the charity local and international recognition.
Prof Chia has been named - along with three other former directors - a third party in a lawsuit filed by the NKF against its former chairman Richard Yong and former treasurer Loo Say San. This means that, should Mr Yong and Mr Loo be found guilty of breaching their directors' duties, Prof Chia will also be held responsible. The other three third parties are accountant Alwyn Lim, lawyer Kweh Soon Han and businessman Chow Kok Fong, all of whom filed their defence last week.
In his defence papers, Mr Lim, who headed the finance committee and was part of the audit committee, addressed the issue of Mr Durai flying first-class and buying air tickets overseas. He said even though the charity only paid for business class travel, senior executives "could upgrade to first class at their own cost or by utilising or redeeming" their frequent-flyer points. He had referred a Colombo travel agent to Mr Durai only after the latter - citing "substantially cheaper" airline tickets purchased in Chennai, Colombo and Bangkok - asked him to help the NKF get better rates, said Mr Lim, who has business dealings in Colombo.
The four former directors also individually sought to counter allegations that they had slept on the job and given Mr Durai a free hand to control the board.
While the former chief executive led proceedings at meetings of the executive committee, the exco "retained overall supervision" by receiving regular briefings and reports from him and other salaried staff, said Mr Kweh.
Mr Lim also sought to shift some of the blame squarely back on the former NKF management over allegations made against him. To the claim that he be held liable for disclosing misleading figures to the public - such as the fact that its fund-raising costs did not exceed 30 per cent - Mr Lim countered that he had made such statements "based on information provided by the NKF, which in turn was based on data and statistics complied by the NKF's accounts department, the NKF's audited financial statements, and the audited accounts in respect of each fund-raising event".
Mr Lim was also blamed for a botched $3.3-million deal between the charity and Forte Systems, owned by Mr Durai's friend, Mr Pharis Aboobacker. Together with Mr Yong, Mr Lim sat on a committee that was to assess and acquire a new software system for the charity in 2001. Mr Lim said he and Mr Yong relied on the technical expertise of the third committee member, Mr Jayaraman Krishnan, the charity's head of department of technology and systems. Forte's quotation was accepted in the end because it was the second lowest - at $3.1 million - and the company was prepared to allow the charity to "customise or modify" the software.
Lawyer Chia Boon Teck, who acts for Mr Yong and Mr Loo, said a Queen's Counsel has been engaged to assess the merits of the NKF's claims, as well as his clients' defences and action against the four third parties.
8 Aug 2006
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A SECOND batch of documents has just arrived at lawyer Chia Boon Teck's office in KhattarWong, which he believes will be crucial in building his case against the new National Kidney Foundation (NKF) board.
Mr Chia is acting for his clients, former NKF directors Richard Yong, 65, and Loo Say San, 58. They are two of the five people whom the new board is suing in an attempt to recover an estimated sum of $12 million.
The 24 cartons - totalling some 115,000 pages - came from Mr Pharis Aboobacker in India, who is a personal friend of former NKF chief executive T T Durai and also implicated in this civil suit. The documents, said Mr Chia, will help prove the legitimate "work done" by the two companies Mr Aboobacker owned, Forte Systems and Protonweb Solutions. These two firms had held contracts with the NKF worth some $7.5 million for call centre services and software development. Having received a first shipment of 17 cartons containing some 55,000 pages two months ago, Mr Chia said these latest documents are important as they contain the source codes for a software system that the charity wanted to install in 2001.
Part of Forte's $3.1 million contract was to release the full codes to the charity, which would allow the NKF to make future upgrades and amendments to the software. "Without the source codes, they would have to run back to the service provider, who would charge an arm and a leg for every amendment. That's why they were so keen on Forte compared to the others," Mr Chia told Today.
NKF's contention, however, is that the software was eventually not delivered on time and Forte was said to have failed to meet contract specifications. The $3.1 million paid to them was finally written off.
There will be a pre-trial conference on Aug 29. Two days later, all parties including the plaintiff, defendants and third parties have to file and serve their lists of documents. The trial is slated to begin in January next year.
12 Aug 2006
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Charity looking for sponsors to help it bear legal fees, says chairman
The National Kidney Foundation (NKF) expects to rack up a hefty sum in legal fees owing to the civil suit it has filed against its former chief executive officer and board members - and the charity is looking for sponsors to help it bear the cost.
NKF chairman Gerard Ee told members of the media yesterday: 'I expect the fees (for the suit) will amount to quite a lot, given the legal specialists we've hired to fight our case.' He added: 'I can't give you an estimate of the total cost at this time . . . it all depends on how long the case will drag out . . . but I can tell you that we are looking for sponsors.'
Mr Ee told reporters yesterday at a media briefing of the NKF's progress for the past year, that the charity hoped to find sponsors to bear as much of the legal cost as possible. 'Unless, of course, we succeed in our action - in which case then that wouldn't be necessary,' he added.
The court case - which is expected to attract a media circus as it is heard in the High Court for eight weeks from Jan 8, 2007 - seeks to recover $12 million in salaries, benefits and failed contracts from the NKF's ex-CEO TT Durai, Durai's business associate and three of the charity's former board members.
The NKF has hired a legal team from one of Singapore's top law firms, Allen & Gledhill, and it will be led by Senior Counsel K Shanmugam. On the NKF's chances of winning this suit, Mr Ee said it wasn't appropriate for him to comment at this point, but later added: 'I am very dependent on the advice of our solicitors and they tell me they're very confident.'
In their defence, the three ex-directors of the NKF who are being sued - former chairman Richard Yong, treasurer Loo Say San and Ms Matilda Chua - have said they did not breach their duties to the NKF, and that Durai was responsible for all its day-to-day operations.
Durai, for his part, has rejected assertions that he over-rode the powers of the old NKF board and ran the charity without proper oversight and control, causing funds to be paid out improperly. The four former NKF officials also face separate criminal charges, due to be heard in March next year.
23 Dec 2006
THE National Kidney Foundation (NKF) is no longer looking for sponsors to cover its legal costs in the impending lawsuit against its former chief executive officer T.T. Durai and former board members to recover some $12 million of the charity's money.
NKF chairman Gerard Ee had said at a press conference last Friday that the charity hoped sponsors would come in to help bear the legal costs.
But in a statement released yesterday, NKF clarified that its law firm, Allen & Gledhill, had agreed to assist when approached by NKF in April for advice on what course of action NKF had against former management.
It said that the law firm stated it did not want to profit from acting for NKF in this matter. 'Allen & Gledhill stated in May 2006 to NKF that they will donate all fees received from NKF, back to NKF,' added the statement.
Mr Ee declined to say more yesterday, only that he should not have mentioned anything related to the lawsuit at the earlier press conference.
29 Dec 2006
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The defendants in the National Kidney Foundation civil lawsuit have successfully obtained access to hundreds of documents that were seized by the Commercial Affairs Department.
Previously, they had been unable to inspect 200 files as the CAD had directed them to liaise with the NKF, to which the documents belong.
The NKF took the stand that the files were seized in conjunction with the CAD's criminal investigations and were not related to the civil proceedings. It claimed it had already disclosed documents necessary for the civil suit.
However, the court has looked favourably at the application filed last month by former NKF directors Richard Yong and Loo Say San, which this newspaper first reported.
Court documents revealed that lawyers for four defendants the other two being former NKF chief TT Durai and former NKF director Matilda Chua were allowed to inspect the documents with the CAD to see if any more relevant information should be disclosed for their defence against the NKF's bid to recoup $12 million.
The NKF was also asked to reimburse about $1,100 to the defendants for photocopying charges.
Meanwhile, the NKF issued a statement on Thursday to clarify comments at a press conference last week by chairman Gerard Ee that it was looking for sponsors to cover its legal costs in the lawsuit. This is not the case. As agreed earlier, Allen & Gledhill, which is assisting the charity, will donate all fees that it receives back to the NKF.
The lawsuit against the former NKF functionaries will be heard in the High Court from Jan 8 till Feb 23 at the earliest. Four other former board directors have also been named as third parties to the suit.
30 Dec 2006
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The highly anticipated National Kidney Foundation (NKF) civil trial has been set for next Monday, January 8.
The trial is expected to last seven weeks, after which the criminal cases against the charity's former Board of Directors will commence. Nine parties are expected to turn up in court for the civil suit.
The new NKF is seeking to recover more than S$12 million from its former chief, T.T. Durai. Three other former members of the Board of Directors, Richard Yong, Loo Say San, Matilda Chua and a business associate, Pharis Aboobacker, are also being sued.
The five main defendants are being sued for alleged breach of duty, which the new NKF says, had caused it to suffer losses. The new management hopes to recover the money which includes the salaries and bonuses paid to the former CEO and seek compensation for loss of goodwill and damage to its reputation.
In July last year, Loo Say San and Richard Yong also demanded that four others be included as third parties in the civil suit, with Alwyn Lim former Vice-Chairman and Chairman of the old NKF's Finance Committee appearing to be a central figure. The other three names are former Assistant Honorary Treasurer, Associate Professor Lawrence Chia, Kweh Soon Han and Chow Kok Fong. It is understood that if they are found liable, they will turn to these third parties to share the cost.
However, it is understood that Mr Lim is also going to take the stand for the plaintiff during the civil action. That is because the former Finance Chairman was involved in the investigations but he was later dragged into the picture and being sued as a third party.
The High Court has set aside seven weeks for the civil case after which the criminal trial is expected to take place at the Subordinate Courts. The civil suit was filed a week after the four former NKF directors were charged with offences including an intent to deceive the NKF and falsifying accounts.
With the civil suit and the criminal case being heard back to back, lawyers say the defendants could stand to gain from the timing should they win the civil suit. Tito Isaac, Lawyer, says: "If the substance of the allegations in the civil suit are mirrored in the criminal charge then the burden for the prosecution will become much higher, it is then open to the criminal lawyers to consider making representations or further representations as the case may be to invite the prosecution to withdraw the pending charges against the defendants." But lawyers say, as criminal cases have to be proven beyond reasonable doubt, the scales could still tip both ways no matter how the civil suit turns out
3 Jan 2007
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