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     Community Issues: Responses to KPMG Report  on NKF

    Responses to KPMG Report on NKF



     - The new NKF¨S progress report 2006

     - Commissioner of Charities appointed

    - Key data of 100 Singapore charities to be listed on MOH Website

     - KPMG submits its report on NKF to the new NKF Board

     - NKF - win back donors' trust

     - Petition: National Kidney Foundation Singapore Responsibility

     - New Board and CEO for National Kidney Foundation (NKF)

     - Police advisory on NKF suit

     - New NKF Board appointed

     - NKF - Investigations into allegations


Excerpt of article "No more passing the buck please" by Chua Mui Hoong in The Straits Times of 21 Dec 2005 (22)

"...Nobody seems to have had oversight over CEO T.T. Durai and his 'coterie of long-serving assistants'.

"Certainly not the board. Not the auditors. And finally, not even the government regulators..."

"Looking at the NKF issue, it appears that the problem is not that there was no regulation. In fact, one could argue that there was too much - scattered over too many government agencies..."

"Did the government agencies close one eye?"

"It was not just NCSS that felt something was amiss at the NKF."

"As far back as 1999, MOH had queried NKF's expanding medical programme and the excessive funds it was raising. It was concerned enough to insist on having an MOH official sit in on NKF executive committee meetings."

"But when the official was denied access to policy-making decisions, MOH chose to stop the arrangement rather than press for more transparency in NKF's decision-making process.

"Furthermore, just three years later, it was MOH which gave NKF back its IPC status - for three years..."




Excerpt of article "The CEO blew his own whistle" by Ong Soh Chin in The Straits Times of 21 Dec 2005 (23)

"...Nay, NKF was felled by its own CEO. The reasons which compelled Mr Durai to sue The Straits Times for libel are only known to him. If he had not taken that one fateful step, the doors would not have opened and the skeletons would have remained in the closet..."

"Perhaps he had been emboldened by the NKF's victory in a widely publicised 1999 lawsuit against Madam Tan (Kiat Noi). She had circulated an e-mail accusing the organisation of wasteful spending and corruption. As a result, she had to pay NKF $50,000 in damages and legal costs, withdraw her allegations and make a public apology in The Straits Times and Lianhe Zaobao..."

"Before that, the NKF had twice taken legal action against people who had allegedly defamed it. In August 1997 and in December 1998, it sued two men for alleging that Mr 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..."



Excerpt of article "Health GPC head: It's worse than I'd thought" by Salma Khalik in The Straits Times of 21 Dec 2005 (H4)

"Madam Halimah Yacob, who heads the Government Parliamentary Committee for Health, has lashed out at the National Kidney Foundation's former management for its 'blatant abuse of power' and said that the Ministry of Health (MOH) has some explaining to do..."

"...In January 2002, MOH took over the supervision of the charity."

"Madam Halimah said: 'The public would want to know why MOH (subsequently) gave NKF three years of IPC status after the NCSS had expressed its concerns..."

"On Mr Durai, she said: 'I am particularly shocked that the chief executive officer could be allowed to enrich himself by claiming overtime and backdated leave, a human resource practice which I have never heard of and which makes a mockery of the word 'sacrifice'."

"What is of greater concern to me though is how little NKF subsidised patients, and even overcharged them to make a profit!"

"After playing on people's sentiments through television images of suffering patients, they have instead caused more hardship to the patients."



Excerpt of letter by Leong Sze Hian in the Forum Page of The Straits Times of 21 Dec 2005 (H9)

"...On Dec 31, 2001, the National Council of Social Service (NCSS) revoked NKF's Institution of Public Character (IPC) status, which meant that the NKF could not issue tax-exemption receipts to donors."

"But less than a month later, in January 2002, the Health Ministry restored NKF's IPC status, administered by the Ministry of Health Endowment Fund, despite the NCSS having informed the ministry of its observations of NKF."

"Why was the above not disclosed, such that it was never reported in the media?"

"Is not the termination of IPC status of Singapore's largest charity - by amount of donations - a matter of interest and grave public concern?..."



Excerpt of letter by Ong Hui Xiao in the Forum Page of The Straits Times of 21 Dec 2005 (H9)

"...It is simply unbelievable that the National Kidney Foundation (NKF) has over the years cheated members of the public of their hard-earned money by misleading them with ridiculous claims.

"Some of the claims, which got me really worked up, include stating that the NKF helped thousands of children and beneficiaries - by including those who went for health screenings - and overstating the monthly subsidy to patients by over $1,000!"

"It would seem that all the donations I have made went to defray the expenses of one man and his friends. This fills me with anger and a deep sense of injustice..."




"First, anyone found in criminal breach will be prosecuted to the full extent of the law.  This will be done.  MOM has completed its investigations.  We will be pressing for charges to be made.  CAD and 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.

"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...

"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..."




Excerpt of letter by Michael Loh Toon Seng (Dr) in the Forum Page of The Straits Times of 22 Dec 2005 (H10)

"...Using sob stories to appeal for public donations, exploiting stars to do stunts to raise funds, the existence of unheard-of HR practices like obscenely generous bonuses, back pay, ex-gratia payments even for people who have resigned, conversion of leave days to cash, $187,000 paid for Mr Durai's 'overtime', making profits from medicines, flying First Class (and suing people for saying so), questionable business relationships with board members which clearly showed a conflict of interest, an utter lack of governance and transparency... How could we in squeaky-clean Singapore have allowed things to deteriorate to this state?..."



Excerpt of letter by Dr Robert Loh Choo Kiat, (former president of the National Council of Social Services) in the Forum Page of The Straits Times of 22 Dec 2005 (H10)

"...In a dialogue in 2001, NCSS pointed out to NKF some of its activities which were considered questionable. If my memory serves me right, much if not all these issues were communicated to the Commissioner of Charities.

"About that time, NCSS was in the midst of introducing a culture of corporate governance to voluntary welfare organisations (VWOs) and the position was in a state of flux. The VWOs were in the process of deciding the extent of self-auditing and transparency in their fund-raising activities and service-delivery programmes.

"Any regulatory guidelines then were simple and had not been developed to any degree of sophistication.

"Besides, NSCC could regulate VWOs funded by it through the Community Chest with some authority and effectiveness.

"NKF was not funded by NCSS/Community Chest and the only action available was not to extend income-tax exemption and, ultimately, withdraw it.

"This by itself would send a strong signal that something was not quite in order. The Commissioner of Charities had to be informed of this action and why it was taken.

"I wonder if KPMG had communicated with the Commissioner of Charities or NCSS before concluding its report."



Excerpt of letter by Felix Ang Kok Hou in the Forum Page of The Straits Times of 22 Dec 2005 (H10)

"...My question is to the NKF's fomer auditor, PricewaterhouseCoopers (PwC). Why were its accounting standards so different from KPMG's? After all, the two auditors are among the most established auditing firms in the world.

"Costs and subsidies were inflated, according to KPMG, but these were not detected in the several years that PwC had been auditing NKF's books."



Excerpt of article "Checks and balances a rule for life" by K. Kesavapany and Ho Khai Leong in The Straits Times of 12 Jan 2006 (32)

"...Legislation to protect the interests and identities of whistle-blowers is badly needed...

"Getting rid of corruption requires a multi-faceted approach. Revelations from media investigations and sting operations are only the tip of the iceberg. In the NKF saga, there were at least three cases of the harassment and victimisation of honest employees who alerted the public about the lavishness of the former CEO. What was worse, the subsequent persecution of these witnesses took place within the system, subverting the very core of governance...

"Defamation lawsuits should not be used too liberally, especially against individuals whose complaints seem obvious and legitimate in the first place..."


Charges Filed against Richard Yong and Loo Say San

CAD has completed its investigations into the affairs of the NKF and presented its findings to the Attorney General's Chambers. After considering the investigation report and the evidence, the Public Prosecutor has decided to proceed with one charge each under Section 157 of the Companies Act against Mr Richard Yong Kun Da and Mr Loo Say San for failing to exercise reasonable diligence as directors of NKF. The offence carries a maximum penalty of a fine not exceeding $5,000 or to imprisonment for a term not exceeding one year.

On the basis of the evidence available, CAD will not be filing criminal charges against any other person.

18 April 2006 @ 9.30 am

Source: Media Release 18 Apr 2006