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Previous FrontPage Edition 21 Jul
2005
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NKF -
Investigations into allegations |
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ROUNDING-UP SPEECH BY MINISTER FOR HEALTH, MR KHAW
BOON WAN ON THE NATIONAL KIDNEY FOUNDATION, 21JULY 2005 AT
PARLIAMENT SITTING
Source: www.gov.sg
Mr Speaker, Sir, I took this
assignment on July 14 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 6 of my assignment. I heard the speeches by 13 Members of
this House. Today I heard from another 8.
I must confess that when I came to
Parliament 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 21 speeches cheered me up
considerably. 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-shape the NKF and the charities
landscape in Singapore.
Future of NKF
We are all agreed that the good
work done by NKF should 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, Dr Warren Lee 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. 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 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 and of
transparency and accountability. This is my intent. Outside of
Singapore, NKF has a reputation as a pace-setter in kidney
dialysis. In Singapore, I would like the NKF 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 as a fact that many of the
new Board Members are long time donors and regular supporters of the
NKF and 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, the tough decisions.
But I am not sure if it is a good
idea to politicise the charities by inviting opposition politicians
on 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 new Board has appointed KPMG
to do an independent review. Let us give them time to work on this
thoroughly, away from the public glare and emotions, so that
assessment can be made objectively and calmly. All the questions
that I asked in my statement yesterday will be addressed. Their
findings will be made public.
The various Government agencies
are comfortable at this point to have the new Board lead the
investigation into past practices. Knowing them, 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 on July 14, 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.
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 very
mature for her age. She wrote: ¡°I was adversely affected by this
fiasco¡±. She added: ¡°Since I was young, my father had very little
time to spend with us¡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 PM: ¡°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 report on the man,
Mr Durai looks to me to be an arrogant
man. His achievements are real and significant. But may be the ego
and arrogance went to his head, leading to poor judgement and
insensitivity.
I think there are lessons for us
here. No matter how great our achievements are, we live for
others. Look at the late Mr Hon Sui
Sen. There was 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 SR Nathan is another such humble
man who has done great for society, but remains his past self.
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
surprising, ensuring a robust regulatory framework for
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,
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¡¯s could occur.
As always, the best way forward
may be 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 of Governance on IPCs on
a set of mandatory rules for all IPCs,
which the Government had earlier accepted, will kick in by 1 Jan
2007. We will see if we can advance this implementation deadline as
proposed by Mr Chew Heng Chin. But I
will challenge the new NKF Board to achieve compliance for the NKF
within 6 months.
Regulatory Structure
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 had 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 various Central Fund Administrators (CFA).
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 and
cumbersome.
On the other hand, there may be
some gaps in regulating a complex institution like the NKF which is
a company limited by guarantee, a charity and has IPC status. For
instance, the NKF also receives donations which are not
tax-deductible and this is not under the purview of my Ministry as
the overseeing CFA. A learning point for Government from this is to
have a more coherent approach to guiding the larger and more complex
institutions.
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 yielded overwhelming negative
feedback.
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. Ms Irene Ng noted that this
dilemma is faced by well-known international charities, like OXFAM,
too. But somehow, they seem to have found satisfactory ways to
resolve the dilemma. She mentioned a US charity website which
released such sensitive information as a percentage of operating
cost or collections. I intend to study their solutions to see if we
can emulate here.
Dr Amy Khor
proposed that all IPCs undertake
independent audits and publish their annual reports and statements
online. All IPCs are already required
to provide their CFAs with annual
independently-audited financial statements. We should certainly
push the larger charities to publish annual reports and 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 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 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 important subject.
Going forward, 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 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. I intend to follow
the rules strictly.
Fund-raising Activities
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 the NKF
shows are ¡°bordering on bad taste¡±.
Several MPs speculated that the
NKF incentive structure might have fuelled the management¡¯s drive to
collect donations at the expense of all 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 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.
We should bear in mind, however, that there are two
separate functions in NKF. One is the provision of medical service
at subsidised
rates. This must be done by competent professionals as lives are at
stake. These professionals must be paid a market wage for their
services.
The other component is fund-raising to pay for the
subsidies. This can be done be volunteers or paid staff. Where
small sums are required by a charity, using volunteers would be
adequate and probably the best way. But where huge sums are
required on a continuing basis like NKF, the charity may have to
fall back on professional fund-raisers like some big American
foundations. The question is then how to remunerate these paid
fund-raisers.
Mr Speaker, Sir, structuring an
appropriate performance remuneration system is an important part of
human resource management in all organisations. If we want the
professionals to do their best, they need to be properly
incentivise.
Some are self-motivated, like Mr Gerard Ee
and Dr Robert Loh. They work out of
basic kindness, or just ¡°coffee and cakes¡± as Gerard
Ee puts it. But some charities do need
professional fund-raisers to help in their charity work, so that
they are free from the burden of fund-raising and can concentrate on
providing services to their targeted beneficiaries. Under such a
model, it may not be wrong to incentivise
performance of fund-raisers based on funds raised.
But it must be a basis that a
sound Board of Directors is willing to publicly defend. Also, as
any of our many listed and professionally run businesses will tell
you, the human resource management practices of organisations must
be anchored by the organisation¡¯s core values and code of ethics.
These values must be lived by the Board, the management and staff
and be coherent across all dimensions of the organisation, be it in
the way they serve their customers, the way they do business with
partners and the way they run the organisation internally.
VWOs
can be run by paid professionals but they must be underpinned by
strong ethics and guided by a moral compass. As Jack Welch,
formerly of GE noted the most difficult type of managers he had to
decide on were the type that ¡°does not share the value, but delivers
the numbers¡±. His conclusion was ¡°we have to remove these managers
because they have the power, by themselves, to destroy the open
trust-based culture that we need to win today and tomorrow¡±. He was
talking about a commercial for-profit organisation, let alone a
charity. I challenge the new Board to put this right in the NKF.
Reserves Policy of NKF
Mr Steve Chia
spoke on the reserves policy of charities, asking if a charity
should continue raising funds even if it had garnered enough money
to cover its expenses for a given period of operations.
It is a basic ethical rule of
fund-raising that we do not mislead donors and potential donors. We
do not coerce and exploit beneficiaries in order to arouse donor
sympathy. And when we have collected enough, we suspend
fund-raising.
That is why we need a review on
the NKF¡¯s reserves policy. We need to
piece together their strategic intent on reserves and projected
needs.
One observation I want to make is
that their recent major donation drives were not for kidney
patients, but for cancer patients. This is a new programme for the
NKF and clearly there is a need to raise funds.
However, Dr Wang raised a more
fundamental question of 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 it is applied properly. Already there have been
suggestions that we merge NKF with KDF. I am not sure if that would
be a wise move.
Currently, dialysis patients have
several choices: NKF, KDF, public hospitals, private hospitals, and
private dialysis centres. If they all compete to deliver the best
value at lowest possible cost, what is wrong with that?
Dr Warren Lee asked the NCSS to
review which of its charities are deserving of
ComChest funding. I will let the NCSS consider his feedback.
MISCELLANEOUS ISSUES
Patient Care / Clinical
Programmes
Dr Tan Sze
Wee is rightly concerned about the burden of cost of renal diseases
in the future. As I described to the House yesterday, the NKF has
over the years developed a corps of medical capability and provides
regular care to 1,800 patients on a co-payment basis. We should
encourage and nurture charities like the NKF which play an important
role, but not just the NKF but other providers like the KDF as well.
Dr Lily Neo asked for the criteria
used by the NKF on assessing patients for admission to their
dialysis programme. She asked if too many were rejected and whether
KDF was started precisely because of the need to look after the
rejects from NKF. These are details which I have no answers to.
The review on the NKF would cover these issues in due course.
Cost Effectiveness
Dr Wang Kai Yuen questioned the
cost-effectiveness of the NKF in kidney dialysis. He produced data
to show that the KDF seemed more cost-effective in comparison.
We will bear this comment 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 the NKF: to deliver
kidney dialysis services to its patients at the lowest possible
cost, commensurate to a good standard of clinical care.
CONCLUSION
Mr Speaker, Sir, we have had 2
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 NKF and in fact the charity sector to emerge
stronger and more resilient. More broadly, Miss Irene Ng described
this NKF 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, 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.
As he put it: ¡°now you know we are not Bo Chap Singaporeans.
Everyone is a patriot at heart¡and maybe a stronger Singaporean
identity will emerge, including Singlish¡±.
Let us now, therefore, allow the
dust to settle, and let the new NKF Board get on with the necessary
restoration work.
The old NKF has great strengths
but also weaknesses. Let us build on the strengths and correct the
flaws.
The new NKF must remain creative,
innovative and professional. Being the largest charity in
Singapore, it must take on a pace-setter role, and be a shining
example of good governance, transparency and accountability. To
achieve this, it must fix all its inadequacies and root out bad
practices.
Most importantly, the NKF must
remember that the core of all charity is basic humility and a simple
desire to help our fellow human beings. The NKF, and indeed all
charities, exists because of the people, and it is the people it
must serve, and not the other way round.
Source:
www.gov.sg Press Release 21 Jul 2005
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