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AGO Report: More Damning Lapses Costing Hundreds of Millions Found in Education Sector

The Auditor-General’s report for FY2015-2016 has brought educational institutions under greater scrutiny for lapses in governance.

These include hundreds of millions of dollars in unrecovered loans, bond-breaking by foreign scholars, grants given without follow-up reviews, “vested interests” issues involving hidden funds.

(1) Millions in Un-recovered Student Loans

NUS and NTU have been flagged for S$228.04 million worth of loans that haven’t been recovered.

This is part of over half a billion dollars in tuition fee and study loans given to students of institutes of higher learning that are outstanding.

As of June 30 last year, the outstanding balance of such loans totalled S$511.49 million.

The AGO had highlight the high figure, while questioning why the MOE has not revised its formula for the calculation of fees payable to banks for administering the loans.

It checked 116 such loans, and found 27 cases where work to recover them was delayed by one to 3 and a 1/2 years.

The AGO also checked on another 58 loans in default for at least 2 years and, in 33 cases, the banks could not produce documents showing recovery action “for prolonged periods” of up to 31/2 years.

The AGO had already flagged this issue 6 years ago, highlighting that it “discourages” banks from giving their best effort to recover outstanding loans, but the issue was persistently postponed by the MOE.

(2) Foreign Bond-Breakers Go Scot-Free

The MOE was also found wanting when it came to the issue of NUS and NTU foreign students who received scholarships but failed to serve their bonds.

Such bond-breakers are required to pay liquidated damages.

When the AGO checked on 30 cases of scholarship winners who were not serving their required bonds, it found 14 cases where the universities did not send letters to remind them of their obligations.

The universities also didn’t impose liquidated damages in cases that warranted it.

(3) Grant Money Given without Thorough Reviews

The AGO also found that the MOE had over-contributed S$4.14 million over 9 years to NTU’s sinking fund.

The MOE was also found to have  disbursed research grants of S$2.96 million to NTU and NUS without carrying out reviews to ensure projects were progressing according to its guidelines.

(4) Conflict of Interest and Hidden Funds

The AGO flagged NYP’s board of governors for having “vested interests” in the institution’s subsidiary, Nanyang Polytechnic International, when involved in the making of decisions.

It said that this reflected a “disregard for financial controls and proper governance”.

The board was found to have approved a funding model more generous than that provided for in government instructions.

Also, by not charging market rates for the use of its premises, and by giving more funding than that approved by the board, NYP gave its subsidiary hidden subsidies and excess funds totalling S$8.38 million from 2007 until March last year.

The AGO said:

“Without a proper framework to manage conflict of interest, there was no assurance that decisions on transactions with its subsidiary were made in an objective and impartial manner.”

It added that generous funding terms, excess funding and hidden subsidies lacked transparency and made it hard for the Government to assess the subsidiary’s true financial performance and viability.



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