National Kidney Foundation Singapore scandal

The organisation's signboard in front of NKFS headquarter in Kim Keat Road was vandalised after the scandal broke out.

The National Kidney Foundation Singapore scandal, also known as the NKF saga, NKF scandal, or NKF controversy, was a July 2005 scandal involving National Kidney Foundation Singapore (NKF) following the collapse of a defamation trial which it brought against Susan Long and Singapore Press Holdings (SPH). This caused a massive backlash and fallout of donors to the charity, and subsequently resulted in the resignation of Chief Executive Officer T.T Durai and its board of directors.

Allegations surrounding the scandal included the false declarations on how long NKF's reserves could last, its number of patients, installation of a golden tap in Durai's private office suite, his salary, use of company cars and first-class air travel. Former NKF patron Tan Choo Leng, wife of Senior Minister Goh Chok Tong, sparked further outrage when she remarked that T.T Durai's pay of "S$600,000 a year is peanuts".

President of the National Council of Social Service, Gerard Ee, has since been appointed as interim chairman of the organisation. A full independent audit on its finances was conducted by KPMG, and a 442-page report released on 19 December 2005 revealed several malpractices by the former NKF board and management. Durai was arrested on 17 April 2006 and charged under the Prevention of Corruptions Act by the Police. A S$12 million civil suit to recover funds by the new NKF board against Durai and four other former board members began on 8 January 2007.

Early accusations

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In August 1997 and December 1998, NKF volunteer Archie Ong and aero-modelling instructor Piragasam Singaravelu respectively were hauled to court separately for defamation when both said that T.T. Durai had been flying first class. The former mentioned in April 1997 that the NKF "squandered monies" in a casual conversation with former chairman of NKF's finance committee Alwyn Lim,^[1] while the latter has claimed that he had personally seen Mr Durai in Singapore Airlines' first-class cabin. Both paid an undisclosed amount of damages to the NKF, and apologised.^[2] News of the suit affected Ong's cancer-suffering father, who eventually died in hospital. Shortly after the 2005 scandal broke, Ong mentioned to the press that he felt "fully vindicated now. I had more than a hundred calls today to wish me well."^[3]

In 1999, NKF tracked down and again took legal action against Tan Kiat Noi, who allegedly circulated an e-mail from her company e-mail on 5 April, claiming that "the NKF did not help the poor and needy, paid its staff unrealistically high bonuses"^[4] and discouraged members of the public from donating. She later published a public apology on local broadsheets The Straits Times and Lianhe Zaobao, and paid a total of S$50,000 in damages.^[5] 48 additional workers who forwarded the same e-mail were also sued by the organisation, but the suit was later dropped in consideration that they would face possible financial hardships.^[6] Days since the 2007 civil suit began, there have been calls by the public to redress the grievances of the three abovementioned whistle-blowers.^[7]

In 2001, the National Council of Social Service refused to renew the NKF's "Institution of Public Character" (IPC) status (which allows it to collect tax-free donations), citing that subsidy figures had been inflated, staff costs had increased by 30% and a "disproportionate" amount of money was spent on fundraising. Concerns were first raised by both by the Health Ministry and NCSS two years ago. However, the former decided to intervene in January 2002 and reinstated the NKF's IPC status for a full three years.^[8][9]

NKF v. SPH

Allegations in article

The Straits Times published an editorial "NKF: Controversially ahead of its time?" on 19 April 2004, written by senior correspondent Susan Long. This article became the subject of the dispute, and eventually the lawsuit that led to the scandal. Durai and NKF challenged the first six lines of the article, which claimed that a retired contractor (who declined to be named, for fear of being sued) had 'lost it' when he was asked to install "a glass-panelled shower, a pricey German toilet bowl and a (S$1,000) gold-plated tap" in Durai's office.^[6][10] The tap was said to have been replaced later with a different material.

NKF shortly issued a letter of demand for an apology, retraction, and payment of damages from the paper's publisher, Singapore Press Holdings (SPH), within 24 hours. Four days after the article's publication, NKF and Durai served a writ on Long and SPH for defamation, demanding S$3.24 million in damages.^[10] They claimed that the six paragraphs in the article implied the mismanagement of donors' funds, that the installations were scaled down only due to the contractor's protests, and that it had avoided providing further details on that matter.

The proceedings

The trial began on 11 July 2005, with Long and SPH represented by Senior Counsel and MP Davinder Singh, while NKF and Durai were represented by Senior Counsel Michael Khoo. Under cross-examination, it was revealed that Durai collected a monthly salary of $25,000 and collected a 10-month bonus in 2002 and a 12-month bonus in both 2003 and 2004, for a total of $1.8 million over three years. He had access to a fleet of eight chauffeured cars and the NKF paid the taxes and maintenance costs of his personal Mercedes-Benz.^[11]

Case dropped

The case was dropped by Durai on 5 PM on the second day of the trial.

Aftermath

The Ministry of Health demanded that NKF pay for damages.

Public backlash

T.T Durai and Health Minister Khaw Boon Wan at a press conference. Durai and NKF's board of directors resigned amidst the scandal.

The focus of the scandal turned to the revelation of Durai's S$600,000 pay, which caused widespread feelings of outrage, anger, and betrayal among the public. 3,800 regular donors cancelled their contributions the day after the trial, and NKF's headquarters was vandalized with graffiti.

Mrs Goh's remarks

Following questions about Durai's pay, wife of Senior Minister Goh Chok Tong and patron of the NKF Tan Choo Leng defended Durai, commenting that "for a person who runs a big million-dollar charitable organisation, with a few hundred million in reserves, S$600,000 a year is peanuts.",^[12][13] much to the indignation of Singaporeans. The statement was taken as an insult by many, who earn much less a year or even struggle for a living.

Blogs and online message boards were quickly flooded with angry comments, and a second online petition requesting Mrs Goh to apologise was started.^{[citation needed]} Jokes on the issue were later circulated, in particular, local satirical and humour website TalkingCock.com published a post featuring a parody 1 peanut bill with a value equivalent to S$600,000.^[14]

On 16 July 2005, SM Goh said that Mrs Goh regretted the statement. He also said to have explained and shown her several e-mails and letters he had received after the remark was made. In what SM Goh claims to be a separate matter, Mrs Goh has also resigned as patron of the NKF,^[15] despite an earlier announcement to remain on the board.^[12]

Interim board

On 14 July 2005 TT Durai and the NKF board resigned en masse. Health Minister Khaw Boon Wan appointed Gerard Ee as interim chairman and CEO.

Government response

Independent investigation

In July 2005, KPMG was commissioned by the new NKF board to study past practices. KPMG published its report^[16] in December 2005, with key findings including:

• The Board delegated its authority to the Executive Committee, and the Executive Committee delegated its authority to Durai.
• In 2003, only ten cents out of every dollar raised were used for dialysis costs. In its 2004 annual report, NKF had claimed that 52 cents out of every dollar went to its beneficiaries.
• NKF awarded contracts worth $3 million to Forte Systems and $4 million to Protonweb, both run by Pharis Aboobacker, a close friend of Durai. Neither project was successfully completed, but no action was taken against the companies. In KPMG's judgment, the terms of the contracts were "unusual" and the ExCo's disregard of the lack of performance was "extraordinary".

Arrests and subsequent lawsuits

Durai was arrested on 17 April 2006. He was out on bail, but will stand for trial with other members of the old National Kidney Foundation Board of Directors. He has also agreed to pay back S$4 million to the new NKF and was sentenced to 3 months jail for misleading NKF by fabricating a $20000 invoice.

Richard Yong (the former chairman), Mathilda Chua (ex-director) and Loo Say San (ex-treasurer) were all declared bankrupt on 16 May 2007.^[17] After selling personal properties worth $7.5 million, Richard Yong left Singapore without permission early on the morning of May 17 but was arrested on 4 July 2007 in Hong Kong and extradited back to Singapore on 3 August 2007 where he was charged the next day for charges that the NKF levied on him as well as escaping from Singapore hours before being declared a bankrupt. Yong said that he had left to settle some personal matters.^[18]

He was sentenced to 15 months in jail for the three charges. Five other charges were taken into consideration during the sentencing. His sentence will commence from the day that he was extradited back to Singapore. Yong has said that he plans to appeal. He lost the appeal and had to serve out his sentence. However, he was given permission to serve half of his jail term (five months) at home on an electronic tag.

Long-term effects

The scandal has raised questions about the level of transparency in other institutions in Singapore. Opposition politicians, notably Chee Soon Juan, have noted that the issues at NKF would probably not have been revealed if T.T. Durai had not sued the Straits Times. Four people linked to the Singapore Democratic Party held a silent demonstration outside the Central Provident Fund (CPF) headquarters in July 2005, wearing T-shirts emblazoned with "GIC HDB NKF CPF Transparency now!", thus demanding greater transparency from the Government Investment Corporation (GIC), the Housing Development Board (HDB) and the CPF. The protesters were arrested but later dismissed without charges, with their own countersuit for unlawful detention dismissed with costs.^{[citation needed]}

On 21 April 2006, Chee Soon Juan and 12 other defendants were sued for defamation for questioning the government's handling of the NKF scandal in the Singapore Democratic Party's newsletter The New Democrat.

New NKF v. Old NKF

The civil trial by the new board against the old executive committee – former CEO TT Durai, chairman Richard Yong, treasurer Loo Say San, board member Maltilda Chua and business associate opened on 8 January 2007.^[19] Damages of S$12 million are sought for alleged mismanagement, breach of duty and damage and loss to the organization. Durai was accused of running the charity to his advantage, destruction of documents, and the like, with the new committee asserting that as a charity, NKF as a charity, and Durai as CEO, should be subjected to a higher and more rigorous standard of care. On the third day, Durai accepted all liabilities and all claims against him. The only public statement by Rajah - Durai's lawyer - was to confirm that his client had dropped out of the matter.

Later that day around 1700 (SST), NKF's lawyer, Shanmugam, confirmed to reporters that Durai conceded; the amount of damages to be paid to the NKF are still to be settled. However, the decision by the other defendants to continue will have implications to other equally liable directors and third parties (Alwyn Lim, Lawrence Chia, Kweh Soon Han and Chow Kok Fong). The result of Durai conceding will make the trial shorter rather than an expected eight week trial.^[20]

The revelations

See also

• Chilling effect
• Corporate abuse
• Corporate scandal
• Accounting scandals
• National Kidney Foundation Singapore

References

1. ^ "Why so silent, Mr Alwyn Lim?", Low Ching Ling, The New Paper, 24 December 2005
2. ^ "T. T. Durai: I should have said, I travel on first class", Bertha Henson, The Straits Times, 12 July 2005
3. ^ "Mr NKF, the court-happy combatant", Conrad Raj, The New Paper, 13 July 2005
4. ^ "NKF acts against e-defamation", Samantha Santa Maria, The New Paper, May 1999
5. ^ "NKF: Controversially ahead of its time?", Susan Long, The Straits Times, 19 April 2004
6. ^ ^{a b} "Action dropped, don't do it", Ng Wan Ching, The New Paper, 22 May 1999
7. ^ "Pay back damages in ' flew first class' suits", Lau Guan Kim, The Straits Times Forum, 13 January 2007
8. ^ NCSS warned NKF and raised alarm back in 2001, The Straits Times, 22 December 2005
9. ^ Regulators wasted opportunity to prevent NKF saga: KPMG report, Julia Ng, Channel NewsAsia, 19 December 2005
10. ^ ^{a b} "Home is home but this office is for charity", Low Ching Ling, The New Paper, 26 December 2005
11. ^ "The NKF Saga" , Siva Arasu, The Straits Times, July 17, 2005
12. ^ ^{a b} "Patron: It Must", (archived) The New Paper, 14 July 2005
13. ^ "Public anger over charity chief’s salary", John Burton, The Financial Times, 14 July 2005
14. ^ "New Singapore Dollar Note Unveiled", Anonymous, TalkingCock.com, retrieved 23 December 2005
15. ^ "Ex-NKF patron Mrs Goh Chok Tong regrets remarks about TT Durai's pay: SM Goh", Wong Siew Ying, Channel NewsAsia, 16 July 2005
16. ^ http://www.nkfs.org/download/nkf_report_161205.pdf
17. ^ ""Yong crumbled in court under cross-examination", by Ho Lian Yi, The New Paper, June 4, 2007". http://newpaper.asia1.com.sg/news/story/0,4136,132148,00.html. Retrieved 2007-06-10. 
18. ^ ""How did Richard Yong slip through the net?", Channel NewsAsia". http://www.channelnewsasia.com/stories/singaporelocalnews/view/280968/1/.html. Retrieved 2007-06-10. 
19. ^ "NKF civil trial kicks off with focus on the way the former CEO controlled the charity", May Wong, Channel NewsAsia, January 8, 2007
20. ^ "Durai concedes", Bertha Henson, The Straits Times, January 11, 2007

External links

• The full chronology of events
• ChannelNewsAsia's coverage on the NKF scandal
• KPMG's independent audit report into old NKFS (PDF document, 4.4MB)