More mega charity
trouble
Ren Ci under probe for possible financial irregularities, IPC
status won't be renewed
TODAYonline
Thursday November 8, 2007
Lee U-Wen
[email protected]
LIKE the old National Kidney Foundation, it is well-known for its
star-studded televised charity shows that rake in millions of
dollars in donations.
Now, the Ren Ci Hospital and Medicare Centre one of the largest
local charities, whose honorary chief executive officer, the
Venerable Shi Ming Yi (picture), has become a household face with
his fund-raising stunts is under probe by the Government for its
financial management.
Its status as an Institution of Public Character (IPC) will also
not be renewed when it expires on Nov 27 which means public
donations made after then will not be tax-deductible.
Yesterday, the Ministry of Health (MOH) said it was commencing an
inquiry into "some possible irregularities in certain financial
transactions" involving the charity and other external
organisations.
Ren Ci, whose last charity show in March raised $7.2 million, is
one of 12 large IPCs under the ministry's purview. In July last
year, the MOH had appointed one of the "Big 4" accounting firms,
Ernst & Young Associates, to conduct an eight-month corporate
governance review exercise involving all 12 IPCs.
The firm had looked at each organisation's accountability and
transparency of its operations, and drawn up a list of
recommendations for each. In Ren Ci's case, one suggestion was to
separate the roles of its chairman and chief executive officer,
which were jointly held by the Venerable Shi, 45. This was in
keeping with the practice that board and management remain
independent of each other.
In September this year, Ren Ci duly complied and named Mr Chua
Thian Poh, chairman and CEO of Ho Bee Group, as its new chairman.
However, the review into the charity's past transactions also
"disclosed other gaps in corporate governance and internal
controls", according to the MOH in a statement.
This prompted the ministry to commission Ernst & Young to carry
out "a more in-depth evaluation", which turned up the possible
irregularities. Hence, it is now "commencing an inquiry into Ren Ci
to establish a fuller and better understanding of these
irregularities", said the MOH. The ministry, the administrator of
the health sector under the Charities Act, will announce its
findings after the inquiry is completed in February and take action
if required.
Responding, Ren Ci said it has a strong culture of corporate
governance and would cooperate fully in the investigations. At the
hospital's Buangkok View premises yesterday, auditors were seen
carting files into the office.
Observers say that for the public to pass judgment on the charity
without knowing more details would be "jumping the gun".
Associate Professor Mak Yuen Teen, director of the Corporate
Governance and Financial Reporting Centre at the National
University of Singapore Business School, said it is likely the
investigations had uncovered "conflicts of interest", where one or
more Ren Ci board members failed to disclose their roles in other
organisations. "It could involve a situation where a board member
has an interest in transactions and did not declare this as it
could lead to them losing their position on the board," said Prof
Mak.
Or, he said, it could simply be a case of ignorance on the board
members' part, with no intent to deceive. "That's why it's
important for board members to understand their responsibilities
In the eyes of the law, there is no such thing as ignorance and any
breach is seen as breaking the law," he said.
Meanwhile, the loss of IPC status for Ren Ci could mean a drop in
donations.
The charity's latest annual report showed that as of March 31,
donations, grants, investment gains and other receipts for the last
financial year totalled $30.3 million up 16 per cent while
expenses amounted to $18.8 million, an 8 per cent rise. The ratio
of its reserves to annual operating expenditure was 1.9.
Of the money raised from this year's charity show, $1.5 million has
been set aside for the new Ren Ci Hospital in Irrawaddy Road, to be
completed next year.
The ministry said it recognised the good work of Ren Ci's staff and
would continue to subsidise its patient care services so that
patients will continue to receive their medical treatments.
"We are confident that the Ren Ci board will ensure that
professional standards and services remain intact and the
day-to-day operations carry on undisrupted," said the statement. As
of March, the charity employed 326 staff.
An MOH spokesman told Today the ministry did not expect to carry
out similar enquiries on any of the other 11 IPCs.
