Health Minister Khaw Boon Wan vowed to tighten regulatory gaps that led to major failures in governance at the National Kidney Foundation (NKF), whose former boss came under fire over his lavish lifestyle.

Khaw said officials have learned "a sharp lesson" from the case. "We will take part of the blame for allowing this thing to drag on for longer than necessary," he told a news conference.

"We will tighten the co-ordination across agencies and close the gaps in our current system," he said after an intensive investigation by auditors KPMG.

"We will fix this within three months. This may require legislative changes."

Charges will be filed against the NKF's disgraced chief executive T.T. Durai and other former managers if investigations show they broke the law, Khaw said.

The case has been investigated by the Ministry of Manpower and further probes continue by the police Commercial Affairs Department and the Corrupt Practices Investigation Bureau.

"There will be no cover-up of any wrongdoing," he said.

The NKF became embroiled in scandal in July following a public furore over how donors' money was being spent.

The scandal emerged after Durai filed a defamation suit against the Straits Times newspaper when it reported that a gold-plated tap had been installed in the private bathroom of his office.

NKF's entire management was subsequently sacked after disclosures that Durai was being paid S$600,000 (US$360,000) a year, plus first-class air travel and upkeep for his Mercedes-Benz car.

The revelations sparked widespread public anger as an estimated two-thirds of Singaporeans have donated to the foundation.

Prominent lawyer Tan Choo Leng, the wife of former prime minister and current Senior Minister Goh Chok Tong, stepped down as patron of the foundation after being criticised for publicly defending Durai's salary.

Khaw said that as a non-government organization, the main responsibility for the proper running of the NKF lies with its board of directors.

"However, in the case of a large entity like the NKF, because of its scale of fundraising, and the patronage that government leaders lent to the NKF, the government had a heavier responsibility to satisfy ourselves that the organization was properly run. We failed in not doing so earlier," Khaw told reporters.

In a rare move, his statement was televised live to viewers in Southeast Asia's wealthiest country.

Khaw said the NKF had been "a model of success" for a quarter-century "and that is probably why no one took serious heed of earlier signs of trouble."

He said that around 2001, after the society transitioned to an incorporated company, regulators occasionally received informal, often anonymous comments that the NKF was arrogant, that its fundraising was aggressive and that its chief executive officer led a lavish lifestyle.

But NKF leadership persuaded regulators that they had done nothing improper, and NKF auditors found no unusual transactions, the minister said.

The latest KPMG audit has revealed so much because, with the resignation of Durai and the former NKF board, "the KPMG auditors were able to go through every file and read every email, without people looking over their shoulders or obstructing their way."

In an investigation that took more than four months, KPMG said the foundation's previous board of management was ineffective in overseeing the charity, preferring to delegate almost all its powers to Durai.

"The full investigation into the past practices of the former NKF board and management revealed poor management practices and a lack of good governance of the NKF under its previous board and management, and even questionable ethical conduct," NKF said in a statement summarizing KPMG's 332-page report.

The investigative report, which was sanctioned by the new board, discovered that under Durai, NKF had grossly inflated the number of kidney patients, patient subsidies and treatment cost, it said.

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