In a rare admission of government blame, Health Minister Khaw Boon Wan on Wednesday took partial responsibility for failing to ensure that the National Kidney Foundation (NKF) was properly run, after an independent audit revealed serious flaws in the way donors' funds were used.

"I think it does affect the reputation" of Singapore, said Seah Chiang Nee, a political analyst.

"The minister himself admitted they could have done more to investigate... One can say they have shown very poor judgment and a certain amount of dereliction of duty to allow this to happen," he told AFP.

Another analyst said the NKF scandal showed that no country was perfect, including Singapore, where authorities often promote the city-state's good corporate governance.

"One of Singapore's special features has been the way it has tried to publicise the quality of its governance and at least officially argues that it is pursuing international best practices," said Robert Broadfoot, managing director of the Political and Economic Risk Consultancy (PERC) in Hong Kong.

"When you get anomalies, exceptions to the image they have tried to groom and portray, it leaves them very exposed when it happens... when those incidents happen, they get huge publicity in a negative way," he said.

Khaw told the nation in a live address -- something rarely done in the city-state -- that until the independent investigation, auditors and regulators did not uncover problems at the charity, even though there had been warning signs.

Khaw said investigations were continuing by the police commercial crimes division and the independent Corrupt Practices Investigation Bureau.

Foreign businessmen surveyed by PERC have consistently rated Singapore as the least corrupt country in Asia.

Although NKF is a non-governmental organization whose board of directors has prime responsibility for running it properly, Khaw accepted part of the blame for not monitoring NKF more closely.

"We failed in not doing so earlier," he said.

Khaw vowed a clean-up of the charity and a tightening of regulatory gaps.

The scandal emerged in July after then-chief executive T.T. 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 Durai reluctantly disclosed to the court that he 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.

The auditor's investigation, which took more than four months, revealed the old NKF board was ineffective in overseeing the charity, preferring to delegate almost all its powers to Durai.

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

The audit also found that several directors in the former board had interests in or were involved in companies that did business with the NKF.

The NKF scandal "has not fatally damaged Singapore's reputation for pursuing good governance but it has shown that it has vulnerabilities," Broadfoot said.

"It keeps a realistic perspective on Singapore. No place is perfect."

                                                      Home