Walmart executives fall on their swords, Auditor-General’s report goes into black hole

The news story came across as incomplete as building half a house. While it detailed the key negative findings of the Auditor-General’s report, nothing was said about officers being made accountable for the errors and penalised accordingly. This will strike many Singaporeans as “business as usual”, or in Singapore political parlance, yet another example of “let’s move on”.

In a letter to the editor of the Straits Times (Forum, 18 October 2011), Ephraim Low asked in somewhat more forgiving language, referring to previous years’ findings of the Auditor-General: “What have agencies that were flagged in previous reports done to ensure that effective controls are in place today? Where are these corrective measures documented? Are they publicly available?”

In contrast, the same 18 October edition of the Straits Times had a report that two senior officers of Walmart China had quit in the wake of a scandal. It is not clear though, what responsibility they had over the false labelling of ordinary pork as “organic”, which triggered raids by city health authorities. Was it merely lack of supervision or were the senior executives part of the scam? Two employees were arrested, presumably not the same two who resigned, while Chongqing authorities closed ten Walmart stores temporarily and fined the retail chain US$420,000.  See Wall Street Journal report. The fine is equivalent to ten times the value of pork sold.

In terms of the value involved in the cases our local Auditor-General has found, they are larger than Walmart’s.

This year, he rapped the Police Coast Guard for its handling of a project to install floating sea barriers at various coastal locations. The project was managed by an external contractor.

The Auditor-General’s Office (AGO) found the pricing of most items was inappropriately determined, by using the costs of other items as proxies. When it obtained the actual prices of two of the items used, it found the Police Coast Guard had been overcharged by about $885,000 – 20 per cent of the amount paid.

It also found that payment was made before the goods were delivered – in breach of financial regulations, and a significant portion of materials paid for did not meet the specifications of the project. The project manager also appeared to have submitted falsified documents to the AGO during its audit.

— Straits Times, 18 October 2011, Auditor-General raps govt agencies, by Tessa Wong

Another incident flagged by the report involved a tender where basic rules of fairness were not adhered to:

One example was the acceptance by the Land Transport Authority (LTA) of a tender which did not meet its specifications. The LTA had issued a tender for a camera system. There was only one bidder and it won the $2.16 million contract. But that firm’s offer did not meet a number of requirements, including that the road camera system be bi-directional and monitor approaching and receding traffic.

The AGO said the LTA should have disqualified the tender, as all tenderers were supposed to have submitted fully compliant offers. As it appeared prepared to lower its requirements, it should have called for a fresh tender to allow more bidders and more competitive pricing.

— ibid.

So, if mis-selling pork to the value of US$42,000 requires that heads should roll, what about losses to the tune of S$885,000 and S$2.16 million?

Just in case action had been taken but not reported in the Straits Times, I checked the website of the Prime Minister’s Office (www.pmo.gov.sg). I regret to report that there has been no public statement on the matter.

* * * * *

As reported in earlier postings here and based on survey findings, one of the chief concerns of voters in the recent general election which saw the People’s Action Party’s vote share fall to barely 60 percent, was that of governance or accountability. It should be obvious that on this score, the government needs to change its attitude if it is ever to regain public support. Sustaining public suspicion of impunity of civil servants and political officers is not the way to go about it.

The government may say that the responsible officers have been dealt with privately, but that won’t be good enough because to do so sends a different signal: that even when things have gone wrong, the dignity (by now proven undeserved) of senior men and women must be preserved at all cost. They cannot be shamed in public. This itself feeds the notion that the ruling class is a class unto itself; untouchable by ordinary citizens. They may be held to account by their peers, but they shall not be disgraced in the eyes of the hoi polloi.

It further fuels the widespread disgust over high salaries for the political class and their senior civil servants. If they are protected from falling on their swords unlike senior executives in the corporate world, then why should governmental pay be benchmarked to the private sector?

This policy of shielding senior government officers must change. Until it does, all the talk about a more consultative style is just lip service.

23 Responses to “Walmart executives fall on their swords, Auditor-General’s report goes into black hole”


  1. 1 tk 18 October 2011 at 17:35

    I’m curious as to whether the Auditor General’s role is purely one of overseeing financial matters, or could the office expand so as to also hold Government departments and Ministries accountable to their (somewhat fuzzy) “mission statements” and “corporate social responsibility (CSR)” statements?

    One hypothetical example could be: the MoF dictates which office paper supplier all other Ministries and Government entities have to use, so that they can, very reasonably, negotiate a bulk contract to get economy of scale. But if that paper supplier was incorporated in Singapore, did not have a Forest Stewardship Council certificate, and was known to accept ‘suspect’ logged wood from Riau province into its pulp mills, as well as be involved in the indiscriminate clearing of Sumatran jungle for Acacia pulpwood plantations (also thereby exposing vast CO2-releasing peat beds, and destroying valuable habitat for endangered animals), then any Ministry or Department that had a CSR relating to the environment (for example the National Climate Change Secretariat or Ministry of the Environment) , would be ignoring that CSR, or even their whole raison d’etre, and could be ‘flagged’ by the AGO.

    Incidentally, in the above scenario, an Environment Minister that wrote to Indonesia to protest Singapore’s concern about trans-boundary haze and reinforce Singapore’s willingness to help with cloud seeding and water bombing, could through no fault of his or her own, be seen as (literally) starting fires with the left hand and trying to put them out with the right – a contradictory position which might also come under scrutiny from an expanded AGO.

    Interestingly, the above hypothetical situation could also be compared to that occurring in the corporate world, where both Mattel and Fuji Xerox Australia recently discontinued their association with their Singapore-based Indonesian paper suppliers, APP and APRIL, respectively, due to pressure applied from petitioners and upon recommendations from their in-house CSR group.

  2. 2 talents not easy to deal 18 October 2011 at 20:12

    But let’s say if you have to discipline or sack a few, you may also need to discipline or even sack a lot of people, if you really want to apply fair and consistent standards. If not, will you have a clear conscience?

    Where to find lots of people to replace these sacked people? And if you disciplined many, morale and operation may also be adversely affected. Especially if these people are special talents which are not easy to find? And which is why they are well paid in the first place.

    Like that then how?

    • 3 Old Singaporean 19 October 2011 at 07:41

      @talents not easy to deal, you are kidding right?

      Having worked for so long, I’ve come to the conclusion that there is no such thing as an indispensible staff. If a company believes certain staff are indispensible, something is wrong with the company.

      For the sake of keeping the so-called talent, you are willing to compromise your values?

    • 4 Fire-chan 22 October 2011 at 03:39

      @talents not easy to deal:

      How sure are you that those “talents” won’t use the chance to get away with bribery, nepotism, playing hooky and whatever else? Some of them are only worth a bit of hassle and are easily replaceable. If they don’t give in their full performance, then that “talent” is worth nothing to the company and their hiring could even be “written off” as a loss.

  3. 5 Marc 18 October 2011 at 20:36

    “So, if mis-selling pork to the value of US$42,000 requires that heads should roll, what about losses to the tune of S$885,000 and S$2.16 million?”

    The way I read it, there wasn’t a loss of 2.16 million.

    • 6 yawningbread 18 October 2011 at 20:57

      Isn’t it a loss if you spent $2.16 million and didn’t get what you wanted in the first place, technical specs-wise?

      • 7 Marc 18 October 2011 at 22:05

        Possibly, but you can’t argue that it is a 2.16M loss. It is not as if they got nothing in return for the money spent. In fact, since there is no basis for comparison, they might even have gotten a good bargain for what they paid. We will never know. That is the problem. Anyway that is just a detail, I very much liked your essay.

  4. 8 Anonymous 18 October 2011 at 20:41

    Yes. We demand accountability. The cooling-off day incident where PAP’s candidate Tin Pei Ling was let off on one count of violating the rules and another count of false declaration in her declaration form shows us very clearly that PAP is above the law. To add insult to injury, the SPF even managed to drag Nicole Seah in on a point of technicality.

    We also witness unaccountability to the extend of absurdity. Repeated management failure of SMRT, whether in terms of security or service delivery seems to meet with zero consequence.

    On the point of governance, the PAP has demonstrated again and again that failure in policies and leadership bears no consequence. Ministers are being rotated round the musical chair election after election. I wonder when the music will stop and the lights turn on.

  5. 9 yawningbread 18 October 2011 at 20:55

    Someone submitted a comment that makes allegations about the management and spending at a country club. It is potentially defamatory. Especially since I do not know the identity of the comment-maker, I can’t post it.

    • 10 wastingmoney 19 October 2011 at 07:45

      Before you call me names*, why didn’t you email me at wongholloway@yahoo.com – I provided my email? I am happy to send you my exchanges of email with both the Chairman and ex-President. And I may have the comments of the current Captain when he was campaigning.

      *why is it that invariably commentators are attacked in personal terms on all the forums and blogs – ST, Today, etc. Even yours which seemed like a sensible one.

      Anne Holloway

      • 11 yawningbread 19 October 2011 at 10:05

        Did I call you names? I stated an opinion that what you submitted by way of comment was potentially defamatory; it was an opinion of the comment. It was hardly an opinion of the writer, which would be what is meant by “personal attack”.

        You are free to publish your email correspondence with the office-holders of the country club on your own blog; but it would be off-topic to the article (above) in question.

  6. 12 Chow 18 October 2011 at 22:38

    Well, I’ll be cynical today and say that the Walmart incident was most likely politically motivated (I will speculate that they’ve got some party election thing going on and this incident may have something to do with it) with Walmart being the easy and easily vilified ‘enemy’. On the other hand there’s no clear ‘enemy’ here so there’s probably less of an impetus to move things along. After all, one MP apparently ‘flouted’ the Cooling Off Day rules but yet got appointed to a pretty high post overseeing the Police themselves. Oh, and they did manage to dig up the dirt on the reporting party to prove that they themselves broke the rule.

  7. 13 stngiam 18 October 2011 at 23:02

    Well, one problem is that many of the things AGO complains about are really stupid things. They are procedural rather than substantive errors in most cases. A civil servant is more likely to get into trouble for a $50,000 mistake than a $50 million mistake because whereas there are rules relating to the disbursement of funds, there are no rules regarding the decision processes leading to the disbursement. Essentially, the corporals and lieutenants are the ones being cited by AGO; the colonels and generals are beyond reach. Much as you think you are striking at the top of the government hieararchy, the reality is that the AGO findings predominantly cite people at the bottom, who are forced to work under rules they didn’t write.

    • 14 ape 19 October 2011 at 19:51

      ‘who are forced to work under rules they didn’t write’

      Exactly my sentiments. There are ppl who has not done any procurement but interprets the MOF rules to the strictest sense.

      The AG report stops short of looking further into the root cause(s) of the lapses. This creates an impression that all fault lies in the procurement/project officers, thereby requiring disciplinary actions. Is this really the case? For all the lapses?

  8. 15 Gazebo 19 October 2011 at 00:17

    One phrase used by Lee Yi Shyan to describe Singapore’s “strengths” in his speech yesterday that caught my eye was “predictable”, in reference to his desire that Singapore “does not lose its fundamentals”.

    As a former civil servant, I know full well that predictability in the government is measured not by strict application of the law, but rather that the ship will not be rocked. In other words, accountability is of second order importance. Rather the imperative is that businesses, particularly foreign MNCs face a “stable” business environment.

    • 16 yawningbread 19 October 2011 at 10:07

      Your comment reminded me of something I heard several years back. In Country X, the kickback percentage for winning any govt tender has held steady at 10 percent for more than ten years. It has a very “stable” business environment🙂

  9. 18 Chanel 19 October 2011 at 14:32

    Gazebo,

    I am very puzzled by how holding government officials accountable to theri misdeeds can make our business environment less stable or unstable. In developed countries such as the US, Japan, Germany, UK and France, politicans and other government officials voluntarily stepped down or were sacked for their misdeeds, but do you see a huge exodus of MNCs??

    • 19 Gazebo 19 October 2011 at 20:29

      no no, i am not defending their stance. i am just pointing out that this is how they think.

      but you can imagine why such an attitude could have developed. i will postulate here that the most obvious reason is because most of the companies in Singapore are attracted there using subsidies and other incentives. as such, MNCs may be afraid of their subsidies being stripped due to leadership change. consequently, the government will try their best to assure the MNCs that there will be no leadership change. i.e. predictability.

  10. 20 Chanel 19 October 2011 at 14:37

    Alex,

    Nothing has changed or is going to change on PAP’s governace style. Misdeeds or big mistakes that reflect badly on the ruling party govt would either be brushed off by “it was an honest mistake, let’s move on” or hidden from the public.

    As for the latest Auditor-General’s report, you can bet your last dollar that the PM has already put a call to the AG Head for a good verbal spanking.

  11. 21 georgelamb 19 October 2011 at 18:32

    Alex,

    I can understand why in some countries heat is necessary to initiate changes.

  12. 22 meiming 19 October 2011 at 21:14

    Yawning Bread,

    Of course, everyone knows that the 10% refers to Madam Tien (wife of Pak Harto). What wrong in naming the country Indonesia…

    Calling a spate a spate… Why the need to hide; especially you have interest concealing the country “Indonesia”.

  13. 23 KC 21 October 2011 at 22:42

    At where I work, we vendors will never be awarded a contract if the specs do not meet. In the event that the engineering team overlooked, they will pressure the vendor to by hook or by crook meet their requirement. They will not rest. If really expectations can’t be met, the contact would then be cancelled. Be it whether there is any kickbacks, the first remedy is to get the specs met.


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