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NKF

The National Kidney Foundation saga was one of the most unusual series of events I am familiar with in the recent history of Singapore, with almost all the involved parties behaving for the local environment in highly uncharacteristic manners.

Kidney failure, while not a common medical condition, occurs often enough for dialysis to be a standard part of the medical services. Since in Singapore major medical facilities are predominently under government coverage - while a number of private hospitals exist to cater to wealthy, including foreign, patients, in patient numbers they are insignificant relative to public general hospitals and government specialist centres like the National Eye Centre and others. It was therefore uncharacteristic that dialysis was left to private clinics and voluntary organizations.

Among these, the National Kidney Foundation was special, first because it had high power figures as patrons (initially it had Tay Eng Soon, a cabinet minister; after he passed away the role passed to Mrs Goh Chok Tong, wife of the then Prime Minister); second because it had an arrangement with Mediacorp to put on its own annual fund raising programme on TV, an opportunity available only to small number of selected charities while others could only do it as part of an umbrella programme. Third, it had a CEO with a high profile for his inventive fund raising role. With these advantages, it quickly built up a financial reserve in the hundreds of millions, and provided services to thousands of patients, who generally displayed high loyalty to NKF for its life saving role, despite the fact that it charge rather high service fees considering its donation collection success.

In the community at large, doubts began to be expressed about whether NKF was deploying its financial resources in the intended way, and stories about high executive salaries and extravagant expenses (whispers about first class air tickets and gold taps in bathrooms were heard). Instead of proving the reports false by opening its accounts/premises for inspection, NKF threatened to sue those who made such comments publicly, and lacking the deep pocket for legal fees, the critics withdrew.

In Singapore, situations likes this would usually cause complaints, often anonymous, to be sent to authorities, including the anti corruption bureau, and generate official or unofficial queries. A quiet word in the ear would usually be enough to halt any malpractices and produce humble repentences. If this does not occur, then the public tend to feel there is not a problem - "otherwise government would have taken action". The NKF situation was therefore highly unusual.

Equally unusual was the role played by Singapore Press Holdings in this drama: as part of the public relations department of Singapore Inc, SPH does not usually engage in diggnig up dirt and propagating bad news. Yet, after individual critics had been intiminated into silence, an SPH reporter chose to publish a critical article about NKF and did not back down when a lawsuit was launched - SPH could afford legal fees and was willing to back her. Quenstioning in open court caused previously hidden details to be publicised, eventually forcing NKF to abandon the case, thus concending the original reports to be valid. This then brought the previously sidelined government officials into action: after the NKF CEO publicly said he intended to continue in his post despite the abandoned lawsuit, a quiet word from the Health Ministry was enough to get him to resign. A new board of management was appointed and various serious inproprieties were revealed, with several criminal and civil cases involving the previous NKF management launched, some of which are still going through the courts.

Even today I find the behaviour of many of the involved individuals inexplicable: why was the NKF executives so confident of their own invulnerability; why Mediacorp was so generous towards NKF instead of sharing its fund raising faciliities with more organizations to generate more widespread good will; why the officials in charge of charity and health issues were so quiescient, in a system that is normally so command driven. Somehow, the common power distribution and deployment model fell through the cracks in the case of charity, a situation now being actively remedied as the two cases below show.

Charity for Whom? 

News just came out that the Director of St John's Home for the Elderly has gone missing, together with over $3M of its $4M of bank deposit. While the criminality of this incident is still under investigation, I wonder why a home with just 60 residents to take care of requires such a large fund. Like old NKF management that raised big money but got into big trouble, St John's home seems better at raising money than spending it for the intended purpose.

Large amounts of money sitting idle in charity organization accounts are undesirable for a number of reasons: the money might have been better devoted to other, more urgent needs, the management may not have tried hard enough to expand its ervices, and it may have set up too large an organization for too small a service population, with the result that (a) it need to have enough money to pay overhead and guarantee continuing operation (b) yet it may not be spending enough on the servicing itself, but too much on maintaining the infrastructure; finally, idle sums of money would sooner or later attract the wrong kind of attention, such as wasteful or at least careless spending by administrators unconstrained by budget issues, criticism from outsiders and donors, and of course, sticky fingers.

In some countries, a charity organization would lose its tax free status if it fails to spend x% of its money on the intended purpose each year. This goes some way towards both the right amount of service provision, and right amount of fund raising - if an organization raises too much money it might end up merely paying the extra raising in tax!

Ren Ci under probe for financial discrepancies        

ANOTHER charity has come under probe. Ren Ci Hospital & Medicare Centre is being investigated by the Health Ministry for possible financial discrepancies, believed to have arisen from a few million dollars in interest-free loans to several companies in the past decade. The largest charity under the Health Ministry after the National Kidney Foundation (NKF), Ren Ci will lose its Institution of Public Character (IPC) status on Nov 27, when it is due to be renewed.This means that it can accept donations, but donors will not get tax exemptions. Ren Ci will continue tending to its 120 nursing-home patients and 300 chronically sick patients at its facilities in Jalan Tan Tock Seng and Buangkok through the probe. Health Minister Khaw Boon Wan told The Straits Times last night that he believed in a 'firm, fair and transparent' approach to the probe. While an inquiry was called for because the transactions had not been 'well explained' by Ren Ci's management, he said 'we should not jump to any conclusion until the inquiry is completed. That will not be fair to the parties involved'. His ministry said yesterday that a review of the charity had turned up 'possible irregularities in certain financial transactions' involving Ren Ci and some external parties, and that an inquiry would clarify them. The Straits Times understands that several companies had been given loans, some amounting to hundreds of thousands of dollars. But Ren Ci's books recorded loans that, in some cases, were several hundred thousand dollars more than what was reflected in the borrowers' books. These irregularities surfaced in the wake of the ministry tightening corporate governance among the charities under its wing last year, following the NKF scandal of 2005.In July last year, the ministry appointed accounting firm Ernst & Young to carry out a general review of the operations at its 12 largest IPCs, including Ren Ci. At the end of the review in February, Ren Ci was asked to split the role of board chairman and chief executive officer. Both positions were then held by Venerable Ming Yi, a colourful character who has performed death-defying stunts in the charity's popular annual televised fund-raisers. He has since become Ren Ci's honorary CEO. Mr Chua Thian Poh, chief executive of property developer Ho Bee Group, became the charity's chairman in September. The ministry next got Ernst & Young to delve deeper into Ren Ci's operations, which was when the loan discrepancies were uncovered. Yesterday, the ministry informed the Ren Ci board that a probe under the Charities Act would be convened. This is expected to take three months, after which the findings will be disclosed and 'appropriate measures' taken. Auditors were seen moving files into a room on the ground floor of the hospital's Buangkok premises just before 7pm yesterday. Venerable Ming Yi was seen on the premises, but declined to take calls to his cellphone. Mr Chua, contacted in China, where he is on a business trip, declined comment and referred The Straits Times to a statement put out by Ren Ci, which said: 'Ren Ci Hospital & Medicare Centre has a culture of strong corporate governance and transparency. When complaints are made, they will be fully investigated. 'We would like to reassure the public that the professional standards and services of Ren Ci will remain intact and the day-to-day operations and patient care will carry on undisrupted.' The charity employs more than 300 people and earned about $30 million last year - $9.5 million from donations, $10 million from grants and sponsorships, and $9.8 million from fund-raisers and other activities.

salma@sph.com.sg