National Education Lessons we can learn from the NKF scandal - Part 2
9) KPMG report page 22, Section 1.5.7
"Mr Richard Yong emphasised that if an Executive Committee member had chosen to dissent or raise a concern, this would have been addressed. However, such occasions were rare since the general consensus was that the members of the Executive Committee, being by and large volunteers, believed that all proposals put before the Executive Committee and decisions taken thereon were done in the best interests of the NKF."
When there is unanimous consent or approval by members of a board of governance, one should be wary for it might be an indication that decisions are not being challenged, and the members trust in the benevolence of those who make the interests.
There is also the question: the best interests of the organisation (to have a lot of reserves, to be long-lasting, to have a good reputation) are not necessarily the same as its stated goals, especially when the organisation is ostensibly dedicated to public service.
10) KPMG report page 23 & 27, Section 1.5.8 & 1.6.7
"Another arrangement to showcase the NKF in a favourable light with proper governance mechanisms was the Audit Committee. The NKF had in the past proudly announced itself as a pioneer in Singapore by being the first and only charity to voluntarily establish "an independent audit committee to enhance its system of internal control" in 1995. In fact, the Audit Committee was arguably a misnomer and the tighter supervision normally expexcted from such a committee was not always found... The use of inconsistent accounting treatments disguised difficulties in complying with regulatory expense limits relating to fund raising, with fund raising expenses sometimes understated."
Trusting in the assurances of organisations that they have internal safeguards is not a wise thing. Even outside auditors may be fooled. The scrutiny of organisations working for the public good by the public and independent bodies is essential to ensure that they are fulfilling their stated mission - openness, transparency and accountability are essential to bring to light accounting shenanigans.
11) KPMG report page 24, Section 1.5.9
"We were unable to review any of the meeting minutes of the Finance Committee, as we were told that all the meeting minutes were destroyed in a "computer crash"."
It is essential for organisations, especially those with enough reserves to last decades and should be able to afford it, to keep backups of critical records in case they ever have to be investigated for wrongdoing.
12) KPMG report page 26, Section 1.6.2
"The founding of the Executive Committee and the consequential delegation of powers to Mr Durai was some kind of Faustian bargain."
Making Faustian bargains - surrendering one's political rights as members of a board of governance in return for an assurance of future prosperity and monetary success is a recipe for disaster.
13) KPMG report page 26 & 28, Section 1.6.3 & 1.6.9
"Mr Durai was undoubtedly the key figure within the NKF... Mr Durai's involvement with the NKF spanned a period of more than thirty years, with thirteen of those years as the chief executive. He was the principal architect of the NKF as an institution and of those activities undertaken by the NKF... Mr Durai's involvement in the management of the NKF was ubiquitous. Everything meaningful that was done by the NKF was done either with his approval or his acquiescence."
Centralising too much power in one person, and raising his significance and importance to such a level that he comes to dominate the organisation is unhealthy. One can only imagine how much worse it would be if a personality cult were formed around this key figure.
14) KPMG report page 39, Section 1.10.9
"Records kept by the NKF of a meeting with NCSS in early 2001 show that the NCSS had apparently raised serious questions at that time about the NKF's activities, including inter alia the accuracy of the NKF's statements on dialysis treatment costs and subsidies, the disproportionate efforts on fund raising, the way in which donations were being used and escalating staff costs... Mr Durai considered this "an attack on the integrity of the Foundation.""
Treating legitimate (and most serious) enquiries about pertinent and troubling points as personal (to the organisation) attacks lends them moral overtones and results in said enquiries not being addressed, and conceivably leads to the questioners being impugned as to their motives.
[Ed: I get the feeling that some of my Tomorrow.sg editors too have this attitude sometimes.]
15) KPMG report page 46, Section 1.11.9
"Excessive zeal on the part of the people... in whose minds the ends had perhaps justified the means."
The road to hell is paved with good intentions. If in pursuit of noble ends the means begin to become contemptible, one should reconsider if one's moral clarity justifies one's actions.
16) KPMG report page 48, Section 2.2.1
"In April 2004, the Straits Times published an article on the NKF, which Mr Durai considered defamatory of himself and which the NKF considered defamatory of itself."
Overzealous use of defamation suits can be used to prevent the truth from coming to light (some would argue that the very use of defamation suits in the first place, in a sector which outside Singapore never uses them, is overzealous). Even if the suits are justified, they can deter future truths from emerging.
17) KPMG report page 52, Section 3.2.5
"The documents we reviewed included but were not limited to: email messages obtained from the forensic imaging of the hard disks."
If you have something to hide, use FBI-standard software to wipe all traces from your records (rewriting your hard disk sectors 255 times - 220 more than in the standard Apple software). Alternatively, if you have something to hide, don't write it down!
-End of Part 2-
Part 1, Part 3