SINGAPORE BUS SERVICE LIMITED (Examination of books and transactions)

Encik Abdul Aziz Karim asked the Minister for Communications if he will appoint a competent officer of his Ministry to thoroughly examine the books and transactions of the Singapore Bus Service (Private) Limited before he authorises bus fare increases; if he had caused such an examination to be made before authorising the last bus fare increases on 10th February, 1974; and if he was satisfied without any doubts that the operating losses of the company as reported were unavoidable, true and correct.

The Minister for Communications (Mr Yong Nyuk Lin): Mr Speaker, Sir, as explained in press statements issued by my Ministry on 3rd and 20th February, and in replies given by me to recent Questions in this House, the bus fare revision effective from 10th February was allowed after two reports were submitted in August and November last year by professional management consultants commissioned by Singapore Bus Service Ltd. These were closely studied and examined by officials of the Ministry of Communications.

The reports of the management consultants were based on the certified and audited accounts of the three constituent bus companies, which comprise SBS. Checking and examination of books of these three companies were done by the auditors of the three bus companies concerned. These certified and audited accounts for the year ended 31st March, 1973, were later submitted to my Ministry separately. However, one of the three bus companies' accounts had the following serious qualification by its auditors, which goes as follows:

`We report that we did not obtain all the information and explanations we required because of:-

(a) an absence of adequate internal controls;

(b) an absence of external documentary evidence to support certain payments; and

(c) a failure to properly maintain accounting and other records.'

In assessing the reports submitted by the management consultants, my officers had access only to these certified and audited accounts for the year ended 3 March, 1973, as well as to other data obtained from the three bus companies and other sources. In addition, my officers also worked independently of the reports of the management consultants on projected revenue and expenditure of Singapore Bus Service Ltd, based on their own source material. This was used as an independent counter-check against the results of the management consultants.

All these studies took several months and involved very detailed work. Actual examination of the books of the three former bus companies was not undertaken by my officers for two reasons - firstly, there is no competent accounting staff in the Ministry of Communications and, secondly, it would only have duplicated the work of the auditors of these companies. But the bus companies had, naturally, to convince me that a fare revision was necessary and also as to when the revision would have to be effected, as well as how much it should he, before approval for the revision was given. On the basis of:

(a) the audited accounts of ABC, ABS and UBC for year ended 31st March, 1973;

(b) the submission of the case for a bus fare revision, on behalf of SBS by its professional management consultants, SGV-Goh (Pte) Ltd, in August and November, 1973; and

(c) the counter-checking of figures and projections made by my officials in the Ministry of Communications,

I was satisfied that the projected operating losses of SBS, on the old fare structure, would have brought it to a state of insolvency by the middle of this year. Inaction would have brought about an even worse situation than the Singapore Traction Company because when STC, with a paid-up capital of over $14 million, folded up bus operations in December, 1971, it had then an accumulated loss of $9 million. The bus fare revision, which was authorised on 10th February, 1974, and for which I assume full responsibility, was necessary for SBS to be viable. It is all the more necessary if it is expected to improve on its services over the next three years, as required by my Ministry.

As stated in an earlier answer to the Member for Kallang on 14th March, should the need arise, I will not hesitate to exercise my powers under section 9A of the Bus Services Licensing Authority (Amendment) Act, 1973 (No. 27 of 1973) to appoint an Inspector to inspect the affairs of SBS. And, should it he in the public interest to do so, I would also cause the report of the Inspector to be published.

Encik Abdul Aziz Karim (Kallang): Mr Speaker, Sir, I am very satisfied with the answer, and I would like to thank the Minister for Communications.