CHARITIES BILL

Order for Second Reading read.

The Minister of State for Finance (RAdm Teo Chee Hean): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The existing Charities Act came into force on 1st January 1983. It is based essentially on the United Kingdom Charities Act 1960. It provides for the registration and administration of charities as well as establishes the office of the Commissioner of Charities and confers upon him a range of powers over charities.

The Commissioner of Charities has accumulated a wealth of experience in the regulation and supervision of charities over the past 12 years. The provisions in the existing Charities Act have at times proven inadequate for the Commissioner to discharge his duties and responsibilities in the areas of registration, preparation of accounts, reports and returns, institution of inquiries, protection of charities and fund raising. For greater effectiveness, the Commissioner will have to be provided with more wide-ranging and better defined powers.

The Bill before this House seeks to re-enact with amendments the existing Charities Act. It is based on the United Kingdom Charities Act 1992 and 1993, with modifications to suit circumstances in Singapore.

The purpose is to strengthen the regulatory role of the Commissioner of Charities, improve the system of supervision of charities and control fund raising activities. This will ensure the more effective use of charitable resources and enhance public confidence in the charitable sector.

Sir, I would now like to draw the attention of the House to the main clauses in the Bill.

Clause 5 amends section 5 of the Act to allow the computerisation of the register of charities. The maintenance of the register in a form other than paper is to keep pace with modernisation and the electronic age.

Clause 7 inserts a new section 7 to empower the Commissioner to give a direction requiring the name of a charity to be changed if it is the same or too similar to the name of another charity, is misleading or offensive, or gives the impression that the charity is connected with the Government when it is not.

Currently, the Commissioner of Charities can institute inquiries for general or specific purposes. Inquiries can be conducted by the Commissioner himself or a person appointed by him. Clauses 8 and 9 will broaden the scope of his existing powers in sections 7 and 8 of the Act to institute inquiries and to obtain information and documents regarding the activities of charities. These enhanced powers will enable the Commissioner to better identify, investigate and remedy financial and other abuses by charities, including exempt ones.

A new Part IV makes fresh provisions relating to the keeping and auditing of charity accounts. Under clauses 12 and 13, charity trustees are required to keep accounting records, prepare annual statements of accounts and preserve them for at least seven years. Clause 14 requires the accounts of a charity whose gross income or total expenditure in any financial year exceeds $250,000 to be audited by an approved company auditor. This improves upon the existing system whereby an external audit is only carried out upon the instructions of the Commissioner during an investigation. The intention is to facilitate the proper accounting of funds and the more timely detection of irregularities. Under clause 16, charity trustees will be required to transmit to the Commissioner annual reports, together with the statement of accounts and auditor's report, within six months of the end of the financial year. Clause 17 requires charities to make their annual reports and other documents available for inspection by interested parties. This will enhance their accountability to their donors, recipients and beneficiaries as well as reassure these persons that the donations are being put to proper use.

A new Part V has been introduced. Clause 19 allows certain small charities to transfer their property to other small charities when such transfers promote the more efficient use of charitable resources. Clause 20 eases the administrative burden of certain small charities by lifting the restrictions on the expenditure of capital.

Clause 21 re-enacts section 11 of the Act which specifies the circumstances under which the doctrine of cy-pres can be applied so that an intention to benefit charity which cannot be literally fulfilled will be effectuated in a manner nearest to that indicated by the benefactor. Clause 22 amends section 12 to simplify the process by which charity property may be applied cy-pres.

Clause 25 enhances the powers of the Commissioner of Charities under section 15 of the Act to act for the protection of a charity administration. The additional powers include restraining debtors of charities from parting with money owed to the charity, as well as appointing additional trustees, a receiver and a manager where the administration has broken down. Clause 27 will disqualify certain persons from acting as charity trustees. This will protect charities from undesirable trustees.

A new Part VII introduces fresh provisions to deal with fund raising on behalf of charities by professional fund raisers and commercial participators. Although the phenomenon of professional fund raisers and commercial participators is currently a rare one in Singapore, it is anticipated that their use by charities to raise funds on their behalf will increase over time.

Clause 34 makes it unlawful for professional fund raisers and commercial participators to raise funds or represent that charitable contributions are to be given to or applied for the benefit of a charity unless they do so in accordance with an agreement with the charity satisfying the prescribed requirements. A charity can restrain any contravention by way of an injunction.

Clause 35 requires professional fund raisers and commercial participators to give details of the institutions for whom they are soliciting money or other property.

Clause 36 enables a donor to serve a written notice entitling him to have payment exceeding the prescribed sum refunded to him and certain agreements to pay such sum cancelled. Clause 37 enables a charity to obtain an injunction to prevent unauthorised or objectionable fund raising on its behalf.

Clause 39 makes it an offence for charities and other persons to raise funds without a permit from the Commissioner of Charities, unless they have been exempted from the requirement. The intention of this provision is to protect the interest of donors to various charitable activities. Unlike the provisions dealing with fund raising by professional fund raisers and commercial participators, the specific provisions to regulate fund raising by charities and other persons will be dealt with by way of Regulations to be enacted later.

However, at present, the intention is only to require a permit for fund raising for foreign charitable purposes. Fund raising for local charitable purposes will be exempted from this requirement. Front-end controls are necessary for fund raising for foreign charitable purposes. Local donors will not be able to check on foreign charities to ensure that their donations are used for the intended purpose. Also, the Commissioner of Charities has no jurisdiction over foreign charities, and will not be able to bring them to task if he discovers subsequently that the donations are not being used for the declared purpose. This is unlike local charities where adequate safeguards will be in place. The Commissioner of Charities can exercise close supervision over, and institute inquiries into the affairs and accounts of, local charities should it be necessary. He can also prosecute them and impose severe penalties for offences committed under the Charities Act.

Clause 40 concerns judicial review. It clarifies that the Courts cannot substitute their decisions for the Executive's decisions in matters relating to the grant of permits for fund raising activities unless it is on ground of non-compliance with any procedural requirements.

It is necessary to exercise strict control over fund raising activities for charitable, philanthropic and benevolent purposes because people are much more willing and trusting when it comes to making donations for good causes. The problem is specially acute when it comes to fund raising for foreign charitable purposes. The Commissioner of Charities finds it difficult to verify the antecedents of foreign charities. We have no jurisdiction over their activities. We lack the means to determine whether the funds they raise in Singapore are utilised efficiently and effectively for the purposes they are intended.

To protect the interests of Singapore donors, the Government intends to restrict the grant of fund raising permits to local charities over which it has full jurisdiction as well as reputable international organisations such as UNICEF and the Red Cross which have well-established track records. Foreign charities without proven antecedents will be denied permits. Clause 40 will ensure that the merits of the decision cannot be reviewed. This is to avoid a situation where interested parties can through the Courts frustrate the Government's decision to reject an application for a fund raising permit.

In general, heavier penalties have been imposed for existing offences under the Act such as the alteration, suppression or destruction of documents. Penalties have also been introduced for several new offences. These offences include failure to transmit accounts for public inspection by the specified deadline. Both the heavier and new penalties will deter the commission of offences and the repetition of any offence by the same party. Clause 45 gives the Commissioner discretion to compound certain offences under the Act.

Sir, I beg to move.

Question proposed.

Mr Low Thia Khiang: ( In Mandarin): Mr Speaker, Sir, I am puzzled by clauses 39 and 40 of this Bill. Clause 39 states that unless approved or granted an exemption by the Government, no one shall participate in or conduct any charitable fund-raising activity, otherwise he shall be liable to be fined not exceeding $10,000 or sentenced to imprisonment for not more than three years, upon conviction. Of course, the Minister of State stated just now that, for the time being, this provision is applicable only to foreign charitable organisations and local charitable organisations are exempted. But why is it that it is not clearly specified in the Bill that this is applicable only to foreign charitable organisations? Under what circumstances will the Government declare that this provision is also applicable to local charitable organisations? If the Government is to invoke the provisions of clause 39 on local charitable organisations, then my question is, first of all, why do we need to have such a broad prohibitive provision? The provisions in this Charities Bill and the Penal Code are already adequate to deal with those who are soliciting for funds on the pretext of charity.

Secondly, if this provision is subsequently made applicable to local charitable organisations, then does it not mean that any registered charitable organisation in Singapore which wants to raise funds will have to obtain the prior approval of the Government before it can do so? Will this not add on more administrative burden for these organisations?

Thirdly, clause 39 of this Bill does not spell out who can legitimately raise funds for charitable organisations. Does it mean, in future, even the trustees and authorised representatives of these charitable organisations will have to get the approval of the Minister before they can raise funds for charity? If that is the case, does it mean that, in future, anyone who wants to do charitable work in Singapore will also need to have approval of the Government before he can do so?

Clause 40 of this Bill even goes one step further to provide that any decision or action taken by the Government under clause 39 therein, whether it is fair or not, shall not be subjected to judicial review by any court of law. To seek redress from the court when one is subjected to unfair treatment is the fundamental right of every ordinary citizen. This Bill has not only deprived the ordinary citizen of his fundamental right but also enables the power of the Minister to surpass the authority of the court. It looks as though the power of our Minister is paramount and absolute, and even the court has no judicial right to interfere!

RAdm Teo Chee Hean: Mr Speaker, Sir, as I have stated, the intention, at present, is to exempt all local charities from the requirement to apply for a licence. So the concern that Mr Low has raised should not inhibit local charities from collecting and raising funds for local charitable purposes. The regulation being put in place is basically aimed at protecting Singapore donors from fund raisers who are raising funds for foreign charities. For local charities, there are sufficient safeguards in place in order to ensure that the local charities apply their funds appropriately. For that reason, local charities are being exempted for the time being. For foreign charities, no such safeguards are in place and the Commissioner of Charities has no powers to investigate them.

The Member also asked why there is a need to disallow judicial review of Ministerial decisions on the grant of a permit for fund raising purposes. The finality clause has been inserted to clarify that the courts cannot substitute their decisions for the Minister in matters pertaining to the grant of permits to conduct fund-raising activities unless it is on the ground of non-compliance with any procedural requirements. This is to prevent foreign charitable organisations, in particular, from going to court and substituting the finding of the court for the decision of the Government to deny such a purpose.

Mr Low Thia Khiang: Can I seek clarification, Sir? If the Minister of State says that the sole intention of clause 39 is to apply only to foreign charities, then why is it not stated clearly in the Bill that it is only applicable to foreign charities and local charities are exempted? That is one clarification. Secondly, I understand from the Minister's speech that there is an intention, probably in the future, for the Government to apply this clause to local charities as well. Would the Minister please answer why it is necessary to have this clause if the Government has no intention to apply it to local charities one day? As regards clause 40, of course I can understand that if it is a foreign charity, it may be a problem in terms of judicial review. But if clause 39 should apply to local charities, then clause 40 would also apply to local charities. The question is: why? It is local charity.

RAdm Teo Chee Hean: Mr Speaker, Sir, I have already explained that the present intention is to exempt local charities. So the concern that the Member has raised should not arise. As I have said, the requirement is basically directed at ensuring that foreign charities, without proven antecedents, can be denied permits and that the merits of the decision cannot be reviewed. The purpose is not to limit local charities from carrying out fund raising for local charitable purposes.

Mr Low Thia Khiang: Mr Speaker, Sir, my question is whether the Government has any intention to apply clause 39 to local charities in future.

RAdm Teo Chee Hean: Mr Speaker, Sir, as I have already said twice this afternoon, there is no intention at present to apply clause 39 to local charities. I am unable to make an open-ended commitment for the future because it is uncertain what the circumstances may be in the future. But for the present, there is no intention to apply clause 39 to local charities.

Mr Low Thia Khiang: Mr Speaker, Sir, this is a Bill before the House. If there is no intention, and the Minister of State cannot anticipate whether it is going to be applicable to local charities in the future, why not just state for the time being, that it is only intended for foreign charities? Or state in the sub-clause that local charities will be exempted from this clause until such time when the Government feels that there is a reason or need to control local charities for this purpose. Then we amend the Act at the appropriate time. Why have such a blanket provision?

RAdm Teo Chee Hean: Mr Speaker, Sir, I think the intention has already been stated very clearly, which is to exempt local charities for conducting fund raising for local charitable purposes from this clause. I am not sure how I can state this intention more clearly than I have done so three times already. But what the Member is asking for is an open-ended commitment for circumstances which may or may not arise in the future, and he is asking for a commitment on such circumstances which I myself may not be able to imagine for the future. There may be charities, for example, some of which operate partially locally, some of which operate partially foreign, and some of their funds may be collected for local purposes, while some may be diverted for foreign purposes, and there can be any mixture of these things.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [RAdm Teo Chee Hean].

Bill considered in Committee; reported without amendment; read a Third time and passed.