THE NATIONAL KIDNEY FOUNDATION

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THE NATIONAL KIDNEY FOUNDATION: Order read for resumption of debate on Question [20th July 2005],

"That the Ministerial Statement on the National Kidney Foundation be considered by Parliament.". - [Minister for Health].

Question again proposed.

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Mdm Ho Geok Choo: Thank you, Sir, for allowing me to participate in this debate.

Sir, my colleagues before me have spoken of their shock and sadness over the NKF saga. Many have also suggested ways to address the lapses. I would like to suggest four measures for adoption:

(1) To give a voice to workers on the NKF Board

Sir, thousands of donors to the NKF are ordinary workers whose altruism has led them to put the interest of charity before theirs. Even with a meagre income, they still fork out regularly in whatever way they could to give to charity.

Sir, I feel strongly that these magnanimous workers ought to have a voice in the affairs of NKF, especially on how the funds are to be used since the bulk of donations are from these ordinary folks.

Contrary to the call by Opposition MP, Mr Chiam See Tong, for Opposition Party representation on the NKF Board, I would propose for the ordinary workers to be represented on the NKF Board because they are a majority stakeholder of the funds and donations. Therefore NTUC, which represents several hundreds of thousands of workers, could nominate a representative to be on the Board of NKF. Coming from the NTUC, he would be one whom thousands of ordinary workers would be able to relate to.

Sir, as my colleague before me, Dr Amy Khor, had said, if public disquiet over the many unanswered questionsis not fully addressed, it could lead to a cynical public with deep mistrust for charities and less giving.Giving a voice to the ordinary workers on the NKF Board is one way that we can regain the confidence of the public in the NKF as they can see themselves through the representation by

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being involved in seeking out the answers to the many unanswered questions and satisfy themselves with such involvement.

Sir, I applaud the new Board and I have no doubt in their experience and competence. However, their composition and representation can be made even more robust with the inclusion of representation of ordinary workers.

(2) To imbue a culture of integrity, trust and respect in our charities and IPCs over and above existing code of governance, regulatory framework and guidelines

Sir, charities and IPCs are not Government entities and should remain as such. They thrive on thespirit of voluntarism and philanthrophy. Therefore, it is understandable when charities and IPCs are not too ready for an over-regulated and over-supervised system. In place, we should inculcate a culture of integrity and responsibility that will breed trust and respect for men and women who have stepped forward to serve the Board gratis and voluntarily. This culture of integrity, responsibility, trust and respect should prevail in the character of professional people working for the IPCs or charities.

The debate that follows the salary of the NKF CEO has brought up another dimension (rightly or wrongly) and that is, the Government is no longer in touch with the feelings of the ground and the allusion that the NKF mirrors the culture and system of its operating environment. These ground sentiments have got to be corrected and to allay these misgivings, it is important that, going forward, the Government must setthe tone and expectations for IPCs and charities. It would be good practice to encourage charities and businesses to conscientiously work towards setting up a code of conduct and ethics befitting their

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respective operations. Such a code of conduct and ethics should be evolved into the culture and ethos of the operations and where compliance becomes second nature to the people of the outfit.

Perhaps the Government should start a yearly campaign on code of conduct and ethics. Just as we have done so for our "Keep Singapore Clean and Green" campaign and the "Courtesy" campaign, such a campaign on "Integrity, Responsibility, Trust and Respect" will go a long way to build a gracious society where the greedy will not get greedier and where power will not corrupt power.

We should start a campaign with our young in schools so that they can be moulded into the right values. At the same time, these young ones should be able to see the people, public and private sector agencies as model organisations exuberating qualities of integrity, responsibility, trust and respect.

(3) To establish a compensation framework driven by KPIs for professionally run charities and IPCs

Sir, my third point touches on key performance indicators, or KPIs, and the proper due process for establishing a compensation framework for professional staff working in charities, or IPCs.Minister Khaw had said, in his statement, that the varying needs and scale of operations of the various IPCs and charities will mean that we have varied needs.

Sir, I am of the view that indeed there is nothing wrong to adopt the concept of social entrepreneurship which is akin to running a charity like a business.Such a model has indeed grown an outfit, such as NKF, from a small entity in the SGH premises when it first started, to a successful formidable charity organisation that it is today.Many have criticised NKF for adopting a business model in its operations. This is not its mistake. The

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mistake NKF made was its lack of transparency. It is unfortunate that the image of success, which NKF has painstakingly built up over four decades, was tarnished over just two days and the success factors abolished along with it.

I agree that a system of checks and balances for due diligence on funds utilisation and accountability be instituted for regular audits by the Board.Therefore, it is good that the list of key performance indicators with regard to the leadership and performance of NKF has been set out for the next Board and management team.

Sir, I hope that this list will include indicators, such as the fund-raising target, number of patients or beneficiaries and the quantum of funds raised that would directly benefit patients vis-a-vis operational expenses (including executive compensation). Such KPIs should be audited regularly for proper accountability. This will help restore confidence amongst donors.

Sir, I understand that speaking from the head (that is, right pay for the right person) is not the same as speaking from the heart. Many will argue that charity is a matter of the heart. To my mind, paying a competitive salary to a top-notch CEO is fair but, in the case of the NKF, the misrepresentation and lack of transparency are what bother many of us, especially since Singaporeans have been faced with retrenchments and pay cuts over the past few years.

Sir, the remuneration of the CEO is often determined by the Board and it would be helpful to know the terms of employment and the key criteria or performance targets for incentive bonus before we can make any meaningful judgment on the CEO’s pay package. As a charitable organisation, the performance incentivesof the CEO should be related to various key performance indicators of the

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organisation such as providing quality care to its patients other than indicators of profit generated, donations collected or size of reserve.

Senior staff of charitable organisations deserve competitive and reasonable pay packages and benefits. However, how does one go about determining the competitiveness and reasonableness of a compensation package? It would be useful for the new NKF Board to consider initiating a job evaluation exercise of its key management positions and to benchmark its remuneration strategies for its key staff with other non-profit or charitable organisations. These findings could be made known to the public and the eventual salaries of key staff, as determined by the job evaluation exercise, will then be properly rationalised and justified.

Sir, it is important that salaries of key staff who are working in charities and IPCs are properly rationalised for greater accountability.Nonetheless, it is the opinion of many Singaporeans (as pointed out by a reader) "that there is such a thing as public service where people, informed by their sense of civic-mindedness, offer their services not for high salaries but more for the satisfaction of a fulfilling life caring for the poor and needy."It is my hope that the new management team of the NKF are not only professionals but will embody these qualities as well.

(4) To empower the new Board to carry out its duties

Sir, the NKF debacle has uncovered many shortcomings in the current system and I urge that the new NKF Board pay heed to these lapses and the feedback of the public and to work on improving the effective management of the NKF.I hope we will no longer sensationalise and agonise further the NKF fiasco but to put all our efforts to support the new NKF

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team in regaining the confidence of donors and supporters for NKF.At the same time, we ought to confer our confidence in the new Board and empower it to proceed with the necessary investigations of the lapses and provide the recommendations to close the gaps. This would require an overhaul of current systems leading to greater improvements of the operating systems, procedures and policies of the NKF.

In the course of this entire exercise, the new Board will be able to learn from the experience and do an even better due diligence in the future. Therefore, it is important for the Board to go through this exercise of investigation and review without further interventions.In my opinion, it is not necessary to install further supervisory committees for the Board as it is already accountable to the Commissioner of Charities and so long as the Board itself is compliant with the code of conduct that I have expounded in my second suggestion, and,as the Board champions for such a culture in the NKF, we can be more assured of closing all gaps.

In conclusion, Sir, Singaporeans should not be deterred to continue with their "spirit of giving" so long as they can be assured that there is transparency and proper accountability on funds raised and that they can breathe a culture of integrity in the behaviour and spirit of the people running charities and IPCs.It will be to our credit that charities and IPCs will continue to be able to attract the best and credible talents to work in their organisations hand-in-hand with our invaluable volunteers and supporters for the greater good of society.

Dr Tan Sze Wee (Nominated Member): MrSpeaker, Sir, I would like to thank you for the opportunity to speak and comment

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on the Minister's Statement on the National Kidney Foundation.

The recent events in NKF have shown that we need better governance and transparency in VWOs. However, I would like to take some objections to the arguments put forth by the SPH's counsel on the funds in NKF that are needed to fund kidney dialysis in this country.

I fully expect that the legal counsel of SPH would try his best to defend his claim and demolish the plaintiff's case. After all, the Singapore's legal system is an adversarial one and this is his job. However, the argument he put forth that the $262 million will last NKF for 30 to 40 years is overly simplistic.It is based on historical facts and figures. However, it conveniently ignores the disease load that Singapore has to face in the future. With a rapidly ageing population, the incidence and prevalence of chronic renal failure and patients requiring dialysis will rise rapidly. I would like to ask the Health Minister the following questions:

(a) What has been the year-on-year growth of kidney failure patients on dialysis in the last 10 years?

(b) What is the number of patients on dialysis now and what is the expected number in five and 10 years' time?

(c) What is the average expected life expectancy of a renal failure patient on kidney dialysis?

(d) What is the expected number of kidney dialysis patients claiming MediShield

that will exceed the lifelong cap on MediShield claims in the next two, five and 10 years?

In addition to the advance in medical science and better care, dialysis patients are expected to live longer than what the MediShield planners already anticipated. MediShield is not bound to cover them

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once these patients exceed the lifelong withdrawal limit for MediShield.When this occurs, patients and organisations, such as Medifund, NKF andmaybe KDF, will have to take up this very substantial burden.

In addition, the NKF has, with the support of the Health Minister, branched out into other areas of service. Some of these other areas include kidney disease research, cancer and paediatric health. I think these are very laudable objectives. Despite the setback in public confidence, I urge Singaporeans to continue to support in these NKF areas of work.

The troubling facet of NKF saga is not how much wealth NKF has, but how little it has, in terms of transparency. In this respect, it can be clearly seen that Singaporeans demand transparency in how public money isspent. This is because most Singaporeans do not realise the costs involved in dialysis care and the implications in the long term, that is, in view of the ageing population and the projected dialysis care costs.Furthermore, what if NKF uses the funds raised for cancer and children's medical care and lumps them into a single pool of funds and takes some of the funds out for operating expenditure, or for other purpose? The public does not know how the funds raised will be used or projected for the future, hence they have demanded accountability from the NKF Board.

From what I understand, directors' fees in some private and public listed companies are published openly in their company websites and annual reports. So, why doesNKF not publish its directors' fees, since it has accountability to its stakeholders, that is, both the public andthe donors? I would even suggest that the same criteria be applied to directorsfor VWOs as well.

Finally, one last comment on the infamous $600,000 annual salary

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package for Mr Durai. We should not criticise Mr Durai for taking home this amount, especially since the previous NKF Board approved it. But I do question the wisdom of the NKF Board. On what basis and benchmarks was this amount arrived at?

I was told that the annual salaries of CEOs of our public acute hospitals range from about $300,000 to, maybe, $500,000 a year. Please bear in mind that these hospitals treat hundreds of thousands of patients a year, have thousands of staff and an annual turnover of anywhere from $100 million to almost $600 million a year.

In fact, I think with the exception of maybe two very senior CEOs, most ofour public acute general hospital CEOs earn substantially lower than $500,000 a year, let alone $600,000 figure. The NKF CEO package should get a reality check by some objective benchmark. We can start by perhaps comparing it with, say, the CEO, COO or even the CFO pay packages of our public acute hospitals.

I think the job responsibility of the CEO of the NKF should be equivalent to the job scope of the CEO of a smaller acute public hospital or, perhaps, the CEO or CFO of a larger hospital. I would question really hard the rationale behind the pay package if the NKF CEO job pays as well as the CEO of SGH or Tan Tock Seng Hospital, which iare two ofour largest public hospitals.

In conclusion, Mr Speaker, the recent events in NKF have shown that we need better governance and transparency in the VWOs in Singapore. However, it should not distract us from the bigger picture of the rising trend and the subsequent burden of renal dialysis patients in Singapore, in the years to come. We need effective and responsible leadership in NKF to fulfil its purpose to serve the

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needs of kidney failure patients in Singapore.

Prof. Ivan Png Paak Liang (Nominated Member): Thank you, Mr Speaker, for allowing me to join in this debate. I have two comments and they relate to the financial reporting structure for Institutions of Public Character (IPCs).IPCs are required to post financial information annually using a prescribed format. My first comment regards operatingand administrative expenses. Consider a big institution likea university or a hospital. It has multiple activities spanning some profitable, some charitable andsome non-profit. All of these are lumped together and we get one big lump sumoperatingand administrative expenses. I think it would be much better for everyone and much more transparent if there were proper segregation of these operatingand administrativeexpenses between the charitable and the non-charitable and the profit-making activities. This would ensure full transparency.We talk in the House a lot about expense ratios. We can see some expense ratios looking very good and that is because things have been commingled with one another. So I do not think we want to have too much clever accounting. We should rather have these segregated so that the public can understand the picture much more clearly.

Sir, my second comment relates also to the financial format prescribed by the CommissionerofIRAS. "Income" is divided into a number of categories. Members would have seen the chart performance shown by the hon. Member Wang Kai Yuen. One of the categories is "Other Income". Let me call attention to NKF that"Other Income" in 2003 was $25 million, which is a lot of "Others". So my second suggestion is that in this prescribed format by IRAS, if the so-called "Others" indeed becomes so large and exceeds some particular level, it would be

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much better for us to see a further breakdown. So maybe "Others" and sub-others and sub, sub-others, depending on how big these are.

Dr Warren Lee (Sembawang): Mr Speaker, Sir, I am pleased that this issue has surfaced and is being discussed at great length in this House. I would like to declare my interest in the field in that I am from the VWO sector. I was the President of the Diabetic Society of Singapore from 1996 to 2002 and has since become the Chairman to the present time. I am also a Board Member of the International Diabetes Federation which is based in Brussels and was previously the Regional Chairman of this same organisation. I am also an Advisor to the Singapore Children Society. I have been following the work of NCSS and NKF for some time.

I feel that through this sorry episode, Singaporeans would be able to get a better appreciation of the work of charitable organisations in our country, their various modes of operation and field of service and they will be better able to make informed choices about which charities they choose to support. Singaporeans should remember that there are many other charities, besides the NKF, when it comes to opening their wallets. According to the Minister, there were 1,800 charities in Singapore and, I think, it is over 500 IPCs. I trust that more and more Singaporeans will realise that the continued maturation and progress of our society will depend on our continued support of the many voluntary welfare organisations in our midst and make the necessary commitment to support these VWOs financially and, also, by coming forward to serve as volunteers.

This episode will also be a catalyst for local VWOs to clean up their acts and to discard outmoded management and fund-raising practices while adopting the best practices of both the corporate and non-

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profit sectors, even the models of social entrepreneurship,in particular, the concept of a professional run fund-raising arm and the concept of having paid staff to deliver professional standards of day care to their clients with the aid of volunteers coming in at management and, perhaps, even at care giving levels.Far too many VWOs are hampered by having their volunteers divide their time and energy between efforts to raise funds and efforts to provide services, such that theydo not do a good job in either field.

I agree wholeheartedly that it is certainly not helpful for us to take out our anger against NKF's staff, many who continue to soldieron as they always have, motivated only by a desire to help those under their care. They and their patients deserve our continued support. However, there is a caveat.

Secondly, with regard to Mr Durai, the outgoing Board and their practices, I think let the law take its course and we should not rush in to judge too quickly or to support too quickly before the full facts are known.

With regard to the famous $600,000, I agree that a good man should equate to good wage. But as a VWO person and as a doctor, I strongly wonder about how it is that somebody can forgetthe difference between 3,000 patients, 2,000 patients and 1,500 patients. To me, that is simple misrepresentation, especially when somebody has got a reputation for being very obsessive with details. However, I would like to urge a full and thorough investigation with no attempt to cover up or protect any person or organisation. If mistakes had been made, let us face up to them and move on. Some of these issues may be new to the investigators and toerstwhile supporters, but they areold sores to those who have been watching the situation unfold over the years.

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The Prime Minister has urged transparency and good governance in all aspects of the society, beginning with MPs and Ministers. We have said that we would not tolerate wrong-doing in Government or commercial sectors. Let us also do the same for the civil society and charity sector. We know that we have branding, even in the area of charities. I, for one, know that one of the organisations I represent, the International Diabetes Federation, chose to have its regional representative office in Singapore, partly because of our reputation for good governance in as much as for the connectivity that Singapore brings.

The NKF was viewed by the man-in-the-street as somehow a Government-backed organisation, despite its status as an independent NGO. Statements by leading establishment figures, as the saga unfolded, have only added to this impression. Let us then see to it that we resolve all doubts in the minds of the man-in-the-street and, also, to the many who are watching us from afar.

I would like to congratulate the Minister for his choice of interim Board Chairman. I would like to express my full confidence in Mr Gerard Ee and his team. I know that they will do an excellent job of exposing and rooting out any questionable practices and restoring public confidence in what has become a Singapore institution. Nevertheless, there are many people who are unhappy, although their reasons are varied.

Sir, those who think that the public anger has been directed solely at the former CEO's pay packet may have missed the point. Public sentiment about Mr Durai's salary and perks may be a proxy or lightning rod for anger and resentment about deeper problems besetting the organisation's policies and practices and the feeling that the Government could have done more to discover and remedy the problems that various

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members of the public have observed but have notyet spoken out against.

The NKF has undoubtedly done good work in raising the standards of treatment of kidney disease, in setting up 21 dialysis centres around the country. Like any other responsible publicly funded healthcare provider, it has had to rationalise the process of care and make tough choices on whom they would treat, whom they would subsidise and whom they would need to reject. Not everyone could have been happy with some of these tough choices. But in the process, the NKF has also indulged in what many regard as questionable practices, both in the area of fund-raising and in the area of application of these funds.

Many Members have, before me, spoken of some of these points. I would not repeat them. But let me give you a little bit of feedback from one of my senior grassroots leaders.This man participated in a "free" healthcare screening, a couple of months ago, at Suntec City. After going through the entire health screening procedure, he was informed that if he were to takea battery of tests from a clinic, it would cost him X dollars. And if he wanted to obtain the results of the tests which he had just undertaken, he would need to agree to contribute $6 through GIRO deduction through the NKF. Although this grassroots leader agreed to make the contribution,another of my grassroots felt that the NKF had manipulated people by stating that the

screening was free.I have also received signed feedback from another retired lawyer who pointed out to me that the NKF does reject many people. While I, as a doctor, realise that not everybody can be treated, we also do realise that many of the people rejected go on then to be treated by the KDF orprivate dialysis centres at much greater cost.

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Turning to the point made by my colleague Dr Tan earlier, he said that, actually, one must look at the NKF's reserves in the light of an increasing disease load. This argument only holds if it is true that the NKF actually increases the number of patients that it is going to be treating in relation to the disease load. I think it is very important for us to ask hard questions about who is being rejected, what is the basis for rejection, and where can these people go. If the NKF, with its vaunted high standards, is unable to look after these people, and if they go elsewhere, then something is wrong with those figures as well. And, speaking as a doctor, I know it is very easy to get good healthcare results, if you first choose your patients. If youchoose patients who are less sick and you treat them, they are more likely to get well. So, again, this question of the reputation for good healthcare must, in the light of what we know, be taken perhaps with a pinch of salt, until and unless it can be proven that, yes,we are actually comparing appleswith apples.

I am also told that this gentleman who was going to be charged more than private rates for dialysis treatment - well, these things are a little bit difficult to prove - and, furthermore, he informed me that there are patients who are in financial difficulties, whose rates of subsidy had not been reviewed for three to four years, that there are patients who dared not complain about the NKF because they were afraid of being blackmarked, of patients who were compelled to participate in public functions because, if they did not turn up, it would go against their record. This is a signed statement, and I am happy to pass this on to the Minister.

There are, I am sure, many more stories, both the ones I have heard within this House and also outside, but I think this question of transparency is not only about transparency of the board. Any

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committee of inquiry or any sort of investigation must really go down to what was happening on the ground, because the man-in-the-street is not so much worried about questions of board governance but what an organisation really does. So, I think, before wecan really talk about restoring confidence in the NKF as an institution, one must not only look at board governance, but alsolook at what has actually been happening, right down to who the service providers are. Coming from a Government hospital, under the able leadership of a Minister, I know that many of these things which I am hearing of would certainly not be allowed. So, I do not see that an NGO, especially one of this nature, should be having any different standards.

Sir, individually, many of the stories recounted to me may have been explained away as one of excesses. But I think we really need to get to the bottom of the matter and expose any legally or morally wrong practices and change them for the better.

What else can we learn from this sorry episode? I hope the NKF would consider setting aside its reserves as a professionally-run endowment fund, with the proceeds to be used for direct patient care. This is a model that has been taken by many Ivy League and overseas universities to manage large endowments. Everything is hands-off,and you make applications to thefunds and funds are made available accordingly. I hope also that we may find a way for the National Council of Social Services (NCSS) and NKF to join forces, and thereby help out a good many VWOs to put them on a firmer financial footing, leaving these volunteers and staff to focus on delivering services to clients.

I feel it is also timely for the National Council of Social Services to put forward its case for funding and to examine itself to see which of its funded agencies

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should continue to get funding from the Community Chest, and then for the Community Chest itself to take some good lessons from the way NKF has been raising money and actually be a bit more commercial about how it is doing things.

Turning to the funds actually already raised by the NKF, it appears to me, Sir, that some of these funds may have been raised perhaps, under what might be charitably expressed, as "false pretences". Some of the funds may have been put up by donors based on erroneous and inaccurate figures and, therefore, we should give donors a chance to indicate if they would still place their funds in NKF coffers or, perhaps, reprogramme them to some other charity like the Community Chest.

I hope that the incoming CEO and his team would conduct a thorough examination not just of the accounts but of the practices, and also to speak widely and seek wide feedback about these other questionable practices, some of which I have highlighted.

In the final analysis, Sir, whether or not we are talking about charity, business or government, we have to say that the end cannot justify the means.

Dr Geh Min (Nominated Member): Thank you, Mr Speaker, Sir, for allowing me to join in this debate. I think I can promise to be fairly short, as the other hon. Members have covered most of the points that I was going to bring up. But I would like to speak on the deployment of staff and, therefore, funds in charitable organisations.

From the figures that we have of NKF, they have, to be accurate, 996 staff members treating 1,800 or perhaps 1,500-plus dialysis patients. Of course, the primary function of NKF is to prolong orsave thelives of kidney patients by providing dialysis. I am given figures on

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the number of renal specialists that NKF has. This varies from three to four. Two sources tell me they have three renal physicians, another source says four but that one is mainly concerned with administration, and another one says that the fourth is actually a surgeon. Whether it is three or four, this works out to a ratio of approximately one renal physician to 500 dialysis patients.I am told that the recommended ratio is one renal physician to 60-80 patients. These are figures given to me by a renal physician and they are based on recommendations from Japan, Korea, Taiwan and the US. So, in a rough estimate, NKF provides one renal physician to about 500 renal dialysis patients.

Just as a further comparison, according to the figures given by NKF on the number of dialysis patients they have, this amounts to about 50% of all patients in Singapore requiring dialysis. The total number of renal physicians, I am told, in Singapore is 26. So, obviously, NKF has just a small fraction, ie, three out of 26.

I am not giving these figures to question the quality of the medical care that is given to NKF dialysis patients. By the Minister's account and by all other accounts I have heard, it gives good medical care. But what I am raising is: from the other figures which were quoted by Dr Wang Kai Yuen yesterday, the staff-patient ratio and the total staff of NKF is extremely high. The ratio of staff to patient is approximately 1,000:2,000. Therefore, the question is: if NKF is so effective and economical in the deployment of its medical specialists, where are all the other staff deployed? Why is it not equally efficient and economical in the deployment ofits other staff? Like Dr Wang said yesterday,I would naturally wonder how many of the staff are deployed in other areas. For example, do they have a top-heavyadministration or

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are they even focused solely on fund-raising? I think these figures raise three issues that I would like to address today.

Firstly, should a voluntary welfare organisation or charitable organisation remain faithful to its original vision, eg, in the case of NKF, providing dialysis? Or should they be permitted or even encouraged to be entrepreneurial and creative and branch out into other areas? If these other areas are closely related to its primary mission, I think one would not quarrel with this. But supposing these areas are very different from its primary mission, or if it chooses to be moved into a fund-raising machine, I think we should question this, because the IPC status was given in the first place, I presume, based on what its original mission was. And if it has changed that mission, should it re-apply for IPC status?

The second point I would like to bring up is how many of its staff members and how much of their time should be occupied with fund-raising. I think the 30% cap on expenditure given to IPCs is not sufficient to address this issue, because this is not a water-tight thing. Some staff may not be directly deployed to fund-raising but, as recounted by the hon. Member Dr Warren Lee, you could do a medical screening and at the end of the medical screening, the staff may ask the patient or potential donor for a donation. This is obviously not done by fund-raising staff but by clinical staff. Related to this is the issue of whether the fund-raising should be done by a separate and presumably, therefore,professional or department, or whether it should be integrated in the whole fabric of the organisation and every one is expected to chip in, from the CEO down.

I think this has wide implications. It is not just VWOs and charitable organisations. We now know, as has been mentioned, that a lot of other institutions,

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including Government institutions and statutory boards, do have endowment funds. They do have to enter into fund-raising activities. Older universities now have endowment funds. NUHhas an endowment fund, so alsohas SGH. So, I think there should be clearer guidelines as to who does the fund-raising and how it is done.

My third point, and this relates to values, is, ultimately, do we, as a society or even as a nation, value an institution for the excellence of its service, the service that it exists to do, or do we value it for the excellence of its fund-raising? Or, which is more likely, do we feel that the two issues are inseparable? Do we think that the net worth and the true worth of an organisation cannot be separated? In my personal opinion, an organisation or institution or individual should be judged primarily by how it or he performs its mission and not by how effectively it fund-raises or how impressive its reserves are. If it feels it needs a large budget and reserve to be effective in its mission, that is its prerogative and, sad to say, I think this is the increasing reality of the situation. But it should not be judged by

its funds. It should be judged by the effectiveness of its delivery. The money is the means, not the end. And until it is put to effective use, I do not think we can say that an organisation that has more funds is therefore more effective than an organisation that has less. In fact, if another similar organisation manages to achieve the same mission as successfully with less funds, I think it deserves more credit for doing so.

At this point, I would like to join some of the other hon. Membersto pay tribute to all the many charitable organisations that have been running on a shoe-string budget, perhaps as the Minister said, using cottage industry techniques for raising funds, but still deliver sterling service to society.Ultimately, service is

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not easily quantifiable. It is easier to look at a bank balance but we should not just value what we can easily quantify. We should, in fact, learn to value what is not easily quantifiable.

May I conclude here by saying again that I concur with the other Members of the House by endorsing that transparency, accountability and integrity are of the utmost importance. To me, transparency and accountability is the free flow of information in both directions, ie,a two-way flow of information. This keeps both parties in touch with reality. It enables them to self-regulate and to fine-tune their practices and their responses. Without this, we are likely to lose touch with reality and come down to earth with a bump or even a crash landing.

Ms Eunice Elizabeth Olsen (Nominated Member): Mr Speaker, Sir, thank you for allowing me to participate in this debate. First of all, I would like to declare my interest as a volunteer to a few voluntary welfare organisations in Singapore.

This past week, it has been almost impossible not to walk past groups of people without overhearing snatches of conversation that mention the National Kidney Foundation, Mr T T Durai and peanuts. It is no surprise, given the generous space the media has devoted to this issue, the courtroom revelations and comments about the NKF and the resultant public emotion that has been stirred up.

I can understand why people have been so demonstrative about this issue, although I shall not go into the merits or demerits of the NKF's practices. Many people have already either defended or criticised the NKF, and many more will continue to do so.

My concern is how the aftermath of last week's lawsuit will impact other

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voluntary welfare organisations in Singapore, especially with regard to the implications for their ability to raise funds for their beneficiaries. I would like to look at how the Government, the VWOs and the public can each play a part to contain the fallout from this incident.

First, let me cite two examples. A friend recounted how, whilst she was in a cab last week, the taxi driver commented the NKF episode illustrated why he only donates to hischurch, which does volunteer work overseas, but not to Singapore charities.

Last week, when I spoke to someone from one of the VWOs, I was told that when its members tried to collect donations for a walkathon, members of the public had reservations about the intent behind the fund-raising.

I recall it was only in February that the Minister of State for Foreign Affairs was giving this House an update on the aid to Aceh and he said that the Singapore style is to be very transparent and gives as much information as possible. Now, unfortunately, the truth is many people believe that the NKF epitomises the Singapore style and vice versa.

Sir, I firmly believe that what needs to be done starting from today is to reassure the public that what has gone on at the NKF is not the norm for VWOs. In some ways, I am sure people recognise how unique is the NKF's fund-raising machinery and professional, corporate set-up. But their greater concern, it would seem, is public accountability of public funds and good charity governance.

I would like to ask how the Government intends to play its part in attending to these two concerns. If the State wants to adopt the "many helping hands" approach as its social safety net for the

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underprivileged, it must recognise that if one of those hands -in this case, that belonging to its VWO partners - is weakened, the social cracks in our nation will widen.

I was looking at the Annual Report of the Commissioner of Charities for 2004, which is, by the way, a grand total of two and a quarter pages and all of nine paragraphs plus two appendices -which is not that inspiring - and I notedthere were only nine field visits for the entire year to better understand the VWOs and their operations, and to advise them on how to meet the regulatory requirements. There was no increase in the number of visits from the year before.

The report also said the authorities would continue to work with other regulatory agencies and the Ministry of Finance to promote good practices in charity governance. I would like to ask which agencies these are and how specifically MOF is promoting good governance practices. I would add my reservations that nine field visits a year, when there are about 1,750 charities,are hardly adequate.If I may, I have one suggestion as to how we can encourage best practices within charities. Why not recognise VWOs for these practices, regardless of the charity's size, to make it easier for those charities with a seal of excellence to gain the public's trust when they raise funds? This is one way to encourage VWOs to strive for the highest of governance standards.

Mr Speaker, Sir, I read the Prime Minister's remarks that he does not see a need to adjust the guidelines for charities now and that it is the personnel that matter.Well, I admit I looked at the Charities Act and it was quite lengthy. Butif Singapore's biggest charity, the one touted to be the most professional of them all,has fallen victim to questionable practices, then I say if we can do more,

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we should do more. Andin the first place, how is the public to know that VWOs are abiding by the guidelines? I would like to ask what will be done in this regard and what public education initiatives can be introduced so that people better understand the roleof VWOs and the ways in which they function.

In addition to tightening the regulatory framework, we should take a leaf from the Monetary Authority of Singapore. I recall from Tuesday's sitting how the Monetary Authority of Singapore is focusing on a supervisory approach, for example, towards the banks. Ina case like the NKF, where there may or may not have been a breach of the Charities Act or the law, but definitely a breach of public trust, might it not be better for the authorities to keep closer watch on the VWOs -especially the 47 large charities whose income exceeded $10 million, representing more than 80% of the $5 billion in total income of all registered charities in 2004?I agree with the Minister for Health that the bigger VWOs should and could observe higher compliance standards. In fact,with only 47 out of about 1,750 charities receiving 80% of all donations, there is definitely a need for differential regulations. This way, the smaller VWOs will be unencumbered by unnecessary regulations which could hamper their fund-raising and the good they do for their beneficiaries. I would also like to ask the Government to make public the charities whose incomes exceed $10 million a year.

Sir, like the other hon. Members, I would like to urge VWOs not to shy away from transparency and greater scrutiny. I would imagine that these will be seen as plus points for fund-raising, more so now and going forward than ever before. VWOs should put their financial and profile information online as soonas possible and strive to bring forward the

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targets for good charity governance. They should inform the public on how donations are used and share their plans with donors. A VWO should educate its volunteers and fund-raisers to be able to know enough of its work to provide information to potential donors.

As for the public, I hope they still believe in helping those who are less fortunate. Speaking as a volunteer, I can testify that whatever amount you donate, no matter how small, can really make a marked difference in a person's life. Charities are one of the best vehicles to bring help to those who need it and charities cannot survive without public funds. The underprivileged wouldbear the brunt if the public were to extrapolate that the practices in mostVWOs are similar to those in NKF. Even so and even now, Ido not doubt that donations to NKFultimately do benefit their dialysis patients.

Maybe, this is an opportunity forSingaporeansto become more informed donors, not to make it difficult for VWOs when they raise funds, but for us to take greater interest and perhaps, get more involved in causes which we believe in sincerely. This way, our money goes a longer way and has more impact.This way, we can play a part in determining whether another NKF will happen again.Perhaps, this entire saga could pave the way for Singaporeans to step forward and volunteer with the organisations that serve the community to which we all belong. For it is when people volunteer that they truly appreciate the importance of giving.

I can still remember the Prime Minister's Budget speech and the plauditsit received for expanding the scope and raising the profile of volunteerism in Singapore. It would be a pity, though, if we allow this NKF incident to detract from the ideals of becoming a more

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compassionate society, one which is determined to forge a true sense of nationhood. That would be the biggest disfavour we could do for ourselves.

Assoc. Prof. Ong Soh Khim (Nominated Member): Mr Speaker, Sir, thank you for allowing me to speak and comment on the MOH's Ministerial Statement on NKF.Many hon. Members ahead of me have spoken on many issues related to the governance and the transparency of NKF and I will not repeat those points and issues again. I would like to still focus on the fund-raising activities, ie, the large-scale charity shows, as well as the "show-casing" of patients in such activities.

Toomany large-scale charity TV shows

Sir, I am of the opinion that we have too many large-scale charity TV shows. Yesterday, during Question Time, I asked the Health Minister on whether there are any regulatory guidelines for VWOs to carry out large-scale charity shows through theTV and the radio media, as recently there have been a great number of such large-scale charity shows, leading to a donation fatigue syndrome in the general public.

Sir, the NKF Cancer Fund charity show this month was carried out in three parts, effectively three charity shows, and the coming President's Star Charity show will be carried out in two parts. Earlier in April this year, we had the NKF Charity show for the kidney dialysis patients, and in the pipeline are the Singapore Cancer Societyshow, the NKF Children's Medical Fund show and theHeartCharity show for the Singapore Heart Foundation. On the average, we are having about 10-12 such charity shows per year. A friend from Hong Kong told me that the average number of charity shows in Hong Kong is about five per year.Sir, besides the large

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number of charity shows, these are in addition to the numerous flag days, fund-raising activities and distribution of donation cards in our schools.

Sir, we need to analyse why the charity bodies in Singapore, especially NKF, need these large numbers of charity shows,whether there are genuine needs for these large numbers of charity shows. Sir, many Singaporeans have many questions unanswered.

(1)Is it because the cost of medical treatments and dialysis services in Singaporeis too high, such that Singaporeans cannot afford?

(2) Is it because Singaporeans do not have enough savings or medical insurance coverage to meet such needs when illnesses strike?

(3) Is it because the charity bodies are not receiving enough subsidies from the Government?

(4) Is it because the current subsidies received by each charity body have not been used optimally to serve its beneficiaries?

Sir, I can go on and list out many more "is it" questions. Sir, we need to look at this problem from a broader perspective rather than simply just focusing on the NKF saga alone, so as to find out the root causes.

Quality of large-scale charity TV shows

Yesterday, the Health Minister informed the House that there are rules that guide the organisation of large-scale fund-raising activities, namely, the Media Development Authority'sFree-to-Air Television Programme Code requires all TV programmes, including charity shows, to observe standards of good taste and decency. Sir, I havea few queries here:

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(1) What are the specific requirements and criteria, besides good taste and decency, that a charity body has to satisfy before it is allowed to carry out a fund-raising large-scale charity show over the TV media?

(2) At the point of applying to carry out a fund-raising large-scale TV charity show, do the charity bodies have to submit a statement of their financial standing for the relevant authorities to assess whether they have a genuine need to carry out this activity? And which are the relevant authorities that assess the needs of these applications to determine if these applications for fund-raising are genuinely in need of funds, and what are the criteria in the assessment?

Sir, the "donation pie" in Singapore is fixed, as there can only be that much of donation dollars in Singapore. By assessing whether a charity body has a genuine need to carry out a large-scale fund-raising TV charity show before approving such activities will allow a more even flow of such donation dollars among the various charity bodies in Singapore, as well as give a chance for the more needy charity bodies to canvass for such donation dollars, as opposed to what is happening now when NKF has a large slice of this donation pie and is keeping this large slice of pie in its fridge, ie, as reserves.

Sir, I hope the relevant authorities can review their current guidelines and regulations and jointly come up with a set of more comprehensive and stringent guidelines to prevent the exceedingly large number of such charity shows which, in a way, is wasting the precious donation dollars as expenditures for such charity shows are high. As has been reported in the Straits Times today, 21st July 2005, in the case of NKF, for every $1 donation received, 24.3 cents go to the fund-raising expenses. Sir, more unnecessary large-scale TV charity shows

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will waste more precious donation dollars although the expenses have been kept at 30%.

Sir, if there are no proper checks for assessing the needs to carry out such fund-raising activities and charity shows, no proper control over the numbers and quality of such shows, these can lead to unhealthy competition among the charity bodies to compete for the "fixed" pie.

Third, on the methods of soliciting donations, some of these large-scale TV charity shows have become lottery shows rather than charity shows, with mega prizes, such as $500,000, condominiums and cars to be won, so that callers will call in as many times as possible. Some have even commented that the odds are better for the charity shows than buying lottery! In addition, look at the stacks of vouchers, claimed to be worth hundreds of dollars for each set, which were sent to the donors from NKF as "an appreciation of their support". If these vouchers are indeed worth the amounts claimed, why not channel the money back to NKF?

On these TV charity shows, if one actually pays closer attention, one would notice that the host of these shows, eg, in the recent NKF show, would always be shouting out a number for the viewers to call to make donation, and that number that he shouted out each time was incidentally not the call number to make the minimum amount of donation, eg, $5, but a number to make a donation of, say, $50. Sir, there was insufficient information being displayed to help the viewers differentiate the amounts of donations that would be made with different call numbers, neither did the host specify that the number that he had just shouted was for a donation of $50 rather than $5. Sir, is this not a form of misleading the viewers and the donors?

In the case of donation cards being distributed in our schools, I recalled once

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when my niece came back from school with a NKFdonation card. And with her young mind, she insisted that I made a 3-digit donation on her card, so that she could receive a gift which was an electronic gadget. On further queries, my niece also reluctantly disclosed that there was peer pressure among her classmates to each go home and request for donations from their parents so that each could receive such a gadget. And my niece felt very disappointed that her classmates would receive such a gadget except her if she could not get that 3-digit donation on her donation card!

Sir, perhaps one would argue that the teachers need to explain to the students. However, looking at the root of the problem, should gifts even be offered in the first place in exchange for donations? Sir, by providing such gifts to students in exchange for donations, we are not cultivating the correct attitude towards donations in our young minds in schools. Hence, Sir, we need more stringent rules and regulations on the methods of soliciting donations.

Fourth, lottery-based charity shows. The Common Gaming Houses Act allows Institutions of a Public Character (IPCs) to conduct no more than one public lottery per year, via charity shows or otherwise. Those which wish to conduct more shows need to apply for a waiver and there are criteria to be satisfied before a waiver is granted.

In the case of the recent NKF Cancer Fund charity show, it was carried out in three parts, which was as good as three lotteries. It has also carried out a similar lottery-based charity show for its April charity show for its kidney dialysis patients and would probably be intending to carry out another similar lottery-based charity show for its Children Medical Fund

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Show. How is it possible that NKF can carry out more than three lottery-based charity shows in a year? Sir, can the Minister for Health inform the House under what conditions will a waiver be granted and why has NKF been granted a waiver in each instance? Are the criteria sufficiently stringent?

The Health Minister said that donors should "vote" with their donations. However, given the overwhelming numbers of such large-scale lottery-based charity shows, it might not be easy for donors to vote correctly with their donations.

Fifth, on exploiting patients and stirring feeling of guilt in public. Sir, there is a need to set guidelines to prevent VWOs from exploiting patients, whether canceror kidney disease patients, by wheeling them out in public places and large-scale charity shows for publicity campaigns or "show-casing" them in their donation soliciting campaigns, such as mailers and letters.

Sir, many of these charity shows that we have seen recently are effectively selling the pain, suffering and sad stories of these patients to obtain more donations. Some of these shows made the patients cry and show them in a state of pain. Many of these shows have crying patients appealing for donations. This is a cruel act aspatients, though sick, are humans and need to have some minimum self-respect and privacy.

In the Straits Times on 16th July 2005, Ms Tan Sai Siong, a former editor of the Business Times , wrote, and I quote:

"My ignorance about how much NKF collects, spends and squirrels away from the donation pie is mostly my fault. This is because while I want to help those I perceive to be less fortunate, I am reluctant to get too close, as heartbreaking tragedies make me uncomfortable.

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So I am a perfect target for those tear-jerking letters describing unimaginable misfortunes that dog NKF beneficiaries. I speed-read their tragic accounts without too much absorption or analysis and sign a cheque to assuage the guilt I feel at my own lucky escape from the caprice of fate.

I quickly switch channels whenever the images of their saddest cases flash on the TV screen but, to compensate for my refusal to hear out yet another gut-wrenching hard luck slice of life, I quickly make that donation phone call."

Sir, these are large-scale charity shows by NKF exploiting the patients to play on the sympathy and guilt of the public to make the donation phonecall, that donation cheque. These charity shows do not seem to be in line with the set of best practices that has been recommended by the Council on Governance of IPCs in May 2004 on the conduct of charity shows, ie, not to stir the feeling of guilt in the publicwho may not wish to donate.

The Health Minister informed the House yesterday that the Media Development Authority's Free-to-Air Television Programme Code requires all TV programmes, including charity shows, to observe standards of good taste and decency. Sir, I do not think that making the patients cry and showing them in a state of pain is "in good taste". Will the relevant authority take a more stringent control before approving such charity shows in future?

Yesterday, I also asked the Minister if there have been patients who have been psychologically threatened to come out and participate in the publicity of the charity shows; otherwise, they would not receive subsidy from their respective charity bodies. And, whether those patients who have volunteered to participate in the publicity campaigns of the charity shows been briefed in detail of

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what exactly would come out and how their story would be portrayed on national TV. Sir, I am of the same opinion as the Health Minister that it would be totally unethical and unacceptable if patients have been pressured to feel obliged to participate in these publicity activities for the charity shows.

Yesterday, the Minister, in his Ministerial Statement, announced six top priorities for the NKF Board. Hence, I would like to propose a seventh priority for the Board to address. This seventh priority is for the Board to review the NKF's relationships and communications with its patients.

Sir, besides taking good care of the patients in the clinical aspect, there is a need for NKF to treat their patients and beneficiaries with utmost respect and dignity. Have the suffering and the mental and physical distress of these patients been exploited by NKF in the fund-raising charity shows and publicity? Has NKF, in its communications withits patients, unknowingly pressurised, or perhaps misled and/or instilled a fear in these patients, such that these patients have been emotionally blackmailed into coming forward to participate in the publicity of the charity shows? Sir, these apply to other charity bodies as well when carrying out large-scale charity shows over the TV media.

The Minister for Health (Mr Khaw Boon Wan): Mr Speaker, Sir, I took this assignment on July 14th to shepherd the NKF through its crisis. I knew it would be a big challenge, but I had faith that the good sense and charitable nature of Singaporeans will prevail. Yesterday was daysix of my assignment. I heard the speeches by 13 Members of this House. Today I heard from another seven.

I must confess that when I came to this House yesterday, I was not sure which views would prevail. Would they be

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negative and destructive: going for blood, witch-hunting, demolishing the NKF through speeches? Or would they be positive and constructive: taking the helicopter view, seeing the larger picture, rising above the fray, and shining the light forward?

The 20 speeches cheered me up considerably. I was happy enough to go for a hair-cut last night! All noted the gravity of the situation. All conveyed in no uncertain terms the public anger over the revelations. But all noted the larger issues at stake. Although views on approaches to address these issues inevitably differed, by airing and debating these views openly in this House, we can then begin to find the answers and start the process to re-shaping the NKF and the charities landscape in Singapore.

Future of the NKF

We are all agreed that the good work done by the NKFmust continue. There are real patients out there and much of NKF’s activities genuinely save lives.

Thankfully, nobody called for the NKF to be shut down. As Dr Wang Kai Yuen put it, the destruction of the NKF would be a "monumental loss to Singapore". All Members spoke on the charitable side of Singaporeans. Otherwise no amount of marketing skills and TV shows could deliver tens of millions of dollars, from all walks of life, to the NKF every year.

Helpfully, Mdm Halimah, Mdm Ho Geok Choo and many others have urged calm and patience, lest we all get lost in the woods. Mr Tan Soo Khoon wisely reminded Singaporeans not to direct their anger at the patients or the NKF staff. As Ms Irene Ng pointed out, coming together to express public outrage is one thing. But vandalising NKF buildings is unbecoming of a society which we want to belong to.

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I fully support these sentiments.

Regaining public confidence

All Members agreed that the best way for the NKF to regain public confidence is to pursue greater transparency and accountability.

I am sure Mr Gerard Ee has taken this message back to his Board and they will do their best to bring this about. I note and am thankful for the ringing endorsement of the new Board of Directors. This is important, for they must be assured that they have the backing of the House and the public. At the same time, they would have noted the lofty expectations which they must meet.

And I am optimistic that they can deliver. Given the professional competence of the NKF staff, the NKF could be a shining example of good governance, of transparency and accountability. This is my intent. Outside of Singapore, NKF already has a reputation as a pace-setter in kidney dialysis. In Singapore, I would like the NKF, as our largest charity,to now be the pace-setter of what good governance, transparency and accountability ought to be, for all charities and IPCs.

As a refinement, Mr Tan Soo Khoon suggested that key donors, like the Foundations, ought to be represented in the NKF Board. Mdm Ho Geok Choo suggested that unions be represented on the Board. We will bear these suggestions in mind, when the final Board is constituted after the current priorities have been fully discharged.

I knowfor a fact that many of the new Board Members are long time donors and regular supporters of not just the NKFbut alsoother charities. More importantly, the NKF donors are best served by knowing that the NKF would now have a strong Board which will make the right decisions,and often tough decisions.

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But I am not sure if it is a good idea to politicise the charities by inviting oppositionMembers on the Board, as suggested by Mr Chiam. Let us keep politics out of charities.

Investigations into allegations

All Members have called for a full and thorough investigation.

As Dr Amy Khor put it, many questions remain unanswered and public unrest should be addressed. We certainly intend to do so.

Dr Khor suggested that a committee of inquiry be convened to look into the matter. The Commissioner of Charities has the powers to initiate such investigations. But due process must be observed. The Commissioner must first establish clear evidence of wrongdoing, which includes getting the charity’s side of the story.

At the end of the day, it is the substance of the investigations that matters, and not the form, whether it is called a commission of inquiry, an investigation or independent audit. We are all committed to finding answers to the many questions raised by Singaporeans and getting to the bottom of this matter. That is what counts.

The new Board has appointed KPMG to do an independent review. Let us give them time to work on this thoroughly, away from the public glare and emotions, so that assessment can be made objectively and calmly. All the questions that I asked in my statement yesterday will be addressed. Their findings will be made public.

The various Government agencies are comfortable at this point to have the new Board lead the investigation into past practices. Knowing the new Board members, I know they will get to the bottom of the issues. Precisely because of the high standing and reputations of the individuals serving on the Board, this

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House and the public can feel confident that their review will be full, thorough and that sound judgement will be applied.

In the course of the review, if it is found that laws have been broken, the relevant authorities will certainly step in. I fully agree with Mr Tan Soo Khoon that any wrong-doers must face the law. If there has been any criminal act, the law will take its course. If there have been poor judgements, they will be acknowledged. If there are systemic flaws, they will be fixed.

As I said before, I do not condone fraudulent practices. But we cannot conclude, a priori , that there were criminal acts on the basis of what has been published to date. We are a law-based society. Let us follow the due process, as advocated by Dr Warren Lee just now too.

Let us also try to look at this issue from the perspective of Mr Durai’s family. His daughter emailed the Prime Minister. Let me quote a few lines from her email. She is a young student in JC but, I think,mature for her age. She wrote: "I was adversely affected by this fiasco". She went on to say: "Since I was young, my father had very little time to spend with us … I always asked myself why my father had no time for us. Were we less important to him than his patients? Was his work more important than us?"She went on to ask the Prime Minister: "After the review by the new Board, you will help him to restore his reputation and honour", if no wrong doings were found.

From the media reports on the man, Mr Durai looks to me to be an arrogant man. His achievements are real and significant. But maybe the ego and arrogance went to the head, leading to poor judgement and insensitivity.

I think there are lessons for all of us here. No matter how great our achievements are, we live for others. Look at the late Mr Hon Sui Sen. You could seeno

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ego in the man. He completely personified humility. Likewise, the late President Wee Kim Wee and hence the huge outpouring of emotions at his funeral. President S R Nathan is another such humble man who has done great for society, for Singapore, but remains exactly his past self. I am so glad he decided toseek a second term.

I scanned through the local media today. I could not help noticing the different spin the Straits Times put to the MPs’ speeches yesterday, compared to all the other local media, like TODAY and Zaobao . Let us hope arrogance has not also gone to the head of the victor in the court case.

_Regulation of IPCs
_

Coming back to the debate, not surprisingly, ensuring a robust regulatory framework for the IPCs was a central theme of Members’ speeches.

Striking the right balance

Many Members have noted the need for balance between regulation and flexibility. Mr Chew Heng Ching, Mr Gan Kim Yong and Dr Ong Seh Hong cautioned against knee-jerk reactions. They advised that we do not over-react and introduce new and tighter rules that may inadvertently cause more collective harm than good, particularly for smaller charities.On the other hand, Dr Wang Kai Yuen, Mdm Halimah, Dr Amy Khor and Mr Tan Soo Khoon argued for additional and tighter rules. They felt the existing regulatory regime would appear to be too loose for large charities, if episodes like the NKF could occur.

As always, you know my preference, I think the best way forward isthe middle path. We should not rush or force an immediate solution. Let us dive into the

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problems at the NKF first, grasp the full details, weigh the options and assess the implications, before we decide on the way forward.

As I said yesterday, I see value in differential regulation, to apply different degrees of regulation and compliance to different charities.This is particularly so for quantitative controls like the expense ratio which many Members touched upon. Dr Wang Kai Yuen suggested a sliding scale for limiting expense ratios, ranging from, say, 15% for the large charities to 30% for the small ones. Dr Amy Khor suggested a tiered approach which sounds similar in concept. We would certainly have to give all these suggestions serious consideration.

In any case, the recommendations of the Council on Governance of IPCs on a set of mandatory rules for all IPCs, which the Government had earlier accepted, will kick in by 1st January 2007. But we will see if we can advance this implementation deadline, as proposed by Mr Chew Heng Ching. But I myself will challenge the new NKF Board to achieve compliancewithin six months.

Regulatory structure

In terms of regulatory structure, Dr Amy Khor proposed a national watchdog to investigate and punish charities which flout the rules and abuse public trust. This is actually the purview of the Commissioner of Charities. The Charities Act gives him extensive power to investigate any abuses. He has power to remove trustees and de-register charities. Whether we need to strengthen his teeth, we can study. After we have completed the independent review on the NKF, we can ask the Commissioner to go for a dental appointment.

Mdm Halimah wondered whether the Government would have intervened, if the previous NKF Board had not sought my

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involvement. This is now a hypothetical question. But looking back at the sequence of events, I would be surprised if the Commissioner of Charities would havesat on his hands and let the crisis fester.

Dr Khor asked if it was more effective to have a single body guiding all VWOs, instead of spreading the work among the various Central Fund Administrators (CFAs). She has a point, but there are arguments both ways. The CFA model was adopted to better spread out resources in assessing IPCs. Each of the 12 CFAs handles a number of IPCs, specific to that Ministry’s area of expertise. If all 1,700 charities, from temples to churches to nursing homes, were to be centrally managed by a single agency, I worry that the required Government machinery would be huge, cumbersome and unresponsive.

On the other hand, there may be some gaps in regulating a complex institution like the NKF, as noted by quite a number of speakerstoday. Itis a company limited by guarantee,a charity andalsoan IPC - three in one. For instance, as noted by Prof. Ivan Png,the NKF also receives donations which are not tax-exempt andoutside IPCpurview, and therefore it is not under the purview of my Ministry as the overseeing CFA. A learning point here for Governmentis to have a more coherent approach to guiding the larger and more complex institutions, like the NKF. We will bear in mind the observations made by Prof. Ivan Png just now about ambiguous definitions of terms and the reporting format.

Transparency and disclosure

Mdm Halimah, Dr Wang Kai Yuen, Dr Amy Khor felt strongly that salaries of top executives should be disclosed as a mandatory requirement of all IPCs.This was in the original recommendations of the Council on Governance. But the

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Council discarded it, after extensive consultations with the IPCs.

As I mentioned yesterday, all charities face this tension between protecting the privacy of their top executives and maintaining transparency with their donors. It is not an easy dilemma to resolve. I heard from Ms Irene Ng yesterdaythat this dilemma, of course,is alsofaced by otherinternational charities, like Oxfam.Somehow, according to Ms Irene Ng, they seem to have found some satisfactory ways to resolve the dilemma. She mentioned a particular US charity website which was able to release such sensitive information, not so much in terms of dollars and cents but at least as a percentage of something. I intend to study these various modelsto see if we can emulate it here.

Ms Eunice Olsenasked for greater transparency along the same light, andwe intend to do so. And the message to the VWOsis - to voluntarily, as part of their clients' servicing, and the donors are their clients, be open with them. My own belief is that the more open you are with your donors, greater public trust isbound toyield greater support - cause and effect. The Buddhists would say yin guo (the cause andeffect).

Dr Amy Khor proposed that all IPCs undertake independent audits and publish their annual reports and statements online. All IPCs are actually already required to provide their CFAs with annual independently-audited financial statements. We should certainly push the larger ones especiallyto publishaccounts online for greater transparency.

Many Members spoke on the public disgust over Mr Durai’s $600,000 pay packet, especially the reported reluctance of the NKF to have this made public.$600,000 is certainly not a small sum. But whether it is too large depends on: (a) the size of the job; (b) on how the pay

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package is determined; (c) on whether the Board had a proper process such as a staff compensation committee and salary benchmarks; and (d) on the actualmeasured performance of the CEO. These are serious matters which an independent and competent Board should have properly established so that their decision could be defended in public. The review of the NKF will shed light on thissubject.

Going forward, let me assure Mdm Ho Geok Choo that I have no doubts the new Board under Mr Gerard Ee has the expertise and the experience to help install a high-standard HR remuneration system for the new NKF.

As for the interim CEO, I have said yesterday that our hospital would second a senior hospital administrator to the NKF. If the NKF Board approves the selection and the arrangement, the NKF would have to fully reimburse the hospital for the services of the seconded staff. Public hospitals have established policies of seconding staff and receiving seconded staff from other organisations. There are clear rules governing inter-agency reimbursement for seconded staff. We will follow the rules strictly.

Fund-raising activities

Dr Wang commented that the NKF appears to have gone overboard with its fund-raising activities. He felt that "Singaporeans are increasingly turned off" and he commented, and Prof. Ong Soh Khim too, that some of the NKF shows are "bordering on bad taste". Yesterday, we had some discussion with Prof. Ong on this issue of TV shows which she raised it again this morning.I am just the Minister for Health. Ministry of Health does not govern TV shows. TV shows come under MICA, but I did the Question yesterday because originally we were not sure that there would be a Ministerial Statement.

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So, may I suggest that the Member file a proper Question to the right Minister.

I am sure he will giveher a full reply, including from the Ministerfor Home Affairs. But I have noted her proposed new priority for the Board. I have suggested six priorities for the Board, andshe said quite rightly that there ought to be a priority too on how NKF ought to deal withits patients.

I heard and I am worriedabout some of the comments and feedback by Dr Warren Lee that, apparently, patients are being coerced to do certain things, otherwise the line may be pulled.Let me repeat myself here. I find it completely and totally unacceptable and unethical to do so. But I think with the new leadership, I am sure if, indeed, that was the case, the matter would change overnight. Once I have settled down- I still got the Ministry of Health to run -Iplan to visit the dialysis centres again, talk to the patients, and hopefully in a candid way,let me gather some of the feedbackdirectly from them. But let me caution on one point. Some of the feedback might be motivated by wanting NKF to provide services for free, a point which I have addressed yesterday. I do not think that is the right approach.The need for co-payment is there, provided the criteria are open and objectively applied, and not unduly stringent,I am sure Singaporeans can accept.

Several MPs speculated that the NKF incentive structure might have fuelled the management’s drive to collect donations at the expense of everything else. I do not know at this point. Until the review of the NKF’s processes is concluded, I would not like to speculate as to whether staff bonuses were indeed based on funds raised and, therefore, led to perverse incentives. We need to understand their HR policy and the remuneration system. This is an aspect which the review will uncover.

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We should bear in mind, however, that there are two separate functions inNKF. One is the provision of medical services at subsidised rates. This must be done by competent professionals, as lives are at stake. These professionals must be paid a market wage for their services.

The other component is fund-raising to pay for the subsidies. This can be done by volunteers or paid staff. Where small sums are required by a charity, using volunteers would be adequate and probably the best way. But where huge sums are required on a continuing basis, like the NKF, the charity may have to fall back on professional fund-raisers like some big American foundations. The question is then how to remunerate these paid fund-raisers.

Mr Speaker, Sir, structuring an appropriate performance remuneration system is an important part of HRmanagement in any organisation. If we want the professionals to do their best, they need to be properly incentivised. Some are self-motivated, like Mr Gerard Ee and Dr Robert Loh. They work out of basic kindness, or Mr Gerard Ee puts it, just "coffee and cakes". Although as Iinteract with him morein the next few months, I am going to advise him to cut down on coffee and cakes. I worry about his waist line. But some charities do need professional fund-raisers to help in their charity work, so that they are free from the burden of fund-raising and can concentrate on providing services to their targeted beneficiaries. As noted by Dr Warren Lee, under such a model, it may not be wrong to incentivise performance of fund-raisers based on funds raised.

But it must be a basis that a sound Board of Directors is willing to publicly defend. Also, as any of our many listed and professionally run businesses will tell you, the human resource management practices of organisations must, ultimately, be anchored by the organisation’s

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core values and code of ethics. These values must be lived by the Board, the management and the staff and be coherent across all dimensions of the organisation, be it in the way they serve their customers, the way they do business with partners and the way they run the organisation internally.

VWOs can be run by paid professionals but they must be underpinned by strong ethics and guided by a moral compass. As Jack Welch, formerly of GE, noted, the most difficult type of managers he had to decide on were the type that "does not share the value, but delivers the numbers". His conclusion was "we have to remove these managers because they have the power, by themselves, to destroy the open trust-based culture that we need to win today and tomorrow". He was talking about the needs of a for-profit multinational, let alone a charity. I challenge the new NKF Board to put this right in the NKF, and I am confident it can be done.

Reserves policy

For example, it is a basic ethical rule of fund-raising that we do not mislead donors and potential donors. We do not coerce and exploit beneficiaries in order to arouse donor sympathy. And when we have collected enough, we suspend fund-raising. Asan aside forthe PAPCommunity Foundation (PCF), every year we do fund-raising for charity.Dr Ng Eng Hen and myself are responsible fororganising the PCF fund-raising for this year.We decide how much we want to raise and seta target. Betweenthe two of us, we are quite resourceful. We can raise large amounts of donations if we want to. But once we hit our limit, we stop and say, "Enough. Thank you very much." That should be the way fund raisers conduct themselves.

This is why we need a review on the NKF’s reserves policy. We need to piece

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together their strategic intent on reserves and projected needs. Dr Tan Sze Wee mentionedhis view on this. He knows - he is a medical doctor -the need for chronic care and the funds required depend on your assumption. Do youprovide for 10 years of liabilities, or three years, or 20 years? Intuitively, I agree with him that unlikelythe so-called 30 years of reserves is the case.

Dr Geh Min askedsomequestions. What is the life expectancy of dialysis patients? If I am not mistaken, the first patient on dialysis in Singapore is still alive.How many cases are therein Singapore today? I think we have something like 3,500 dialysis patients. NKF's market share is about half, 1,800 or so, and every year about200 patients are added, and this is cumulative.

One observation I want to make is that NKF's recent major donation drives were not for kidney patients, but for cancer patients, which is a new programme. So intuitively, I am quite sure there is not enough money for this new programme.However, as I said, I have suspended the fund-raising activities in NKF. So Prof. Ong's worry about wheelchairs being pushed out and more TV shows being occupied by NKF,for the next few months,she would not be seeing all those.

However, Dr Wang raised a more fundamental questionabout whetherNKF should not just stick to kidney dialysis, and not wander to other areas. I keep an open mind on this issue for the moment. I see values in some competition between charities, provided competitionis properly applied. Already, there have been suggestions that we mergeNKF withKDF. I am not sure if this is awise move.

Currently, dialysis patients have some choices:NKF, KDF, public hospitals, private hospitals,

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private dialysis centres, a certain range of prices that they can go to, depending on their needs anddifferent levels of service - some have aquariumsand some do not, some are very basic. But if they all compete to deliver the best value at the lowest possible cost, what is wrong with that?

Dr Lily Neo asked for the criteria used byNKF on assessing patients for admission to their dialysis programme. She asked if too many were rejected, and whether KDF was started precisely because of the need to look after the rejects fromNKF. Honestly, I do not know.Please bear in mind that NKF is a private non-governmental VWO. It is not a department of the Ministry of Health.I am beginning to know a little bit more about the operation. I will know more as I get involved. But since I am on this point, I hope that, at the end of the day, let us keep NKF non-governmental and it should not become, for example, a Ministry of Health's department, orentity. I think that would be walking backwards.

Cost effectiveness

Dr Wang Kai Yuen, and I think Dr Geh Min, also questioned the cost-effectiveness ofNKF in kidney dialysis and some data were produced to show the comparison with KDF.We will bear this observation in mind. We need to dive into the cost details in due course. I share Dr Wang’s objective thatNKF should try to be as lean and slim as possible, so that the savings could be passed on to the patients. After all, this must be the basic mission ofNKF: to deliver kidney dialysis services tothe patients at the lowest possible cost, commensurate with a good standard of clinical care.

_Conclusion
_

Mr Speaker, Sir, we have hadtwo days of fruitful debate in this House.Unfortunate

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though the entire NKF saga may be, I am cheered by the fact that all Members saw this as an opportunity in the way we collectively handle this crisis, for both the NKF and, in fact, the entire charity sector to emerge stronger and more resilient. More broadly, Ms Irene Ng described thisincident as a "defining moment", an opportunity for Singaporeans to sharpen our collective identity. I agree. And I am not the only one. Members may know of Mr Jack Sim, an active Singaporean volunteer, who is passionate about toilets. He started the WTO: not the one in Geneva, but the World Toilets Organisation based in Singapore. He sent me an email to say that he saw the NKF incident becoming a nation building exercise. Let me quote him:"Now you know we are not Bo Chap Singaporeans. Everyone is a patriot at heart … and maybe a stronger Singaporean identity will emerge, including Singlish."

Let us now, therefore, allow the dust to settle, and let the new NKF Board get on with the necessary restoration work.The old NKF has great strengths but also weaknesses. Let us build on the strengths and correct the flaws.The new NKF must remain creative, innovative and professional. Being the largest charity in

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Singapore, it must take on a pace-setter role, and be a shining example of good governance, transparency and accountability. To achieve this, it must fix all its inadequacies and root out bad practices.

Most importantly, the NKF must remember that the core of all charity is basic humility and a simple desire to help our fellow human beings. The NKF, and indeed all charities, exist because of the people, and it is the people they must serve, and not the other way round. [ Applause. ]

Mr Speaker: Pursuant to Standing Order No. 44(2), the motion to consider the Ministerial Statement on the National Kidney Foundation lapses at the conclusion of debate.