The National Kidney Foundation Singapore scandal, also known as the NKF saga, NKF scandal, or NKF controversy, was a July 2005 scandal involving National Kidney Foundation Singapore (NKF) following the collapse of a defamation trial which it brought against Susan Long and Singapore Press Holdings (SPH). This sparked significant controversy, causing a massive backlash and fallout of donors to the charity; it then subsequently resulted in the resignation of chief executive officer T. T. Durai and its board of directors.
Allegations surrounding the scandal included the false declarations on how long NKF's reserves could last, its number of patients, installation of a golden tap in Durai's private office suite, his salary, use of company cars and first-class air travel. NKF patron Tan Choo Leng, wife of Senior Minister Goh Chok Tong, sparked further outrage when she remarked that T. T. Durai's pay of "S$600,000 a year is peanuts".
President of the National Council of Social Service, Gerard Ee, has since been appointed as interim chairman of the organisation. A full independent audit on its finances was conducted by KPMG, and a 442-page report released on 19 December 2005 revealed a host of malpractices by the former NKF board and management. Durai was apprehended on 17 April 2006 and charged under the Prevention of Corruption Act by the Police. A S$12 million civil suit to recover funds by the new NKF board against Durai and four other former board members began on 8 January 2007.
Initial accusations
In August 1997 and December 1998, NKF volunteer Archie Ong and aero-modelling instructor Piragasam Singaravelu, respectively, were hauled to court separately for defamation when both said that T. T. Durai had been flying first class. The former mentioned in April 1997 that the NKF "squandered monies" in a casual conversation with former chairman of NKF's finance committee Alwyn Lim,"Why so silent, Mr Alwyn Lim?", Low Ching Ling, The New Paper, 24 December 2005 while the latter made claims that he had personally seen Durai in Singapore Airlines' first-class cabin. Both paid an undisclosed amount of damages to the NKF, and apologised."T. T. Durai: I should have said, I travel on first class", Bertha Henson, The Straits Times, 12 July 2005 News of the suit affected Ong's cancer-suffering father, who eventually died in hospital. Shortly after the 2005 scandal broke, Ong mentioned to the press that he felt "fully vindicated now. I had more than a hundred calls today to wish me well.""Mr NKF, the court-happy combatant", Conrad Raj, The New Paper, 13 July 2005
In 1999, NKF tracked down and again sought legal action against Tan Kiat Noi, who allegedly circulated an e-mail from her company e-mail on 5 April, claiming that "the NKF did not help the poor and needy, paid its staff unrealistically high bonuses""NKF acts against e-defamation", Samantha Santa Maria, The New Paper, May 1999 and discouraged members of the public from donating. She later also published a public apology on local broadsheets The Straits Times and Lianhe Zaobao, while paying a total of S$50,000 in damages."NKF: Controversially ahead of its time?", Susan Long, The Straits Times, 19 April 2004 Forty-eight additional workers who forwarded the message were also sued by the organisation, but the suit was later dropped in consideration that they would face possibly extenuating financial circumstances."Action dropped, don't do it", Ng Wan Ching, The New Paper, 22 May 1999 Days after the 2007 civil suit began, there were calls by the public to redress the grievances of the three abovementioned whistle-blowers."Pay back damages in ' flew first class' suits", Lau Guan Kim, The Straits Times Forum, 13 January 2007
In 2001, the National Council of Social Service refused to renew the NKF's "Institution of Public Character" (IPC) status (which allows it to collect tax-free donations), citing that subsidy figures had been inflated, staff costs had increased by 30% and a "disproportionate" amount of money was spent on fundraising. Concerns were first raised by both by the Health Ministry and NCSS two years prior. However, the former decided to intervene in January 2002 and reinstated the NKF's IPC status for a full three years."NCSS warned NKF and raised alarm back in 2001", The Straits Times, 22 December 2005"Regulators wasted opportunity to prevent NKF saga: KPMG report ", Julia Ng, Channel NewsAsia, 19 December 2005
NKF v. SPH Allegations in article The Straits Times published an editorial "NKF: Controversially ahead of its time?" on 19 April 2004, written by senior correspondent Susan Long. This article became the subject of the dispute, and eventually the lawsuit that led to the scandal. Durai and NKF challenged the first six lines of the article, which claimed that a retired contractor (who declined to—and cannot—be named, for fear of being sued) had 'lost it' when he was asked to install "a glass-panelled shower, a pricey German toilet bowl and a (S$1,000) gold-plated tap" in Durai's office."Home is home but this office is for charity", Low Ching Ling, The New Paper, 26 December 2005 The tap was said to have been replaced later with a different material.
NKF shortly issued a letter of demand for an apology, retraction, and payment of damages from the paper's publisher, Singapore Press Holdings (SPH), within 24 hours. Four days after the article's publication, NKF and Durai served a writ on Long and SPH for defamation, demanding S$3.24 million in damages. They claimed that the six paragraphs in the article insinuated the mismanagement of donors' funds, that the installations were scaled down only due to the contractor's protests, and that it had avoided providing further details on that matter.
The proceedings The trial began on 11 July 2005, with Long and SPH represented by Senior Counsel and MP Davinder Singh, while NKF and Durai were represented by Senior Counsel Michael Khoo. Under cross-examination, it was revealed that Durai collected a monthly salary of $25,000 and collected a 10-month bonus in 2002 and a 12-month bonus in both 2003 and 2004, for a total of $1.8 million over three years. He had access to a fleet of eight chauffeured cars and the NKF paid the taxes and maintenance costs of his personal Mercedes-Benz."The NKF Saga" , Siva Arasu, The Straits Times, 17 July 2005
The court was told that the NKF's reserves stood at S$262 million as of July 2003.
SPH's lawyer, Davinder Singh, said during the trial that the NKF had been telling Singaporeans that its reserves would not last more than three years, according to statements made by its officials. He argued that if the NKF stopped all fundraising activities and concentrated on treating kidney patients, it would still have enough money to see through its operations for 30 years, based on its expenses scheduled for 2003.
In June 2005, the NKF had told The Straits Times that it needed about S$2,600 per month to support each of its 2,000 patients, a total of S$62.4 million per year. The charity cited those figures to bolster its argument that its reserves were not excessive. Based on its expenditure of more than S$60 million a year for dialysis, the reserves would last three years. However, on 12 July 2005, during the trial, the court was shown how the NKF in fact spent far less on dialysis than the public had been led to believe. According to its 2003 audited financial statement, the NKF spent S$31.6 million that year on dialysis and transplantation. Of that amount, S$22.9 million came from dialysis fees it collected from patients and a further S$1.5 million came from other related income. This meant that the NKF was out of pocket by only S$7.2 million.
Durai initially disagreed with Singh, saying that no-one could be sure patients would continue to pay their share for the treatments. However, he finally agreed that the NKF's assertion that the reserves would last only three years was 'not accurate'.
Singh noted that even if the NKF had to foot the entire dialysis bill of $31.6 million a year, its current reserves of S$262 million would last more than eight years.
Singh argued that the NKF had overstated its patient numbers, and this would have given the impression to the public that more funds were needed to run its operations.
In May 2004, Health Minister Khaw Boon Wan informed Parliament that the NKF had treated 1,414 patients in 1999 and 1,512 patients in 2003. A letter written to The Straits Times in April 2004 by Gerard Chuah, the chairman of its Children's Medical Fund board, had claimed that the NKF had 3,000 patients. Singh pointed out the number had been overstated by about 1,000. Durai said he realised there was a mistake only after the letter had been published, but had not corrected it.
During cross-examination, Durai admitted that an overestimate had been made and not corrected. When asked why he had done nothing to correct it, Durai said, "It was an oversight. I did not think it was of material importance. The donor gives us money because of the brand of the NKF and I did not think it was so important at that point of time to correct this error."
Singh suggested that the number had been inflated to create a false impression of need. In fact, according to Khaw's statement in Parliament, the NKF's "share" of kidney patients in Singapore had dropped, from 54% in 1999 to 44% in 2003.
Durai was paid a monthly salary of S$25,000 in 2002 and received 10 months' performance bonuses (S$250,000) for that year, making a total of S$550,000 for 2002. He was paid a monthly salary of S$25,000 and received 12 months' performance bonuses (S$300,000), amounting a total of S$600,000 in both 2003 and 2004. He was paid a total of nearly S$1.8 million in three years from 2002 to 2004. These figures were closely guarded secrets until the trial. There were many occasions when he declined a pay rise but was paid the offered increase in salary, backdated to the time he was offered the pay rise, the following year.
Singh said that Durai had tried to give the impression in his affidavit that he was being thoughtful when he agreed to come on board as CEO in 1992 for just $12,000 a month even though he had been offered $20,000. The truth, Singh said, was that Durai had agreed to the lower pay in exchange for freedom to earn extra income outside the NKF. Durai testified that his earnings were up to the board of directors to decide, admitting that he was unethical but arguing that he was not to blame for accepting them.
NKF volunteer Archie Ong and aero-modelling instructor Piragasam Singaravelu, who claimed that they had seen Durai travelling in first class on airlines while making NKF business trips, were taken to court separately in 1998. Both apologised and paid damages and costs to the NKF after realising they were effectively fighting a losing battle against the unlimited monetary resources of the NKF.
The NKF, including chairman Richard Yong, had maintained that senior executives flew business class for long-haul flights.
Durai told the court on 11 July 2005 that he did fly first class. For the past two years, he had been entitled to a fare equal to Singapore Airlines business class rate—the equivalent of first class on other airlines. Previously, he had paid the difference on his own.
It was revealed during the trial that the NKF had a fleet of eight cars with company drivers and Durai was one of six officers who could make use of them at any time. The office cars were also used to transport VIPs and guests of the charity. In his affidavit, Durai said that the office fleet was used by officers who had to visit NKF facilities to attend to the needs of the centres and patients. Durai also had his own Mercedes-Benz 200 for his personal and family use, and his wife also drove it. However, the NKF paid the car's road tax and picked up the bills for maintenance and repair.