Sweetlands Childcare ex-director fined for illicit withdrawals from Child Development Accounts

·Senior Reporter
A child putting a coin into a piggybank.
A child putting a coin into a piggybank. (PHOTO: Getty Images)

SINGAPORE — A former director of 11 childcare centres made use of a government scheme to obtain money from parents who owed school fees at her centres.

Chan Chew Shia, 58, took advantage of the Child Development Co-Savings (Baby Bonus) Scheme, through which the government matches any savings deposited by a parent into their child’s Child Development Account (CDA), and made unauthorised withdrawals from the accounts.

Chan - a former director and overall-in-charge of 11 childcare centres under the Sweetlands Childcare Centre brand - was fined $90,000 for her offences, which spanned August 2011 to March 2015.

She pleaded guilty to 30 out of 154 counts under for contravening the Child Development Co-Savings Regulations (CDCR) for making unauthorised withdrawals from the CDA. The remaining counts were considered for her sentencing.

Chan’s case is the first prosecution under the CDCR. The offence carries only a fine.

Deducting ministry's match contributions in place of fees

As a director, Chan had faced issues with parents of the students at her childcare centres owing school fees. She came up with an arrangement in which she would deposit money into the students' CDAs as a loan to the parents, so that the Ministry of Social and Family Development (MSF) would match the contribution in the kids' CDAs.

Chan would then deduct a repayment of her loans to the parents, and deduct MSF’s matching contributions in place of outstanding fees due from the parents. Her deductions for loan repayments were not authorised withdrawals from the CDAs under the CDCR.

Before she committed those offences, she had contacted a member of the MSF customer service staff over the phone on 7 September 2010, and was wrongly told that her loan repayment arrangement was permissible.

However, MSF officers learnt about the arrangement after conducting an audit of Sweetlands Childcare in March 2011, and informed Chan that she should not make deductions from the CDA for loan repayment purposes.

Despite the warning, Chan continued to collude with parents of children to make unauthorised withdrawals from their children’s CDAs on 30 occasions from between 24 April 2012 and 28 August 2014. She agreed to provide them a loan to deposit into their CDAs in order to trigger matching contributions from MSF.

Chan then made unauthorised withdrawals or directed for unauthorised withdrawals to be made. She had the capacity to make the withdrawals as she was an “approved person” for 10 out of her 11 childcare centres, which were approved institutions.

Chan made a total of 154 deductions amounting to $133,674 for loan repayments through the arrangement she had with 22 parents. These involved the CDAs of 34 children.

After receiving a complaint from a parent regarding the same scheme, an MSF officer spoke to Chan over the phone on 27 May 2011 and informed her that she should not make withdrawals from the CDAs for loan repayment purposes.

In April 2014, during an audit of Sweetlands Childcare following another complaint by another parent, MSF officers discovered that Chan was still offering her arrangement to some parents and there were deductions from the CDA accounts for loan repayments. Chan was told once again that she should not make such deductions.

On 29 July 2015, Chan received an official letter from MSF, stating that unauthorised deductions were made from the CDAs of various children, in breach of the CDCR.

In total, she refunded $5,880 out of the unauthorised withdrawals to the CDA.

DPP says offences resulted in director's personal gain

The prosecution sought a fine of $90,000. As the case was the first prosecution under the CDCR, Deputy Public Prosecutor (DPP) Cheng Yuxi proposed a sentencing framework based on the offence and offender-specific factors.

The fine imposed should be higher than the amount involved, argued the DPP, who also pointed that while Chan claimed she was was helping families of students who could not afford school fees, the offences resulted in her own personal gain.

“The purpose of the accused’s deposits was to trigger MSF’s matching contribution, which could be used to pay the school fees of her child care centres which was in deficit. As she was the director of all 11 childcare centres, she stood to gain from the payment of school fees using the CDA funds,” said the DPP.

Chan’s lawyer Julian Tay said that a decade ago, when the Baby Bonus Scheme was still in its infant stage, the relevant guidelines were not entirely clear.

He pointed out that his client was initially given erroneous advice, and that when MSF wrote to Chan in 2015, she ceased the arrangements with the parents immediately.

Chan’s end goal had been to assist the parents, he added. “I would say, in this case, means to an end was not properly executed as it was, but the end goal was to assist the parents cause. Ultimately, the whole purpose of depositing the funds as loan to the parents into CDA account is to trigger the matching contribution, and that matching contribution of course would be useful to defray education costs and fees imposed by centres.”

He added that when news of Chan’s offence first broke in 2015, there was a “media frenzy” and talks of her alleged cheating resulted in banks withdrawing their credit facility. Chan was pushed to “the brink of bankruptcy”.

Chan also suffered for an “unduly long period of time” as she was only prosecuted five years after the offences, he added.

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