Commission Against Corruption, Macao SAR

The CCAC has completed the inquiry into the termination of the cooperation agreement in relation to Smart Nursery by the Social Welfare Bureau (hereinafter referred to as “SWB”), where it believed that the SWB's termination of its cooperative relationship with Zonta Club of Macau (hereinafter referred to as “Zonta Club”) which operated Smart Nursery and its supervision on Zonta Club's utilisation of subsidies on the nursery were on the basis of its own duties and that there was no existence of illegality or administrative impropriety. On the contrary, according to the findings of the investigation, there was information indicating the existence of irregularities or illegalities concerning staff employment, financial management and utilisation of subsidies at the nursery by Zonta Club. Moreover, Zonta Club failed to rectify the problems all along in a timely manner, thereby affecting the maintenance of good services of the nursery and childcare services to a certain extent.

Last March, the CCAC received a complaint from Zonta Club, claiming that the SWB had allegedly breached the law and abused its power concerning the termination of cooperation between the two parties and therefore requested the intervention of the CCAC. Due to the public concerns on the incident and doubts about the decision of the Administration, the CCAC carried out an inquiry into the incident where it gathered information from relevant departments and institutions and heard the statement of the staff in order to clarify whether the involved procedures and decisions were legal and reasonable.

According to the investigation of the CCAC, in 2019, the SWB entered into a cooperation agreement with Zonta Club to set up Smart Nursery. Since July 2020, the SWB had been repeatedly sending its staff to the nursery to carry out assessment of its operation and inspection on its medical care and hygiene, but it discovered that the number of staff members in the nursery was, for a prolonged period of time, fewer than the required standard number of staff members stipulated in the cooperation agreement. Some of the staff members who received direct subsidies from the SWB including teaching assistants for children and housework helpers were even not seen working in the nursery. The SWB made multiple written requests to Zonta Club for explanation or proof of employment, but the data provided by Zonta Club obviously differed from that registered on the “platform for report of data of personnel and accounts of social service facilities”, which contravened the “Guidelines on Regular Appropriation of Subsidies to Social Service Facilities” and the cooperation agreement. Moreover, Zonta Club never took measures as required by the SWB to rectify the relevant violations in a timely manner.

The CCAC also discovered that some of the aforesaid personnel who never worked for the nursery were full-time employees of other companies. Some of them were even not in Macao for a prolonged period. The CCAC considered that they occupied the standard subsidised staff quota. As a result, the number of staff members actually working for the nursery did not reach the standard number of staff members required for maintaining good service, thus affecting the childcare service to a certain extent.

Furthermore, when reviewing the financial data of the nursery, the SWB found multiple unusual expenses, which should not be included in the operation costs of the nursery according to the relevant provision. Between 2021 and 2023, the SWB made several written requests for concrete explanation for the relevant expenses, the basis for the calculation and copies of the receipts. However, the response and data provided by Zonta Club failed to prove that those expenses were related to the operation of the nursery. Later, after the SWB requested for data again and conducted another review, some of the expenses were accepted, but the remaining ones were still not able to be proven related to the operation of the nursery. Moreover, Zonta Club never returned the funds involved to the account of the nursery as required by the SWB.

The CCAC pointed out that although the annual financial statements submitted by Zonta Club to the SWB were subject to an external and independent audit by certified public accountants and an audit report with “unqualified opinion” was issued, according to law, this merely indicates that the auditors considered the relevant financial statements reflected the financial situation of the nursery and were prepared in accordance with applicable accounting standards. Whether or not the utilisation of subsidies complied with the regulations must be verified and determined by the SWB in accordance with its powers. At the same time, in the process of operating social facilities, although supported entities have the right to charge fees to users and thereby obtain operational revenue, such revenue is generated through personnel hired as well as equipment and supplies purchased with government subsidies, particularly given that the relevant facilities or premises are provided by the government free of charge. Therefore, unlike general privately operated premises and business operations, according to contracts and relevant guidelines, supported entities are subject to supervision regarding the use of revenue. If a balance remains after all expenses are deducted, a certain percentage of the balance must be returned to the government.

The CCAC pointed out that the SWB had been continuously following up on the issue of fund usage by the nursery since 2021 and that no consensus was reached despite rounds of discussions with Zonta Club. Given Zonta Club's repeated breaches of the agreement, the SWB initiated procedures to terminate the cooperation agreement in accordance with the provisions of relevant laws and the agreement. According to the CCAC's analysis, regarding the issue of rescinding and terminating the cooperation agreement with Zonta Club, although the basis cited by the SWB was the agreement signed by both parties in 2019 rather than the re-signed one in 2024, this does not preclude the bureau from directly adopting Decree Law no. 22/95/M as the regulatory basis for early termination or non-renewal of the agreement.

Based on the findings of its investigation, the CCAC found that Zonta Club did indeed violate the legislation, subsidy guidelines and the cooperation agreement in terms of staff employment, financial management and utilisation of subsidies at the nursery. The SWB had been continuously following up on the matter since 2020 and gave Zonta Club multiple opportunities to provide explanations, submit supplementary information, and make corrections or improvements. However, the responses and submitted materials by Zonta Club failed to dispel concerns about alleged violations, and no appropriate measures were taken to follow up on the issue or refund the relevant funds. The CCAC believed that the SWB's determination that the cooperative relationship could not be maintained was based on factual and legal grounds.

Following in-depth analysis, the CCAC found no administrative illegality in the procedures taken by the SWB to terminate the cooperative relationship with Zonta Club. The bureau's initiation of relevant procedures and implementation of relevant measures were legitimate actions in fulfilling its duties. Since no illegality or administrative impropriety was found in the matters involved in the complaint, the CCAC has filed the case.