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SingPost shareholders ask if those involved in TG deal taken to task
SINGPOST'S controversial TradeGlobal (TG) deal dominated the floor at its 25th Annual General Meeting (AGM) on Thursday.
Nine of the 900 shareholders present took the microphone to question the board of the postal and e-commerce service provider on the lack of due diligence, impairment of assets, unclear articulated mergers and acquisitions (M&A) policy, inadequate governance, and slashed dividends.
They even asked for details on how those involved in the takeover of the loss-making US e-commerce business TG would be taken to task.
Chairing the four-hour session at Suntec Singapore International Convention and Exhibition Centre, SingPost's non-executive lead independent director Fang Ai Lian said a full copy of the independent report by legal counsel WongPartnership LLP, when issued, will be given to the relevant regulatory authorities.
Mrs Fang said in order to help shareholders understand the observations made by the independent review on several points, its summary had been made public.
"This report did not discuss individuals," she said.
Independent director Elizabeth Kong said the focus of the summary was on the processes and not on specific individuals.
"That will be in the complete report to be handed over to the relevant authorities. The summary did not single out the exco, but merely said further due diligence was not carried out, responsibility not dealt with," said Ms Kong, who chairs the independent committee formed to review the TG acquisition.
SingPost hired FTI Consulting to assess the adequacy of due diligence performed in relation to the TG acquisition and said, in May, that it would take a whopping S$185 million impairment for TG, admitting that the business has "underperformed".
WongPartnership was asked by the current board to conduct a review of the circumstances surrounding its predecessor's decision to acquire TG and in an update on Monday, the law firm said that due diligence was not observed nor properly carried out before SingPost signed off on its largest acquisition in 2015.
The "asymmetrical flow on information" to the board also resulted in its oversight.
A summary of the findings was filed with the Singapore Exchange late on Monday night, two months after the group posted a net loss of S$65.2 million for its fiscal fourth quarter, down from a net profit of S$105.4 million in the previous year.
Ms Kong assured shareholders the recommendations made by WongPartnership to rectify governance issues had been accepted and SingPost "had put in place frameworks to address (our) shortcomings".
Visibly absent at the AGM was SingPost chairman Simon Israel, who was taken ill and was hospitalised on Thursday just hours before the AGM.
A spokesman from the firm said Mr Israel, who took over as chairman in May 2016, "is under observation pending tests". In his speech, read out by Mrs Fang, Mr Israel said SingPost had put a new dividend policy in place last year, and this "has resulted in paying a significantly lower dividend".
He said the "paying out 60 to 80 per cent of underlying net profit" meant impairment does not affect the dividend. He also said the past dividend policy, which "was not sustainable and dividends were being paid partly out of the reserves", is no longer appropriate when raising new capital for growth.
On SingPost's future, Mr Israel said while there had been "several major setbacks", SingPost should not lose sight of the progress made.
They include the strengthening of its partnership with Alibaba, the opening of its Regional eCommerce Logistics Hub, and the harnessing of technology to manage the decline of the postal business.