SingPost should have disclosed internal wrongdoing once the facts had been established

WHEN Singapore Post (SingPost) said on the evening of Dec 22 that it had sacked three top executives for mishandling internal investigations sparked by whistleblowing reports, I wondered if the story would get a proper airing over the Christmas and New Year period.

Three weeks on, the matter is still making headlines.

One reason for the sustained interest in what happened is that SingPost operates a key public service with many stakeholders – the government not least among them.

Senior Minister of State for Digital Development and Information Tan Kiat How said in Parliament last week that the government is monitoring the situation closely, and that the company has been issued an advisory to uphold proper governance and processes.

Another reason SingPost is still being closely watched is that a major value-unlocking programme is underway. Turmoil within its top management ranks could put plans to monetise hundreds of millions of dollars of assets at risk; or create a buying opportunity for investors.

Over the 12-month period to Dec 22, SingPost shares had chalked up a total return of 20.4 per cent. This was in sharp contrast to their 10-year total return of minus 62.5 per cent.

Maybank said in a report last week that SingPost shareholders could receive as much as S$0.86 per share from various asset divestments. The research house has a target price of S$0.77 for the stock.

SingPost closed last Friday (Jan 10) at S$0.54, up 0.9 per cent or S$0.005.

Perhaps the main reason SingPost is still under the spotlight is that it has simply failed to maintain control of the narrative surrounding the whistleblowing reports, and the disclosures it has made are now being second guessed by market watchers.

In particular, SingPost did not seem prepared for the blowback from the three senior staff it fired – chief executive Vincent Phang, chief financial officer Vincent Yik, and chief executive of its international business unit Li Yu.

The three of them made statements about SingPost’s internal investigations that seem at odds with the company’s own version of events.

On Jan 2, the Securities Investors Association (Singapore), or Sias, issued a statement that pointed out some of these discrepancies, and called for an independent professional inquiry.

“Shareholders deserve better, and so does the market if all are to make informed decisions regarding their investments,” Sias said.

Would an independent inquiry be helpful? What could SingPost have done differently?

Disclosure shortcomings

Clearly, the misconduct brought to light by the whistleblowing reports does not reflect well on SingPost’s internal controls and processes. But SingPost did not help itself by keeping silent until last month, and not being more proactive once the cat was out of the bag.

The company’s announcement on Dec 22 did not even state exactly when it received the first whistleblowing report. This had one of my newsroom colleagues scrambling to check if there had been an earlier announcement on the matter.

SingPost responded to comments and queries from its stakeholders with another announcement on Dec 29, which included a timeline of events and an explanation for why it had kept the whistleblowing reports under wraps.

The company said no public disclosure was made when the first whistleblowing report was received on Jan 17 last year as the report had been submitted in confidence, and the allegations it contained had not been substantiated.

An investigation eventually determined the problem was confined to a single client and practices of three employees. The client was informed, and a settlement was hammered out.

SingPost said the three errant employees were dismissed in June 2024, and that the client’s contract was renewed in August 2024.

At that juncture, SingPost again decided that no announcement was necessary. It noted that the settlement amount had no material financial impact, and its business with the client was unaffected.

As for the misrepresentations made by SingPost’s management, the timeline showed that investigations took place from May to August last year. SingPost’s board then deliberated until November, at which point disciplinary proceedings against Phang, Yik and Yu kicked off.

SingPost said no announcement was made during the investigation and disciplinary proceedings as no conclusion was reached until the close of business on Dec 20. “This approach also ensured fairness to the parties involved in the disciplinary process,” it said.

Investors should vote

The way I see it, SingPost should have disclosed the internal wrongdoing uncovered by the whistleblowing reports once the facts had been established. While the company may not have faced immediate material financial risks, the practice of falsifying shipment data to dodge penalties could have damaged its reputation.

SingPost should perhaps also have flagged its concerns about its top management earlier. According to the timeline of events, it was evident by Apr 3, 2024, that the three top executives had made representations that contradicted the investigation findings.

If this was enough to eventually warrant their sacking, should this information have been kept from investors for some eight months?

This brings me to the question of whether an independent inquiry is a good idea.

My view is that many small investors would probably like to have more information about this whole affair.

Phang and Yik have already stated that they would welcome a public inquiry, and that they are prepared for their full responses to SingPost to be released. This is not surprising, as a public inquiry would be less costly than pursuing their case in the courts.

As an investor myself, however, I would much rather see shareholders of public-listed companies hold their boards to account directly.

At SingPost’s last annual general meeting (AGM), barely one billion of its 2.25 billion shares voted on each resolution. Singtel holds 494 million SingPost shares, representing a nearly 22 per cent stake.

Instead of pressing for an independent inquiry, perhaps Sias should call on Singtel to review the performance of SingPost’s board and encourage more investors to attend the company’s next AGM later this year.

Amendment note: The caption has been changed to reflect the correct company