Singapore's Accounting and Corporate Regulatory Authority (Acra) has begun investigations into Singapore Post over possible breaches of the Companies Act, local media reports said.
In a Singapore Exchange filing this week, SingPost said that Acra had asked SingPost for the complete Joint Special Audit Report dated May 3 “as it is commencing investigations into possible
breaches of the Companies Act as highlighted in the Report.” SingPost had only disclosed a 52-page executive summary of the report by PricewaterhouseCoopers (PwC) and Drew & Napier.
SingPost had in December 2015 announced that in addition to its regular auditors (PwC), it would appoint special auditors (Drew & Napier) to investigate corporate governance issues, which came to light when SingPost stated that none of its directors had an interest in three acquisitions of freight forwarding companies which SingPost made between January 2013 and January 2015. These involved a 62.5% equity stake in Famous Holdings (FHPL); a 100% stake in F.S. Mackenzie (FSM) through FHPL; and a 90% stake in Famous Pacific Shipping (New Zealand) (FPSNZ).
This statement turned out to be erroneous as then-SingPost board member Keith Tay was also the non-executive chairman and 34.5% shareholder of Stirling Coleman Capital, during these acquisitions. Stirling Coleman Capital was appointed by FHPL as financial arranger, and financial advisor for FSM and FPSNZ in these transactions.
In the executive summary of the audit report, auditors PwC and Drew & Napier said that the error had arisen out of carelessness on the part of SingPost staff and there was “no deliberate intention to conceal” Mr Tay’s interest in the company’s acquisition of FSM. Mr Tay resigned from his post as SingPost's lead independent director following the release of the special audit report.
The auditors also found that SingPost has "no prescribed policy, process or procedure for the evaluation and approval of M&A transactions". In practice, the M&A team adopts a process "based on broad internal guidelines as well as the work experience of its members", they found.
"We strongly recommend that SingPost should define standard procedures and guidelines for the declaration of directors’ interests," the auditors said as part of its recommendations.
In response, SingPost said that the Board had accepted the auditors' recommendations, and would implement them together with those from the broader Corporate Governance Review that is still ongoing.
Separately, corporate heavyweight Simon Israel took up the post of SingPost chairman last week, a move expected to lend stability to the firm, which has been suffering from a leadership crisis.
Mr Israel, a former executive director and president of Temasek Holdings and current chairman of Singtel, took over from Lim Ho Kee who stepped down last month.
SingPost is still looking to replace group CEO Wolfgang Baier, who resigned abruptly in December 2015.
Nol van Fenema