Singapore Post (SingPost) yesterday defended its appointment of PricewaterhouseCoopers (PwC) as special auditors to review its corporate governance.
In a lengthy letter to The Business Times, the firm sought to "clarify some misconceptions the public may have about our company".
First, it addressed the company's decision to appoint PwC to carry out a special audit.
The firm last December admitted an "administrative oversight" by not properly disclosing director Keith Tay's interest in its purchase of freight forwarder FS Mackenzie.
Mr Tay, on SingPost's board since 1998, is also a director and shareholder of Stirling Coleman Capital, which SingPost said had been the "arranger" for the purchase.
SingPost later announced that a special audit would be carried out to probe issues surrounding Mr Tay's interest in SingPost's acquisition of stakes in three companies: Famous Holdings, FS Mackenzie, and Famous Pacific Shipping (NZ).
However, BT commentators - including Mr David Gerald, the president and chief executive of the Securities Investors Association (Singapore), and NUS Business School associate professor Mak Yuen Teen - criticised the choice of PwC, which has been SingPost's external auditor since its listing in 2003.
In its letter, SingPost said the specific scope set for the special audit does not conflict with PwC's role as the company's external auditors.
While PwC is also the external auditor of Famous Holdings, this was not so at the time of SingPost's acquisition, the letter said. PwC was appointed in line with rules requiring listed companies to appoint the same auditor for Singapore-incorporated units.
SingPost decided to appoint a Big Four audit firm "with global name recognition" given "the seriousness of the issues that had been raised and the potential impact on the company's reputation internationally as well as locally". SingPost did not call a tender for the special audit as the board decided PwC would be the most appropriate choice.
This is because two other big firms - Deloitte and EY - had some connections to the matter at hand.
Meanwhile, SingPost had already outsourced some internal, related audit work to KPMG. "While we acknowledge that the special auditors should be perceived to be independent by the market... ensuring actual independence is, equally if not more, critical," its letter said.
PwC is bound by stringent conflict management rules and has confirmed that it complies strictly to these rules, SingPost added.
SingPost also noted that Mr Tay did not attend the board meeting that appointed PwC. Mr Tay will recuse himself from all related proceedings, the company said.
