Investors query SingPost audit report

The report attributed the lapse to the carelessness of SingPost staff rather than deliberate attempts to conceal former lead independent director Keith Tay's interests.
The report attributed the lapse to the carelessness of SingPost staff rather than deliberate attempts to conceal former lead independent director Keith Tay's interests.ST PHOTO: SEAH KWANG PENG

Some feel report didn't address concerns like how board arrived at prices paid for purchases

Singapore Post's share price edged up a cent to $1.59 yesterday even as a special audit report released late on Tuesday found that the company has "no prescribed policy, process or procedure" for evaluating and approving merger and acquisition transactions.

Mr David Gerald, president of the Securities Investors Association of Singapore (Sias), said: "Sias is somewhat surprised, especially for a company with a $3 billion market capitalisation, that such important policies or processes were not in place."

The postal group, which has spent recent years sweeping up stakes in logistics firms to grow into a regional e-commerce player, sought the audit last December after it came to light that its board had wrongly disclosed that none of its directors had any interest in the 2014 acquisition of freight forwarder F.S. Mackenzie.

SingPost later revealed Mr Keith Tay, who on Tuesday resigned as SingPost's lead independent director, is a chairman and 34.5 per cent shareholder of Stirling Coleman, which arranged the deal on behalf of the seller of F.S. Mackenzie.

The report by special auditors Drew & Napier and PricewaterhouseCoopers attributed this lapse and another to the carelessness of SingPost staff rather than deliberate attempts to conceal Mr Tay's interests.

Singapore Post, which has spent the last few years sweeping up stakes in logistics firms to grow into a regional e-commerce player, called for the audit last December after it came to light that its board had wrongly disclosed that none of its directors had any interest in the 2014 acqusition of freight forwarder F.S. Mackenzie.

But some investors felt the report did not address other concerns, such as how the SingPost board arrived at the prices it paid for the F.S. Mackenzie and Famous Pacific Shipping (New Zealand) purchases that Stirling Coleman advised the sellers on, and what fees Mr Tay earned from these deals - questions that Sias had raised to the board in January.

Mr Gerald said the basis for the investment decision "could have been addressed more thoroughly" to assuage the concerns of shareholders.

Notably, the report never mentioned the amounts SingPost paid for the three acquisitions investigated, although the sizes of the stakes were mentioned. And while the investigation was drawn out for about three months, the auditors said it was only on April 29 that SingPost informed them that one piece of evidence - an exco paper dated Jan 7 last year - might not be accurate. No reason was given.

Adding to the string of questions, the report recorded differing accounts between two company secretaries in January last year on whether they should include a disclosure of Mr Tay's interests in a draft announcement.

The announcement later went public with the paragraph on disclosures omitted. The auditors left it at that, saying only that the final approval of the chief executive was not obtained in this instance as the responsibility had been delegated to the company secretaries. This deviation was not "significant or unusual", the auditors wrote.

When contacted by The Straits Times last month, former company secretary Winston Wong had declined to comment, citing a non-disclosure agreement. He is now at OUE. The other company secretary has also left SingPost.

For now, the Singapore Exchange said it is reviewing the special audit report, and will take disciplinary action for any breaches of the Listing Rules and refer breaches to the relevant authorities, if necessary.

A version of this article appeared in the print edition of The Straits Times on May 05, 2016, with the headline 'SingPost shares edge up as investors query audit report'. Print Edition | Subscribe