Singapore Post is appointing auditors to investigate corporate governance concerns, just a day after acknowledging that it had not properly disclosed a director's interest in a 2014 deal.
The recommendation to appoint special auditors was made by Mr Keith Tay Ah Kee, the independent director involved in the errant disclosure.
The move was warranted in view of what SingPost described as "the seriousness of the issues raised" by corporate governance expert Mak Yuen Teen, an associate professor at the National University of Singapore Business School and an investor in SingPost.
Prof Mak raised questions in a letter published yesterday about SingPost's public disclosures relating to Mr Tay's possible interest in three recent acquisitions.
He asked SingPost to clarify whether Mr Tay had recused himself from board discussions about SingPost's acquisition of stakes in local freight forwarder Famous Holdings, FS Mackenzie, a British-based freight forwarder, and Famous Pacific Shipping (NZ).
On Tuesday, SingPost told the Singapore Exchange that Mr Tay had disclosed his interest in the FS Mackenzie deal and abstained from voting when the board approved the deal in July last year.
But its announcement on SGX last July said that none of its directors had any interest in its purchase of FS Mackenzie. It acknowledged on Tuesday that this was an "administrative oversight".
SingPost added on Tuesday that Mr Tay's position, as non-executive chairman and a shareholder of corporate finance advisory firm Stirling Coleman Capital, was disclosed in an announcement on SingPost's 2013 deal to buy Famous Holdings.
SingPost told The Straits Times that Stirling Coleman was the arranger for all three deals.
But Prof Mak noted that according to Stirling Coleman's website, it was the arranger for the Famous Holdings deal and financial adviser to the seller for the FS Mackenzie and the Famous Pacific deals.
"It's not clear to me what SingPost means by arranger, but 'financial adviser to seller' has a very clear meaning and it means working for the seller," he said. That raises questions about possible conflicts of interest, he added.
SingPost said yesterday that Mr Tay requested the special auditors to report directly to the board and the audit committee, and that the report be made available to the authorities and shareholders. Mr Tay also said he will recuse himself from the matter during the investigation and assist when required.
SingPost added that the internal processes relating to the deals will be disclosed.
"Hopefully, SingPost will announce what is the scope of the special audit," Prof Mak said.
"I would like to see the special audit go into issues like how the omission in the FS Mackenzie deal had occurred, how Stirling Coleman was selected as the arranger for the Famous Holdings acquisition and the fees it was paid, as that has implications on whether Mr Tay should be considered an independent director.
"If your firm advises on transactions for the counterparty as is the case for the FS Mackenzie and Famous Pacific Shipping deals, people may question if you are truly independent.
"Unfortunately, it is unlikely that the special audit will be able to shed light on how the sellers came to appoint Stirling Coleman, as those decisions were taken by the sellers, who are not part of the special audit."
Gibson, Dunn & Crutcher partner Robson Lee said SingPost has created more uncertainty by calling for a special audit without clarifying what is wrong.
He added that the firm should consider calling a trading halt and clarifying the purpose and scope of the special audit, otherwise the market would not be trading with full information.
Yesterday's developments come two weeks after the shock resignation of SingPost chief executive Wolfgang Baier, who oversaw the expansion of the firm into businesses related to e-commerce.
SingPost shares closed down one cent or 0.6 per cent to $1.66 yesterday.