SingPost's disclosure lapses made no difference to deals, say special auditors

But auditors take director to task for delay in disclosing stake in firm advising companies

A Singapore Post (SingPost) branch at Eunos Road. PHOTO: ST FILE

A long-awaited report has found that the disclosure lapses relating to deals by Singapore Post (SingPost) to buy two freight forwarders made no difference to the company board's ultimate decision to acquire the two companies.

However, the report took director Keith Tay to task for the delay in disclosing his interest in the firm Stirling Coleman, which advised the companies that were being bought by SingPost.

Special auditors Drew & Napier and PricewaterhouseCoopers conducted a corporate governance review at the request of SingPost. Last night, a 47-page summary of the report was issued.

In a statement last night, Mr Tay said he has resigned as lead independent director with immediate effect. PHOTO: NEWGATE COMMUNICATIONS

SingPost has been embroiled in controversy after it came to light last December that Stirling Coleman had advised the parties selling the firms to SingPost. This raised various issues, such as whether disclosure of Mr Tay's interest in the deals was properly made and even if SingPost may have overpaid.

In the acquisition of F. S. Mackenzie, the auditors noted that Mr Tay had declared his interest as chairman and 34.5 per cent shareholder of Stirling Coleman to the board.

  • How the saga unfolded

  • JAN 18, 2013: SingPost says it is buying a 62.5 per cent stake in freight forwarder Famous Holdings for $60 million. Mr Keith Tay, non-executive chairman and a shareholder of Stirling Coleman, which arranged the transaction, abstains from voting.

    JUNE 23, 2014: SingPost executive committee (exco) meets to approve acquisition of freight forwarder F.S. Mackenzie. Mr Tay, attending via telephone, declares his interest in the deal as Stirling Coleman is advising the seller of F.S. Mackenzie.

    JULY 18, 2014: Famous Holdings approves the F.S. Mackenzie acquisition via directors' resolution. No physical meeting takes place. SingPost announces the £7 million (S$13.8 million) deal on the Singapore Exchange (SGX) later. Statement includes an incorrect paragraph: "None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the Acquisition."

    NOV 5, 2014: During a board meeting of Famous Holdings, a SingPost subsidiary, at 10.30am, the board is updated on the progress of the acquisition of freight forwarder Famous Pacific Shipping (New Zealand). Mr Tay declares his interest in Stirling Coleman, financial adviser for Famous Pacific. Later, at noon, a SingPost exco meeting is held in the same room, but there is no recorded disclosure of Mr Tay's interest in the Famous Pacific deal. Mr Tay cannot recall declaring his interest at the SingPost meeting.

    JAN 7, 2015: SingPost exco approves acquisition of Famous Pacific Shipping (New Zealand). Mr Tay does not attend as he is in hospital in China. There is no recorded discussion of Stirling Coleman's involvement in the acquisition.

    JAN 7 - 14, 2015: SingPost's legal team discusses if Mr Tay's interest in Stirling Coleman needs to be disclosed in the SGX announcement.

    JAN 14, 2015: SingPost announces that it has acquired a 90 per cent stake in Famous Pacific Shipping (NZ) for a total consideration of up to NZ$8 million (S$7.5 million). In its statement, the entire paragraph on "directors' shareholding and controlling interest", where Mr Tay's interest in Stirling Coleman would have been disclosed, is omitted.

Stirling Coleman was advising the seller of the freight forwarder.

But the announcement on July 18, 2014, posted on the Singapore Exchange (SGX) website that went out to the public, omitted this information and went unnoticed by the SingPost corporate secretarial team. Mr Tay spotted the omission that night and highlighted it to the SingPost team.

SingPost company secretary Winston Wong asked external lawyer Ng Eng Leng of Rodyk & Davidson if a disclosure should be issued, but Mr Ng advised that it was not necessary. However, Mr Ng told the auditors subsequently that he had not read the incorrect announcement and would have advised SingPost to issue a clarification if he had been aware of its mistake.

The special auditors pinned the incorrect disclosure on what it called "carelessness" in preparation and review by certain SingPost staff.

On the second acquisition of Famous Pacific Shipping (New Zealand) announced on Jan 14 last year, the paragraph on "directors' shareholding and controlling interest", which would have disclosed to the public that Stirling Coleman was advising the firm and that Mr Tay was its chairman, was entirely omitted.

The auditors did not point fingers at any one person for this lapse, although it noted that SingPost's legal team had differing views on whether disclosure was necessary.


  • • To improve guidelines on the evaluation and approval of merger and acquisition transactions

    • To implement standard procedures for the disclosure of directors' interests

    • To put into writing the guidelines for preparing and disclosing announcements made to the Singapore Exchange on merger and acquisition transactions

They also noted that Mr Tay had disclosed his interest to Famous Holdings, which held Famous Pacific, but not to the SingPost executive committee, which was the approving authority.

But even with these lapses, the special auditors concluded that "there is no suggestion that Mr Tay's vote influenced or otherwise affected the eventual approval of (the) acquisitions."

SingPost's statement last night was swiftly followed by a separate statement from Mr Tay via his lawyers, to say he has resigned as lead independent director with immediate effect, as he sees no further need to remain on the board now that the audit is completed.

Mr Tay said last night: "While there are some factual findings in the report that I disagree with completely, they do not detract from the key point - nothing I did caused the non-disclosures in relation to the acquisition of F.S. Mackenzie and Famous Pacific."

National University of Singapore business school associate professor Mak Yuen Teen, whose letter on these deals last December had sparked the audit, said: "The special auditors were critical of Keith Tay... It would seem that regulators may need to look further into this. I think this point should not be buried by the argument that SingPost would still have made the acquisitions."

SGX reminded companies last night of the rules on transactions that require disclosure of a director's interests. It said a company's board is responsible for the announcements and must not abdicate its responsibility to professionals.

It also wants SingPost to obtain independent confirmation that recommendations set out in the summary are implemented.

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A version of this article appeared in the print edition of The Straits Times on May 04, 2016, with the headline SingPost's disclosure lapses made no difference to deals, say special auditors. Subscribe