SingPost board outlines details of proceedings that led it to fire CEO and 2 senior executives
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(From left) SingPost’s group CEO Vincent Phang and group CFO Vincent Yik, and CEO of the company’s international business unit Li Yu.
PHOTOS: ST FILE, BT FILE, SINGPOST
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SINGAPORE - Singapore Post on Dec 29 published a detailed account of the disciplinary proceedings leading to the sacking of three of its senior executives, saying the company’s board of directors had ensured due diligence, and that the three had an opportunity to be heard before it made its decision.
“The termination of senior management was a carefully considered decision by the board, based on established facts and supported by legal advice, including a second independent opinion from the senior counsel of another law firm,” SingPost board chairman Simon Israel said in a Dec 29 statement.
In a filing with the Singapore Exchange
It was responding to stakeholder and media inquiries, and corporate governance concerns.
All three are contesting the decision, saying the reasons provided for the termination of their employment are without substantive grounds and that the process leading to it was not conducted fairly.
The board’s account was detailed in two phases: the first focusing on the falsification of e-commerce shipment data, which had been identified through a whistle-blowing report, and the second on the senior executives’ conduct in handling the whistle-blowing matter.
Phase one: False entries on delivery status confirmed
The first phase of investigations related to the practice within Mr Yu’s IBU of manually keying in the “DF” (delivery failure) status code in respect of a significant number of parcels that SingPost had agreed to deliver, which falsely indicated that delivery had been attempted but had failed.
A “DF” status code counts as a valid status code that indicates SingPost has tried to make a delivery and would count towards it satisfying certain key performance indicators.
The allegation raised in the whistle-blowing report was that the manual “DF” data entries were being done to avoid payment of certain contractual penalties to the customer, whose identity remains undisclosed.
The matter was immediately brought to the audit committee’s attention following receipt of the whistle-blowing report by SingPost on Jan 17, and investigations conducted by SingPost’s internal auditors commenced that day.
A copy of the whistle-blowing report was also sent to the Infocomm Media Development Authority (IMDA) on Feb 28, although the matter had no impact on local postal and parcel deliveries over which IMDA has oversight.
The SingPost board said no public disclosure was made at this stage as the whistle-blowing reports had been submitted in confidence and the allegations had yet to be substantiated pending investigation.
Internal investigations later substantiated the practice of manual “DF” data entries for the avoidance of penalties under the customer agreement, as alleged in the whistle-blowing reports.
They also revealed that SingPost was liable to pay contractual penalties for not meeting specified service level requirements and for false data entries.
As representations made by SingPost’s management in relation to the whistle-blowing reports contradicted the findings of internal auditors, the audit committee on April 3 engaged the assistance of external legal counsel and, on April 19, a forensics service provider.
Further investigations confirmed the practice of manual “DF” data entries to avoid contractual penalties.
On May 6, disciplinary proceedings commenced against three staff from the IBU who were involved in the data falsification. The board noted that these employees were given the opportunity to respond to the allegations of misconduct against them.
Their employment was terminated on June 12, following the conclusion of these proceedings.
SingPost said it was informed by the Tripartite Alliance for Dispute Management that the three former IBU staff had submitted claims for wrongful dismissal. Two subsequently withdrew their claims, and the third decided not to proceed with his claim.
On Nov 11, SingPost filed a police report against the three.
The board also instructed SingPost’s management to make the appropriate disclosure to the affected customer, and a settlement amount was agreed upon.
As the settlement amount, which is confidential, was deemed to have no material financial impact, and SingPost’s contract with the customer was subsequently renewed in August, the board’s assessment was that no announcement or disclosure was required at this stage.
The incident was nevertheless reported as a substantiated case relating to fraud in SingPost’s Sustainability Report for the 2024 financial year.
Phase two: Poor handling of investigations by management
The second phase of investigations related to management’s conduct in the handling of investigations into the whistle-blowing reports, as well as the renewal of the affected customer agreement in 2023.
The same external law firm was engaged to review management’s conduct in the matter.
These investigations revealed that although Mr Phang, Mr Yik and Mr Yu were provided with the reports and findings of the auditors, as well as the concerns auditors had raised, they nevertheless made serious misrepresentations concerning the whistle-blowers’ allegations to the audit committee.
These included false assertions that:
There was no evidence of data manipulation and wrongdoing in relation to the manual “DF” data entries;
There was no evidence of falsification for the purposes of avoiding penalties;
The purpose of the manual “DF” data entries was not to avoid contractual penalties;
The practice of manual “DF” data entries itself would not attract any liabilities;
The practice of manual “DF” data entries was requested by the customer; and
The customer was fully aware of the assumptions of the manual “DF” data entries and such practice is said to be in line with industry practice.
These misrepresentations, made over three occasions from March 11 to April 3, contradicted the auditors’ reports and were without any independent evidence or substantiation, the board said.
The board said Mr Phang, Mr Yik and Mr Yu relied on the misrepresentations made by interested party representatives from the IBU, which led to the undermining of the internal auditor.
“The board notes that if the audit committee had relied on and accepted the misrepresentations by Mr Phang, Mr Yik and Mr Yu over group internal audit’s findings, the practice of the false manual ‘DF’ data entries which were intended to avoid contractual penalties would likely have continued,” it added.
In his statement, Mr Israel noted that the incident underscores the importance of a robust whistle-blowing process within the governance framework.
“It ensures employees feel protected when coming forward, and assured that their allegations will be addressed impartially and effectively.”
Disciplinary proceedings against Mr Phang, Mr Yik and Mr Yu commenced on Nov 11.
The board said: “They were each provided with an opportunity to respond to the allegations of misconduct against them.” Mr Phang and Mr Yik’s responses were made through their lawyer, while Mr Yu submitted his personally.
The proceedings, which were concluded on Dec 20, determined that the severity of the senior executives’ misconduct warranted disciplinary action in a form leading up to dismissal, given the severe breaches of policy and serious legal and reputational risks involved.
To further ensure fairness and independence, the board said it also sought and obtained a second opinion on the matter from a senior counsel at another leading law firm, prior to making its decision to terminate the employment of Mr Phang, Mr Yik and Mr Yu on Dec 21.
SingPost then filed its official announcement on the whistle-blowing reports, disciplinary proceedings and leadership succession on the stock exchange late on Dec 22.
Timeline of events leading up to sacking of SingPost CEO
Jan 17 - SingPost receives first whistle-blowing report. Investigations begin, led by group internal audit (GIA) with oversight from the audit committee.
Feb 28 - SingPost receives second whistle-blowing report, addressed to the Infocomm Media Development Authority and copied to SingPost.
March 11 - Audit committee meets to discuss findings by GIA.
April 3 - Audit committee discusses findings by GIA.
It engages external legal counsel to review and advise on matters raised in the whistle-blowing reports, as representations made by the management contradict the investigation findings by GIA.
April 19 - Audit committee engages a forensics service provider to review and advise on matters raised in the whistle-blowing reports.
May 6 - Disciplinary proceedings begin against three staff in international business unit operations (IBU Ops) who were directly involved in the manual “delivery failure” data entries.
May 9 - June 7 - During the proceedings, the three IBU staff are given the opportunity to provide their written responses to the allegations. An investigation committee reviews the allegations against the three and their responses.
May 13 - Aug 14 - Audit committee engages the same law firm to investigate the management’s handling of the whistle-blowing reports and renewal of the affected customer’s contract.
June 12 - The three IBU staff are dismissed.
July 4 - 14 - SingPost is informed by the Tripartite Alliance for Dispute Management (TADM) that the three former staff have submitted claims of wrongful dismissal.
Aug 14 - Nov 11 - The board deliberates in consultation with external legal counsel following investigations on the management’s handling of the reports and contract renewal.
Aug 27 - TADM informs SingPost that two of the three former staff have withdrawn their claims.
Oct 16 - TADM informs SingPost that the third former staff member has not proceeded with his claim.
Nov 11 -Disciplinary proceedings begin against CEO Vincent Phang, CFO Vincent Yik and IBU chief Li Yu.
A police report is filed against the three IBU staff.
Nov 22 - Mr Phang and Mr Yik provide responses, via a lawyer’s letter, to the allegations. Mr Yu provides his response by e-mail. An investigation committee reviews the allegations and the trio’s responses.
Dec 11 - A senior counsel at another leading law firm is instructed to advise on the allegations and provide a second opinion.
Dec 20 - A board resolution is passed to dismiss the three executives.
Dec 21 - Mr Phang, Mr Yik and Mr Yu are dismissed with immediate effect.
Dec 22 - Announcement is released on SGXNet on the whistle-blowing reports, disciplinary proceedings and leadership succession.
