Singapore Post (SingPost) is currently undergoing investigations by accounting watchdog the Accounting and Corporate Regulatory Authority (Acra) for possible breaches of the Companies Act. In response, investors dumped SingPost shares, causing shares to fall as much as 3.5 per cent to S$1.52 in the mid-morning of 19 May.
At the end of the day, SingPost shares closed down 1.6 per cent at S$1.55, with about 11 million shares changing hands.
According to a filing to the Singapore Exchange (SGX) in the morning of 19 May, SingPost said it has been requested by ACRA on 18 May to provide the Joint Special Audit Report dated 3 May to aid with the investigations.
Law firm Drew & Napier and auditing firm PricewaterhouseCoopers were appointed by SingPost to carry out the Joint Special Audit Report in December 2015 to investigate corporate governance issues. SingPost has currently only released to the public a 52-page executive summary of the report.
The report was following revelations that former SingPost's lead independent director and board member Mr Keith Tay was a shareholder and chairman of the financial adviser to three freight forwarders that SingPost bought in 2013, 2014 and 2015. Mr Tay did not disclose his interest in the acquisition of Famous Holdings (FHPL) in 2013, which the auditors in the summary report note is “arguably in breach of section 156(1) of the Companies Act.”
“His declaration was only made on 8 January 2013, when the SingPost Board gave its final approval, even though Mr Tay was aware of his interest in the proposed transaction by 14 August 2012 (at the latest),” read the report.
Mr Tay was also the non-executive chairman and shareholder of Stirling Coleman Capital during the period of the acquisitions. Stirling Coleman Capital served as financial arranger for FHPL.
The auditors also found that Mr Tay had breached fiduciary duties in the acquisition of FHPL and of another freight forwarding firm Famous Pacific Shipping (NZ) in 2015.
Following the release of the Joint Special Audit Report, Mr Tay resigned from his positions as lead independent director and member of the Audit Committee, Nominations Committee and Executive Committee in SingPost. He will also step down from the board of FHPL.
Breaches of the Companies Act are punishable by a fine not exceeding S$5,000 or imprisonment for a term not exceeding 12 months.
Nevertheless, the special report found that for its mergers and acquisitions, SingPost has “no prescribed policy, process or procedure for the evaluation and approval of M&A transactions” and that all M&A decisions were made “based on broad internal guidelines as well as the work experience of its members.”
Still, ACRA outlined various recommendations for SingPost, including strongly recommending that “SingPost should define standard procedures and guidelines for the declaration of directors’ interests.”
In its SGX filing on 3 May, SingPost stated that it has accepted the auditors' recommendations and will work towards implementing the changes together with a corporate governance review it is currently undertaking.