SINGAPORE - Singapore Post (SingPost) on Dec 29 published a detailed account of the disciplinary proceedings leading to the sacking of three of its senior executives, saying that the company&rsquo s board of directors had ensured due diligence, and that the three had an opportunity to be heard before making its decision.

 

In a filing with the Singapore Exchange, SingPost&rsquo s board outlined the investigation and disciplinary process leading to the terminations of group chief executive officer Vincent Phang, group chief financial officer Vincent Yik and CEO of the implicated international business unit (IBU) Li Yu. It was responding to stakeholder and media inquiries, and corporate governance concerns.

 

All three are currently contesting the decision, saying that the reasons provided for their termination are without substantive grounds and that the process leading to the move was not conducted fairly.

 

The board&rsquo s account was detailed in two phases: the first focusing on the falsification of e-commerce shipment data - which had been identified through a whistleblowing report, and the second on the senior executives&rsquo conduct in handling the whistleblowing matter. 

 

Phase one: False entries on delivery status substantiated

 

The first phase of investigations related to the practice within Mr Yu&rsquo s IBU of manually keying in the &ldquo DF&rdquo (delivery failure) status code in respect of a significant number of parcels which SingPost had agreed to deliver, which falsely indicated that delivery had been attempted but had failed.

 

A &ldquo DF&rdquo status code counts as a valid status code which indicates that SingPost has tried to make a delivery and would count towards it satisfying certain key performance indicators.  

 

The allegation raised in the whistleblowing reports was that the manual &ldquo DF&rdquo 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&rsquo s attention following receipt of the whistleblowing report by SingPost on Jan 17, and investigations conducted by SingPost&rsquo s internal auditors commenced on the same day.

 

A copy of the whistleblowing report was also made to the Info-communications Media Development Authority of Singapore (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 whistleblowing reports had been submitted in confidence and the allegations had yet to be substantiated pending investigation.  

 

Internal investigations later substantiated the practice of manual &ldquo DF&rdquo data entries for the avoidance of penalties under the customer agreement, as alleged in the whistleblowing 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&rsquo s management in relation to the whistleblowing 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 &ldquo DF&rdquo 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 Resolution 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&rsquo 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&rsquo s contract with the customer was subsequently renewed in August, the board&rsquo 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&rsquo s Sustainability Report for the 2024 financial year.

 

Phase two: Poor handling of investigations by management

 

The second phase of investigations related to management&rsquo s conduct in the handling of investigations into the whistleblowing reports, as well as the renewal of the affected customer agreement in 2023.

 

The same external law firm was also engaged to review management&rsquo 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 whistleblowers&rsquo allegations to the Audit Committee.

 

These included false assertions that:

 

-There was no evidence of data manipulation and wrongdoing in relation to the manual &ldquo DF&rdquo data entries  

 

-There was no evidence of falsification for the purposes of avoiding penalties

 

-The purpose of the manual &ldquo DF&rdquo data entries was not to avoid contractual penalties  

 

-The practice of manual &ldquo DF&rdquo data entries itself would not attract any liabilities  

 

-The practice of manual &ldquo DF&rdquo data entries was requested by the customer and 

 

-The customer was fully aware of the assumptions of the manual &ldquo DF&rdquo 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 auditor&rsquo s 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.

 

&ldquo 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&rsquo s findings, the practice of the false manual &ldquo DF&rdquo data entries which were intended to avoid contractual penalties would likely have continued,&rdquo it added.

 

Disciplinary proceedings against Mr Phang, Mr Yik and Mr Yu commenced on Nov 11.

 

&ldquo They were each provided with an opportunity to respond to the allegations of misconduct against them&rdquo , the board said. Mr Phang&rsquo s and Mr Yik&rsquo 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&rsquo 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 whistleblowing reports, disciplinary proceedings and leadership succession on the stock exchange late on Dec 22.

SINGAPORE - Singapore Post&rsquo s (SingPost) board of directors will work with the company&rsquo s existing management to ensure the sale of its Australia freight business is completed as planned.

 

In an exchange filing late on Dec 29, the board said it will also take into consideration the change in SingPost&rsquo s profile following a divestment of the Australia business, and the subsequent need for a review of the group&rsquo s strategy in evaluating the appointment of a new group chief executive. 

 

SingPost&rsquo s board said its statement was issued in response to comments and queries regarding the recent termination of three senior executives, former group CEO Vincent Phang, former chief financial officer Vincent Yik, and the CEO of an international business unit (IBU) Li Yu, on Dec 21.

 

This came as a result of investigations into a whistleblowing report received by SingPost in January, alleging the falsification of e-commerce shipment data at the IBU helmed by Mr Yu. The terminations were disclosed to shareholders on Dec 22.

 

The Straits Times had raised concerns that Mr Phang&rsquo s removal could delay ongoing efforts to ensure the long-term commercial viability of the postal service business, and execute a new strategy to focus on logistics for future growth.

 

Plans to divest non-core assets to pare debt and return excess capital to shareholders were also on the cards, including the proposed sale of the Australian freight management business to a private equity firm for A$776 million (S$656 million) in cash.

 

This would substantially improve the company&rsquo s financial position and make way for a potential special dividend.

 

In its Dec 29 statement, SingPost&rsquo s board said that it will seek shareholders&rsquo approval for the proposed divestment at an extraordinary general meeting expected to be held in February 2025.

 

It also reaffirmed its intent to progressively divest and unlock the value of non-core businesses and assets as its Singapore business &ldquo transitions to an asset-light, carbon-light, and higher-return model&rdquo .

 

In Singapore, SingPost had been finalising an operating model with the Infocomm Media Development Authority, which has oversight over local postal and parcel deliveries.

 

This includes plans to transition away from post offices to alternative locations and channels where customers can interact with the postal system to send, receive or manage mail and parcels.

 

The board noted that the transformation of the Singapore postal business is being led by CEO of the Singapore Business Unit Shahrin Abdol Salam and his leadership team.

 

&ldquo As part of our ongoing transformation, SingPost is reviewing its customer service touchpoints to meet evolving consumer demands for postal services in a rapidly changing digital landscape.

 

&ldquo Adjustments will be made to some post offices and locations to ensure that postal services remain cost-effective and relevant.&rdquo

 

The Singapore business is also in the process of restructuring the national postal infrastructure and network to cater to the growth of e-commerce logistics, and plans to invest further in increasing capacity and improving productivity via automation.

 

&ldquo These investments will support the transformation of postal operations and provide a pathway for future growth in urban logistics in Singapore,&rdquo the board said.

 

Shares of SingPost last traded at 52 cents on Dec 27, after falling by more than 10 per cent on news of the terminations.