SingPost’s Parcelgate fiasco is a corporate governance disaster

IN A shocking disclosure on Sunday (Dec 22), national postal service provider Singapore Post (SingPost) announced that it had fired three senior management staff – group chief executive Vincent Phang, group chief financial officer Vincent Yik, and chief executive of its international business unit (IBU) Li Yu.

The terminations, which took immediate effect on the day before this announcement, came after the trio were found in a review by an external law firm to have been “grossly negligent” in the handling of internal investigations over a whistleblower’s report that SingPost had received earlier this year.

But what could be more shocking is what the company has failed to disclose in its bourse filing.

Whistleblower? What whistleblower?

First, investors would be surprised to learn that SingPost had “earlier in the year” received a whistleblower’s report relating to the group’s non-regulated international e-commerce logistics parcel business.

A report on the same matter had also been sent to the Infocomm Media Development Authority, the company added.

Why did SingPost not disclose that it had received a whistleblower’s report, even when internal investigations and an external review and assessment were under way?

In a series of questions posed to the SingPost board on Monday, the Securities Investors Association (Singapore), or Sias, noted that the company’s 2024 annual report – published in the last week of June this year – did not specifically mention any whistleblower’s report.

“When did the board receive the whistleblowing report, and what safeguards – including additional oversight by the board and temporary curtailment of executive powers of key employees – were put into place during the investigations?” Sias asked.

In its filing on Sunday, SingPost said that internal investigations as well as further review and assessment by external professional advisers – which arose from the whistleblower’s report – found that three managers in the IBU had “committed serious breaches” of the company’s code of conduct.

They had performed or approved manual updates of the “delivery failure” status code for parcels that SingPost had agreed to deliver for “one of its largest” customers – without supporting documents, and even though no delivery attempt had been made.

“The first operational issue this raises is how the manual overrides of delivery status happened and what the levels of control were,” said Stefanie Yuen Thio, joint managing partner at TSMP Law.

“For example, I would imagine that any manual override would need two persons to approve it. I would also expect that the company (has) a system of internal surveillance to spot any unusual patterns or volume of manual overrides,” she added.

SingPost said that the employment of these three individuals was terminated earlier, and that the company has also made a police report against them.

Sias also questioned whether the company will publish the key findings of its internal investigation report, and whether it will be carrying out a group-wide review to ascertain that all other business units are operating in accordance with its established rules and protocols.

Corporate governance advocate Mak Yuen Teen of the National University of Singapore Business School noted: “I would also ask why the individuals involved engaged in such serious misconduct or fraud.

“Was it pressure from management to meet unrealistic key performance indicators (KPIs)? Are the financial challenges faced by the business creating a toxic culture?”

Professor Mak noted that this is SingPost’s “third major scandal or controversy” since 2005.

For example, in July 2016, the company pledged to adopt the recommendations of a special audit and corporate governance review after an “administrative oversight” in 2015 led to an expose of its corporate governance shortcomings.

The revelations of the lapses occurred shortly after the sudden departure of its then group CEO Wolfgang Baier, and were soon followed by the high-profile departures of its chairman and most of the other directors and members of the senior management team.

“It may raise issues about more deep-seated issues like culture – although I note that the board and management through these three episodes have changed,” Prof Mak added. “Culture can be a very difficult thing to develop and cascade through an organisation.”

Role of the chiefs

Meanwhile, the biggest question in the Parcelgate scandal could be: What exactly did the group CEO, group CFO and CEO of the IBU do – or not do – to be sacked with immediate effect?

SingPost’s statement gave scant details, shrouded in corporate speak and legalese.

The company said the trio had “omitted to consider material facts that compromised their decision-making and/or failed to perform their duties responsibly and reliably”.

In the handling of the whistle-blower’s report, they were found to have “accorded undue weight to the misrepresentations” by representatives from the IBU “without any independent substantiation or evidence”.

In turn, they had made “various serious misrepresentations” to the audit committee.

“(They) had breached their duty to use reasonable care and skill in the performance of their duties,” the company said. “The serious misrepresentations also effectively undermined the group internal audit.”

It added that the board has “lost confidence and trust in the judgment” of the trio, “and in their ability to perform their duties towards promoting and protecting the interests of the company”.

Unfortunately, there was no mention of what these “serious misrepresentations” were, that warranted the dismissal of the key management personnel.

“SingPost should disclose the full details of its findings against the ex-senior executives, and the bases of their alleged breach of duty,” said Kennedys Legal Solutions partner Robson Lee. “The independent report containing the findings and the allegations against the senior executives should be fully disclosed to the market.”

When it comes to whistle-blowers’ reports, Lee said, it should be of “paramount importance” that senior management recuse themselves from the matter, especially if there are allegations made directly or indirectly against any person in senior management.

“That should be Rule 101 in any whistle-blowing policy that should be part of every listed company’s corporate governance due process,” he added. “As a public-listed company, SingPost would be expected to have a comprehensive whistle-blowing policy.”