- Joined
- Apr 14, 2011
- Messages
- 17,019
- Points
- 113
SingPost's board says decision to sack 3 top executives was 'carefully considered', releases detailed timeline
There have been questions about SingPost's recent sacking of its group CEO, its group CFO and the head of its international business unit at the same time.
From left: SingPost senior executives Vincent Phang, Vincent Yik and Li Yu. (Photos: SingPost website)
Listen
9 min
Michael Yong
30 Dec 2024 08:07AM(Updated: 30 Dec 2024 09:40AM)Bookmark
WhatsAppTelegramFacebookTwitterEmailLinkedIn
Read a summary of this article on FAST.
FAST
SINGAPORE: Singapore Post's board responded late on Sunday (Dec 29) to questions from stakeholders about its decision to sack three top executives at the same time, saying it was "carefully considered".
In a Singapore Exchange filing, chairman Simon Israel said: "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 senior counsel of another law firm.
ADVERTISEMENT
"This decision reflects the board's unwavering commitment to governance principles, prioritising what is right – even when it is more challenging in the short term – in the best interests of the company."
SingPost announced on Dec 22 the termination of the employment of its group chief executive officer Vincent Phang, its group chief financial officer Vincent Yik and the chief executive of the company's international business unit Li Yu over their mishandling of whistleblowing reports.
Following the news, the company's share price dropped by nearly 11 per cent the following day.
Experts said the sacking of three top executives at the same time was "unprecedented" for a Singapore firm.
The SingPost board on Sunday published a detailed account of the proceedings and said the announcement was to address comments and queries from stakeholders surrounding the firing of Mr Phang, Mr Yik and Mr Li.
ADVERTISEMENT
"In particular, the response … details the investigation and disciplinary process leading up to the terminations, whereby appropriate diligence was undertaken and the opportunity to be heard was given to the affected parties," said SingPost.
The firm said it took "decisive action through rigorous internal investigations" and the engagement of external advisers.
These investigations were closely supervised by its audit committee and were conducted in two phases.
Related:
FAQ: Why did SingPost fire three of its senior executives?
SingPost sackings: 'Internal investigations' into whistleblowing reports will not be published, firm tells SIAS
ADVERTISEMENTPHASE ONE
The first phase related to the practice within the international business unit operations (IBU Ops).This involved manually keying in the delivery failure (DF) status code for a significant number of parcels that SingPost had agreed to deliver.
This falsely indicated that the delivery had been attempted but had failed.
The allegation was that this was done to avoid the payment of certain contractual penalties to the customer.
A whistleblowing report was made, but there was "no public disclosure" at this stage as the allegations had yet to be substantiated pending investigations, said SingPost.
These internal investigations were carried out by its group internal audit (GIA), and the practice was substantiated.
ADVERTISEMENT
The internal audit unit further outlined that the company was liable to pay contractual penalties for not meeting service level requirements and for false data entries.
But representations made by management contradicted the findings of the GIA, and the audit committee engaged external legal counsel and a forensics service provider to "independently assist with the review" and advise on the matters.
Following this, the practice of manual data entries to avoid paying penalties to the customer was confirmed.
"The company then commenced disciplinary proceedings against three staff from IBU Ops who were, during the course of these proceedings, provided with an opportunity to respond to the allegations of misconduct against them in accordance with the company's disciplinary policy," said SingPost.
Their employment was terminated after the conclusion of these proceedings.
These managers submitted claims against SingPost to challenge the termination, but they were eventually withdrawn or not proceeded with.
ADVERTISEMENT
The company then filed a police report against them.
The board then instructed management to disclose what happened to the customer. A settlement was reached – although the terms are confidential.
"At this juncture, the company's investigations had determined that the issue was isolated and limited only to the contract with the specific customer and the practices of the three former staff from IBU Ops," said SingPost.
PHASE TWO
The company then looked at management's conduct in the handling of investigations into the whistleblowing reports.ADVERTISEMENT
They were not directly involved in the allegations raised in the whistleblowing reports.
SingPost also looked at the renewal of the affected customer agreement in 2023.
"The key issue here centred around governance expectations and proper conduct by management. The same external law firm was also engaged to review management's conduct in the matter," said the company.
In the course of these investigations it was found that although Mr Phang, Mr Yik and Mr Li were provided with the reports and finds of, as well as concerns raised by GIA, they made "serious misrepresentations" about the allegations.
This was despite "clear evidence" substantiating the allegations.
These false assertions include that there was "no evidence of data manipulation and wrongdoing" in relation to the manual data entries.
They also claimed there was no evidence of falsification to avoid paying penalties, and that the manual data entries were not to avoid such penalties.
ADVERTISEMENT
SingPost said the top executives asserted that the practice of manual data entries "would not attract any liabilities" and that it was requested by the customer.
It was claimed that the customer was "fully aware" of the assumptions of manual data entries and that such practice was in line with industry practice.
"These misrepresentations, made over three occasions from Mar 11 to Apr 3 contradicted the findings in GIA's reports and were without any independent evidence or substantiation," said the company, adding that all three were expected to protect the interests of the company at all times.
However, instead of addressing the findings, they relied on the misrepresentations made by representatives from IBU Ops, who were interest parties.
"The misrepresentations by Mr Phang, Mr Yik and Mr Li effectively undermined GIA, an independent and important group function responsible for investigating whistleblower incidents," said SingPost.
"The board notes that if the audit committee had relied on and accepted the misrepresentations by Mr Phang, Mr Yik and Mr Li over GIA's findings, the practice of the false manual 'DF' data entries which were intended to avoid contractual penalties would likely have continued."
ADVERTISEMENT
After investigations and further deliberations by the board, as well as consulting external legal counsel, SingPost opened disciplinary proceedings against all three.
Related:
Commentary: Don’t forget the whistleblower(s) who did the right thing at SingPost
SingPost 'confident' of legal position after former CEO, CFO say they will contest sacking
The company said they were each given an opportunity to respond to the allegations of misconduct.Mr Phang's and Mr Yik's responses came from their lawyer, while Mr Li's response was personally submitted.
ADVERTISEMENT
Disciplinary proceedings concluded on Dec 20, and it was decided that the "severity of their misconduct" warranted dismissal, given the "severe breaches of policy and serious legal and reputational risks involved".
"To further ensure fairness and independence, the board sought and obtained a second opinion on the matter from a senior counsel at another leading law firm, prior to making its decision on the matter."
The company said no announcement was made during the investigation and disciplinary proceeding into management's conduct.
The announcement on Dec 22 was made only after a conclusion was reached.
"This approach also ensured fairness to the parties involved in the disciplinary process," said SingPost.
"The company is unable to comment further on the investigation and disciplinary process in light of possible litigation with the relevant parties."
ADVERTISEMENT
All three top executives have said they would contest their sacking.
Related:
Sacked SingPost executives say their firing is 'without merits'
Third senior executive fired by SingPost to contest sacking, calls decision 'without merit'
NEXT IN LINE
The company previously said that it intends for Mr Isaac Mah, the current CFO of its Australia business – Freight Management Holdings – to return to Singapore to take up the group CFO position.Earlier in December, SingPost said it was selling FMH to a private equity firm for a cash consideration of A$775.9 million (US$504.1 million).
"Mr Mah, a chartered accountant, has been identified in SingPost's succession plan as a high potential leadership candidate and has been on a development path within the group," said SingPost.
He has been with SingPost since 2019 when he was appointed as head of strategic investments and investor relations, spearheading SingPost's investment in Australia.
He was appointed as CFO of FMH when SingPost took a controlling stake in FMH.
Having been instrumental in all merger and acquisition transactions the company has undertaken in recent years, he is "well-suited to assume the role" of group CFO, said SingPost.
The current head of the South District International Business Unit, Mr Gan Heng, has been appointed CEO of the International Business Unit.
SingPost said it would announce the appointment of a new group CEO in due course, subject to regulatory approvals.
It said in its evaluation for a new group CEO, it will take into consideration the "change in the profile of the group" following the potential sale of its Australia business, as well as a "subsequent need for a review" of the company's strategy.
"This incident underscores the importance of a robust whistleblowing process within the governance framework," said chairman Mr Israel.
"It ensures employees feel protected when coming forward, and assured that their allegations will be addressed impartially and effectively."
