SingPost board outlines details of proceedings that led it to fire its CEO and two senior executives

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’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’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’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’ 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’s IBU of manually keying in the “DF” (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 “DF” 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 “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 whistleblowing report by SingPost on Jan 17, and investigations conducted by SingPost’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 “DF” 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’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 “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 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’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 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’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’ 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 auditor’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.

“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.

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

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

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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