A Corporate Governance Breach at SingPost

Case Solution

Gennaro Bernile, Havovi Joshi, Vinika D Rao
Singapore Management University ()

This case takes place in May 2016 and concerns the development of a corporate governance saga at Singapore Post Limited (“SingPost”), Singapore’s designated public postal license. The narrative begins in December 2015 when SingPost announced that it had not disclosed Lead Independent Director Keith Tay’s interest in a 2014 acquisition due to “administrative oversight” in a notification from SGX dated July 18, 2014. Tay was the non-executive chairman and had a 34.5 percent stake in corporate finance advisor Stirling Coleman, who was working for the seller on the acquisition. The announcement added that Tay, however, had abstained on all board votes regarding the acquisition. In light of the public outcry, SingPost decided to conduct a special audit to investigate conflicts of interest related to the acquisition. Regulators and shareholders alike expressed great concern about the content of the special audit report. What could SingPost do to regain the trust of its stakeholders and ensure that its corporate governance standards and mechanisms are considered truly effective? And what would be the biggest impact of SingPost’s failure on the corporate governance environment in Singapore, a country that prided itself on both the effectiveness of its regulatory environment and the ease of doing business? This case facilitates the discussion on corporate governance and helps students understand the importance of corporate governance mechanisms for overseeing corporate governance and making strategic decisions. This case study can be used to analyze the central internal governance role of the board of directors and its role in controlling management decisions. Furthermore, the case can be used to explain that the external mechanism of corporate governance, that is, the business management market, is an important factor in monitoring the strategic decisions of top management.

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