By Melissa Tan

First Published in Business Times, January 30, 2016

A COMMENTARY on Singapore Post’s choice of special auditor published in The Business Times on Thursday was a possible culprit for the stock’s 6.5 per cent plunge to a 22-month low that day, the postal and e-commerce group has claimed.

It separately defended its choice of PricewaterhouseCoopers (PwC) as special auditor for a corporate governance probe, in a roughly 2,500-word letter on Friday evening.

These came as the stock recovered slightly on Friday from its drubbing the previous day, rallying 2.7 per cent or 3.5 Singapore cents to end at S$1.335. The percentage gain was its biggest one-day rally since it climbed 4.5 per cent on Oct 16 last year.

SingPost shares had dived 6.5 per cent or S$0.09 to S$1.30 on Thursday, the lowest price since March 2014, drawing a query from the Singapore Exchange (SGX).

SingPost replied in an SGX filing on Friday morning that a possible explanation was market reaction to the commentary “SingPost saga: Untenable for PwC to stay on as special auditor”, in BT on Thursday, Jan 28.

“We are not aware of any information not previously announced concerning SingPost or our subsidiaries or associated companies which may explain the trading activity.”

The Jan 28 commentary, written by corporate governance specialist and SingPost shareholder Mak Yuen Teen and investor Chew Yi Hong, had argued that it was “untenable” for PwC to continue to accept its appointment as special auditor.

Out of 31 firms that have appointed a special auditor since 2011, SingPost was the only one that picked its external or internal auditor to do the special audit, the two men said. PwC has been SingPost’s external auditor since the group’s listing in 2003.

In a separate bourse filing, the group also published an eight-page letter on Friday evening in response to two commentaries and one letter, published in BT on Jan 21, that criticised its choice ofPwC.

In the letter, SingPost defended its decision, saying that the special audit’s scope “does not in any way conflict with PwC’s role as the company’s external auditors . . . the performance of the special audit will not result in a self-review which would impact the external audit”.

It added that the audit committee “is satisfied that the fees were reasonable” for the special audit. But it did not say why it considered PwC able to carry out the special audit without a conflict of interest or applied the same line of reasoning to the other Big Four firms.

SingPost also said that it wanted to “clear any misconception” that its acquisitions of stakes in three companies – Famous Holdings, FS Mackenzie and Famous Pacific Shipping (NZ) – were interested person transactions (IPTs).

Its board director, Keith Tay, is a director at Stirling Coleman, which had acted as the arranger appointed by the seller for the Famous Holdings deal and as the financial adviser to the seller for the FS Mackenzie and Famous Pacific deals.

But his director role at Stirling does not make the three deals IPTs as defined in SGX listing rules, SingPost said, pointing out: “The sellers of the stakes . . . were not interested persons of the company under the SGX listing rules.”

Though the board said in its letter that Mr Tay had recused himself from special audit deliberations, it was quiet on whether he had recused himself from discussions on the acquisitions.

Prof Mak told BT on Friday night that he was disappointed that SingPost’s board had made up its mind to stick with PwC.

“Disclosing, abstaining or even recusing does not make a conflict magically disappear,” he added. “I just cannot understand why, in a market where there are so many firms that can act as adviser, the three sellers ended up with Stirling Coleman – including two sellers based in UK and New Zealand.”