21-6-2023 (SINGAPORE) SPH Media Group has lodged a police report in response to potential offences discovered during an investigation conducted by its audit committee. The media company, responsible for publishing prominent titles such as the Straits Times, The Business Times, and Lianhe Zaobao, revealed earlier this year that its daily circulation figures had been inflated by approximately 10% of the reported average. In January, SPH Media appointed its audit and risk committee, along with legal advisors, to conduct a thorough examination and determine the necessary actions.
On Wednesday, SPH Media released a media statement confirming the completion of the committee’s investigation on June 16. The committee recommended filing a police report after uncovering several issues that could potentially constitute offences. The specific offences were redacted from the publicly disclosed report.
During an internal briefing for SPH Media publications, Max Loh, chairman of the audit and risk committee, clarified that the police report was not targeted at individuals or entities but rather presented the findings of the investigation as a whole. When questioned about the undisclosed offences, Loh stated that it was not the committee’s responsibility to determine them.
Loh also mentioned that the complete, unredacted report is accessible to the police. As a member of the board of SPH Media Trust and the former managing partner of EY ASEAN & Singapore, Loh played a crucial role in overseeing the investigation. The audit committee enlisted the services of legal advisors from Allen & Gledhill, who further engaged Deloitte to assist with the investigation.
The findings of the investigation revealed that the overstatement of daily circulation numbers occurred between September 2020 and March 2022. Approximately 82,600 copies were found to be overstated, including 49,000 bulk copies that were reported but not distributed through the Newspapers in Education (NIE) Fund, 13,600 copies attributed to schools, airlines, agencies, and all-in-one copies, 5,000 copies under the “Y Deal” arrangement, and 15,000 copies under the “X Barter Deal.”
The report addressed the issue of bulk copies, stating that while printing and distributing such copies to third parties is a common practice in the newspaper industry, they cannot be counted if they are returned, unsold, or undelivered. The investigation identified instances where these practices were not followed. The report concluded that individuals involved in the overstatement of circulation numbers were from the circulation division and found no evidence of board or senior management involvement.
Regarding the “X Barter Deal,” SPH had a long-standing arrangement with a company identified as “X” between 2013 and 2022. The arrangement involved the provision of e-paper digital subscriptions to SPH by “X” in exchange for 15,000 digital subscriptions to the Straits Times and Business Times. The report raised concerns that the “X Barter Deal” may have evolved into an arrangement intended to inflate circulation numbers and revenue without genuine intentions for execution.
The report stated, “As the X Barter Deal may not have been a genuine arrangement, there was an overstatement of revenue and expense of approximately S$830,000 (but no impact on profit and loss) in the financial statements of SPH Media Group for the financial year ended Aug 31, 2022.” However, the accounting impact was deemed immaterial to the overall financial statements of SPH Media Group for the same period.
SPH Media has taken action against employees involved in the inflated circulation numbers, resulting in four departures from the company and three warning letters being issued. Allen & Gledhill, after reviewing the actions taken, concluded that they were reasonably justified and in compliance with SPH Media Group’s policies. The employees who remain with the company were found to have acted under the instructions of their superiors, with a mistaken belief that the practices directed by their superiors were acceptable within SPH.
