Follow us on Telegram for the latest updates: https://t.me/mothershipsg
The Singapore Press Holdings (SPH) Media Group has filed a police report over inflated circulation figures, following a recommendation by its board’s audit and risk committee.
According to a press release by SPH Media Group, an investigation by the audit and risk committee into the matter of overstated inflation numbers concluded on Jun. 16.
The committee commissioned the law firm, Allen & Gledhill to assist in the investigations.
Its findings on the matter did not identify the people who were interviewed for the investigation by name.
Committee's observations could potentially constitute offences
The committee then recommended that a police report be lodged as some of its observations "potentially constitute offences".
SPH Media Group added that it would fully cooperate with the police in their investigations.
It also stated that it would act on the committee's recommendations for benchmark reporting and further enhance its risk management practices in the coming months.
What did the committee find in its report?
Using bulk copies paid for from the NIE Fund to shore up circulation numbers
Until the financial year of 2021, the daily average circulation copies for SPH print and digital news publications were reported by SPH Limited in its annual reports, and in biannual and annual submissions to IMDA and SingStat, respectively.
With regard to "bulk copies", the people interviewed generally understood that this referred to copies of non-subscription based news publications which are either typically sold and distributed at a discounted rate or distributed for free in large numbers.
Such copies would either be purchased or sponsored by corporate customers or paid for out of the NIE Fund at a heavily discounted rate.
The ‘bulk copies’ practice appear to be common knowledge within SPH, even at the board level, the report added.
NIE Fund set up to distribute samples to the needy
As for the NIE Fund, the interviewees understood this to be fund originally set up within SPH to pay for the distribution of newspaper samples to students, needy families, halfway houses and charities.
This fund was under the control of an unnamed SPH senior management member, who would approve heavily discounted rates for the bulk copies that were charged out of the NIE Fund.
The committee's report then said an unidentified entity managed the day-to-day operations of the NIE Fund which included deciding on what is to be booked into the NIE Fund and approving charge outs for sums below six figures.
Bulk copies used to shore up circulation numbers, cushion fall in print circulation numbers and meet KPIs
The report added that the NIE Fund was used to pay for bulk copies which were used to shore up the circulation numbers in SPH's annual reports, cushion the fall in print circulation numbers and meet key performance indicator (KPI) targets in respect of circulation numbers for the Circulation Division.
The report highlighted:
"The KPI targets in respect of circulation numbers were prepared by [ redacted ] at the start of each financial year, approved by [ redacted ], discussed with SPH senior management and ultimately approved by [ redacted ] as part of SPH’s annual budget."
The report then noted that "in recent years", more NIE digital bulk copies were added to soften the drop in print circulation numbers, and to maintain circulation numbers.
The NIE Fund was closed in May 2022, following the discovery of the inflated numbers.
Continued reporting printed school copies for circulation even though they were no longer being delivered to schools
Another source of the inflated numbers was the copies produced by SPH for schools, under two arrangements: the Character & Citizenship Education (CCE) deal, and reading corner copies, in which print and digital copies of SPH news publications, sponsored by the SPH Foundation, are placed in tertiary school reading corners.
The committee found that for the financial year of 2020 (FY 2020), the Circulation Division was directed to cease printing and delivering The Straits Times print copies to schools, pursuant to their request, but to continue reporting these copies as part of The Straits Times' print circulation numbers.
This was notwithstanding that no print copies The Straits Times were in fact printed or delivered under the CCE deal from FY 2020 onwards.
The revenue from the CCE deal was also booked into the NIE Fund prior to FY 2021.
In addition, the CCE deal was revised in 2021 to remove print copies of The Straits Times, leading to a a reduction of 1,900 daily circulation numbers for print copies.
However, the Circulation Division was instructed to use the NIE Fund to print more copies of The Straits Times, as part of the NIE bulk copies, to plug the gap in the circulation targets for that financial year.
Schools requested delivery of ST copies to be halted during pandemic, but were still printed and sent to warehouse instead
As for the reading corner copies, during the Covid-19 pandemic, schools had requested that delivery of these print copies be halted.
However, these copies were still printed then sent to SPH's warehouse at Kaki Bukit where they were either disposed or stored, then re-distributed when schools subsequently re-opened.
These copies were included in SPH's reported circulation numbers, notwithstanding that some of these copies had not been distributed.
The reported added that there is no available evidence to suggest that SPH's senior management and board, other than an unidentified person, had knowledge of the issues around the school's copies.
It also noted that due to limited records and conflicting responses from interviewees, it cannot be conclusively determined when the practice of disposing printed copies began.
Barter deal between SPH and "X": Only 7 digital codes accessed
The report also highlighted a barter deal between SPH and an entity called X in which said entity provided its own e-paper subscriptions to SPH, in exchange for 10,000 digital subscriptions to The Straits Times, and 5,000 digital subscriptions to The Business Times.
It noted that barter deals, in and off themselves are not improper and can be recorded as long as they satisfy specified recognition criteria.
The report highlighted that the original intention of the barter deal was to expand SPH news publications’ outreach and distribution in other jurisdictions at zero or low cost, and also promote SPH news publications in Singapore by bundling its subscriptions with those of foreign news publications.
Under the deal, the amounts to be paid by X to SPH and vice versa were offset against each other, and no real cash changed hands under this arrangement.
The 15,000 circulation copies arising from this arrangement were included in SPH’s reported circulation numbers.
However, only seven digital codes for The Straits Times and The Business Times digital subscriptions were accessed as of Jul. 29 2022, within the first 18 months of the X Barter Deal, suggesting that there was limited efforts to distribute the access codes.
Interviewees were also unable to explain the basis for and the variations in the value and number of X E-paper subscriptions and the administrative fee payable, when the 2018 X Barter Agreement was renewed in 2020.
There was also no definitive explanation as to why there was no corresponding administrative fee payable by X to SPH.
Other sources of inflated numbers: Y deal, airline copies, agency subscriptions, all-in-one copies
As for other sources of inflated numbers, the reported pointed to a "Y Deal" in which an entity known as Y paid SPH royalty fees every month and was was granted an exclusive limited license to print and distribute 5,000 daily copies of The Straits Times from 2013 to 31 March 2022.
These 5,000 daily copies were reported as part of SPH’s circulation numbers, even after printing under the Y Deal stopped in February 2021.
The entity was also charged a nominal sum under the Y Deal from November 2021 onwards, in order to allow the 5,000 copies to continue being reported in SPH’s circulation numbers.
As for airline copies, SPH had an arrangement with an airline, which paid SPH an undisclosed monthly sum for unlimited digital downloads of various SPH media and news titles.
A fixed number of digital copies of SPH news publications, totalling approximately 2,500 daily copies across the publications, was reported in SPH’s circulation numbers.
This was despite the actual number of downloads, which the airline was able to track and provide to SPH, being "significantly" lower, thereby resulting in elevated circulation numbers being reported.
With regard to the agency subscriptions, SPH had an arrangement with two agencies from Oct. 1, 2019, to Sep. 30, 2022, in which SPH supplied approximately 4,500 digital coupon passes to each agency for a three-year access to The Straits Times online.
Due to system constraints, two subscription codes were created for each digital coupon pass, with one subscription recorded at full price and the other at 100 per cent discount, resulting in the double counting of digital copies reported in the circulation numbers.
As for the all-in-one packages, these were introduced in 2011. In 2016, some subscribers to the packages requested that print copies not be delivered but still paid the same price for the package.
SPH continued to print these copies, which were likely disposed of, and report these print copies in its circulation numbers.
SPH: Risk controls will be reviewed
Following the release of the report, SPH media chief executive Teo Lay Lim said that "inherent weaknesses" had been revealed by the matter, The Straits Times reported.
Teo added that the company is also commissioning outside parties to look at SPH's governance, control and compliance, and is currently adopting a new system pertaining to "resource planning."
The media group will also be acting on recommendations in the report such as benchmarking its circulation numbers with "internationally accepted standards".
The report had concluded by stating:
"SPH Media Group has a legacy of operating within individual departments given the specialized nature of each operation/function. It should perform a comprehensive review of its control environment and practices to balance operational effectiveness and efficiency with its expected standards of conduct and accountability."
The head of the committee, Max Loh, added that the police report was not against specific individuals or entities but pertained to the findings of the investigation.
The police also have access to the unredacted report, he said.
"We cannot say more than that because it will prejudice police investigations. We’ve laid out what the issues or the findings are. And I think we really have to leave it to the relevant authorities, which, in this case, are the police, to figure out how they’re going to proceed and maybe if at all, they want to proceed."
Related stories:
Top photo by Joshua Lee