SPH Media Group has filed a police report over the irregularities found in its circulation numbers.

However, the version of the SPH audit and risk committee (ARC) report released to the public has been redacted to remove the names of the personnel allegedly involved and also what offences, specifically, might have been disclosed by the investigation.

Now that a police report has been made, it remains to be seen whether the police will take up the investigation.

While the police generally have a duty to investigate, they may decline to take further investigation where there is insufficient evidence of criminal wrongdoing.

In the meantime, however, a few key observations about the case may be made.

WHAT EXACTLY WAS THE POTENTIALLY OFFENDING CONDUCT?

The ARC report states that its legal advisors, Allen & Gledhill, believed that certain matters discovered during the investigation could potentially constitute offences.

• First, the inflation of circulation numbers by counting bulk copies that had been returned, unsold or undelivered. Bulk copies refer to news publications sold or distributed at a discounted rate or for free in large numbers  
• Second, improper accounting of revenue. In particular, recognition of revenue from bulk copies that had not been sold or distributed to a third party
• Third, an improper barter arrangement, called the “X barter deal”. This was a deal in which SPH agreed to exchange e-paper digital subscriptions to entity X for 15,000 digital subscriptions to The Straits Times and The Business Times

The ARC report states, however, that “the X barter deal could potentially have evolved into a questionable arrangement entered into for the sole purpose of inflating circulation numbers and revenue, without a genuine intention to execute the arrangement”.

WHO COULD POTENTIALLY BE PROSECUTED?

First, in relation to the overstatement of circulation numbers, it seems from the ARC report that this practice may have started much earlier, with the establishment of the Newspaper in Education (NIE) Fund, an internal SPH fund set up to pay for newspaper samples for students, needy families and charities.

However, according to the report, “the NIE Fund was used to pay for NIE bulk copies used to shore up the circulation numbers in (SPH’s) annual reports, cushion the fall in print circulation numbers and to meet key performance indicator (KPI) targets in respect of circulation numbers for the circulation division”.

The report does not definitively state when the NIE Fund was set up, but mentions that it could have been as early as 2000.

The report says the NIE Fund was under the overall control of a particular officer, whose name is redacted.

The KPI targets for circulation numbers were discussed with senior management and approved by another person whose identity is redacted. The report suggests that at least one of the people whose identities are redacted was in senior management.

The report states that the X barter deal dates back to 2013. Two persons are mentioned, though both names are redacted. One was in charge of deciding whether to renew the deal, and the other in charge of approving the decision.

The major targets of any investigation are therefore likely to be the persons identified by the ARC report.

Even if they have subsequently left SPH, that is no barrier to prosecution. There is no statute of limitations on the commission of offences in Singapore.

A secondary issue is whether SPH itself could be criminally liable. This depends on whether the criminal acts were committed by someone who represented the company as an entity, and was not merely acting of his own accord.

This seems unlikely in this case, based on the available evidence, as the ARC report states: “The persons who were involved in the overstatement of circulation numbers (and in particular, had knowledge that copies that were not delivered were included in the reported circulation numbers) were from the circulation division. There has been no evidence sighted to suggest that the (SPH) board or its senior management (save for [redacted]) were involved in this.”

Similarly, while the board was aware of the X barter deal, it was not apprised of the operational details and it seems unlikely therefore that the company would be responsible for any criminal wrongdoing in this regard.

WHAT POTENTIAL OFFENCES MIGHT BE INVESTIGATED?

It is usually best to wait until accused persons have been charged, instead of speculating on possible offences committed.

Charging is a matter of evidence and prosecutorial discretion. What charge is laid depends on what evidence the investigation turns up and how the Public Prosecutor, who is the Attorney-General, assesses that evidence.

That said, some educated guesses on the nature of the potential offences can be made.

First, it could be cheating, an offence under the Penal Code. The essence is that the offender deceived someone into believing something that was not true.

Usually, as with online scams, this causes the victim to deliver property in the form of money to the offender. However, cheating is a very broad offence and does not always require money to change hands.

In this case, the thrust of the alleged wrongdoing is deception. It is not clear from the ARC report whether the target of the deception was the company, the public, or some other entity.

However, what is clear is that certain people within the organisation wanted to make it appear as if circulation numbers were higher than they actually were.

It is not necessary that this deception caused monetary loss — as long as some damage was done to SPH or other parties, even merely reputational damage. It does not seem too much of a stretch to say that SPH’s reputation has been damaged by this deception.

Cheating does not have to actually succeed to be an offence. An attempt to cheat is also an offence, as is a conspiracy to commit cheating.

Second, it could be falsification of accounts, also an offence under the Penal Code. The gist is that the source of the document may be genuine, but the information contained in it is false.

In this case, the intentional counting of copies that were known not to exist, or that were known to properly not be countable, and publication of those numbers in company documents could potentially amount to a falsification of accounts.

This applies to both the counting of bulk copies and the X barter deal.

Third, it could be corruption. This is an offence under the Prevention of Corruption Act.

Given that the ARC report states that the X barter deal could have evolved into a “questionable arrangement” and there may not have been genuine intention to execute the agreement, it is possible that someone somewhere in the system was deriving improper benefit from it.

That is where the corruption could potentially come in. The essence of corruption is misusing one’s position or power in order to derive unjustified personal benefit.

Finally, it is not entirely clear whether the accounting lapses themselves could be the subject of separate offences.

The ARC report concludes that the effect of the accounting malpractices did not amount to any material difference in the financial statements of SPH Media Group.

The main challenge of any investigation is likely to be proving that any accused person or persons intentionally or knowingly inflated the circulation numbers.

Mere negligence or recklessness will not do in the context of white-collar crimes.

Given the scale of the potential offending conduct and the time period over which it was said to have occurred, it seems likely that the investigations, if any, will take some time to be completed.

The upshot is that the SPH saga may be with us for the long haul.

ABOUT THE AUTHOR:

Alexander Woon is a lecturer at Singapore University of Social Sciences’ School of Law and is a lawyer at RHTLaw Asia. He was a deputy public prosecutor at the Attorney-General's Chambers.