CORPORATE GOVERNANCE CASE STUDIES VOLUME SEVEN Edited by Mak Yuen Teen Corporate Governance Case Studies Volume seven Mak Yuen Teen, PhD, FCPA (Aust.) Editor First published October 2018 Copyright ©2018 Mak Yuen Teen and CPA Australia All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, except for inclusion of brief quotations in a review. The views expressed in this publication are those of the authors and do not necessarily represent the views of, and should not be attributed to, CPA Australia Ltd. Please contact CPA Australia or Professor Mak Yuen Teen for permission of use of any case studies in this publication. Corporate Governance Case Studies Volume Seven Editor : Mak Yuen Teen, PhD, FCPA (Aust.) Editor’s email : [email protected] Published by : CPA Australia Ltd 1 Raffles Place #31-01 One Raffles Place Singapore 048616 Website : cpaaustralia.com.au Email : [email protected] ISBN : 978-981-11-8936-4 II Contents Foreword Preface Singapore Cases Is Datapulse Flatlining? ................................................................................................. 1 Fat Leonard: The Elephant In The U.S. Navy’s Room .................................................. 42 A Good Deal? Privatisation Of Global Logistic Properties ........................................... 57 The Diagnosis Of Healthway ....................................................................................... 71 International Healthway Corporation: Rising From The Dead ...................................... 86 Keppel Corporation: Offshore And Off-Course .......................................................... 101 Next Stop For SMRT ................................................................................................ 131 Swissco Holdings: The Struggle To Stay Afloat ......................................................... 145 Trekking In The Wrong Direction ............................................................................... 163 Yuuzoo Corporation: A Uniquely Singapore Listing?.................................................. 186 Asia-Pacific Cases Felda Ventures Into The Unknown ............................................................................ 220 Infosys Limited: Murthy’s Law ................................................................................... 235 Real (Kobe) Steel, Fake Results ................................................................................ 253 Living On The Razer’s Edge ...................................................................................... 267 Can It “Trive” Again? ................................................................................................. 280 III Global Finding The Whistle At Barclays ............................................................................... 300 Bell Pottinger: A Deal With The Devil ......................................................................... 312 BT Group: The Italian Job ......................................................................................... 330 Deutsche Bank: A Russian Affair ............................................................................... 344 Equifax Discredited ................................................................................................... 359 Rio Tinto: A Canary In The Coal Mine ....................................................................... 375 Rolls-Royce: Turbulence Ahead ................................................................................ 387 Broken Furniture: The Collapse Of Steinhoff .............................................................. 405 Tesla Motors: Full Speed Ahead ................................................................................ 422 A Rough Uber Ride .................................................................................................. 443 The Krafty Takeover Of Unilever ............................................................................... 456 IV Foreword Corporate governance is an on-going journey for listed companies to build trust in society and achieve high standards of governance and performance in a disruptive, fast-paced and volatile operating environment. Listed companies are increasingly under pressure to be more transparent and accountable to their stakeholders. Therefore, the current corporate governance structures and processes need to evolve to remain relevant and effective in the future economy. Extensive work has been done on this front in recent years in Singapore. In August 2018, the Monetary Authority of Singapore announced changes to the Singapore Code of Corporate Governance. The new code aims to support sustained corporate performance and innovation and strengthen investor confidence in Singapore’s capital markets. These are encouraging developments to raise the bar on corporate governance. In Singapore, CPA Australia is proud to be part of the national effort to improve the overall corporate governance culture. Among our key initiatives in the past decade is this ongoing series of Corporate Governance Case Studies. CPA Australia is privileged to have partnered Associate Professor Mak Yuen Teen FCPA (Aust.) of the NUS Business School since 2012 to publish this annual collection of teaching case studies. We thank Prof Mak for his meticulous efforts in editing the case studies and the students of the NUS Business School for their work in researching and producing the cases. We hope this 7th volume of case studies will continue to encourage robust discussions on governance and contribute to advancing corporate governance standards in Singapore, the region and beyond. Yeoh Oon Jin FCPA (Aust.) Divisional President – Singapore CPA Australia October 2018 V Preface Since the first volume of this publication in 2012, it has always been my intention to make the case studies as timely as possible and to continue to expand the range of issues and countries that are covered – while remaining faithful to a significant Asia focus. In this latest volume, I have also been more directly involved in writing some of the cases, especially those where I have been involved in raising possible issues in the companies concerned. This volume also contains a few cases that are longer than usual because of the many issues involved. Even then, in some companies, a difficult decision has to be made to focus on just a subset of the issues. Some companies may require an entire book to cover all the issues and, given the drama, maybe a movie to go with it. The objective of having the cases being as timely as possible means that for some of the cases, the story has not ended yet. Some may well see a sequel in the future. We have also tried to track further developments until as close as possible to the publication date. This year’s volume has 26 cases – the most in the series so far. Ten are Singapore cases, including several which Singapore readers may be familiar with, such as Datapulse Technology, Keppel Corporation, Trek 2000 International and YuuZoo Corporation. Two of the five cases from other Asia-Pacific countries are from Malaysia – which so far in the earlier volumes has only seen one case. One of the Malaysian cases about Felda Global Ventures case has political governance aspects to it, perhaps timely given the change in government there. The case about Razer’s listing in Hong Kong could very well have been classified as a Singapore case, given that the founder is a Singaporean. Part of this case is about differences in corporate governance and listing standards in Hong Kong compared to Singapore. The eleven global cases include, for the first time, two cases from South Africa involving Bell Pottinger and Steinhoff and a case with an Italian connection about the subsidiary of London-listed BT Group plc. VI The cases in the previous volumes continue to be used by various universities, institutions and professional bodies around the world and we continue to receive very positive feedback. I personally use many of the cases in professional development courses for directors, regulators and industry professionals, and for my corporate governance and risk management course at the NUS Business School. I am delighted that we have in September this year published the second volume of cases in Chinese - co-edited with my former colleague, Associate Professor Vincent Chen at National Chengchi University in Taiwan - which are based on a selection of cases from past volumes. This follows the success of the first volume in Chinese published in 2016. I would like to thank CPA Australia for their continuing partnership on this publication, and especially Joanna Chek for her excellent work in supporting it. My gratitude also goes to to the students who wrote most of the original cases as part of their course requirements, and the student assistants who helped edit the cases. Isabella Ow once again proved to be an excellent editorial assistant, doing first-round editing for many cases and further editing for all the cases, and coordinating and reviewing the work of other student assistants. Associate Professor Mak Yuen Teen, PhD, FCPA (Aust.) NUS Business School National University of Singapore October 2018 VII IS DATAPULSE FLATLINING? Case overview In November 2017, Datapulse Technology (Datapulse), a digital storage company listed on the Singapore Exchange (SGX), made disclosures