Actions and Lessons Resulting from SPH Media Trust's Internal Review of Overstated Circulation Numbers

Ms Tin Pei Ling asked the Minister for Communications and Information in respect of the SPH Media Holdings Board’s Audit and Risk Committee findings published on 16 June 2023 (a) what is the timeline for SPH Media Group to implement the recommendations; (b) whether the Ministry will impose additional obligations on the group to tighten accountability; and (c) whether all the overstated circulation figures and consequent financial impact have been corrected.

Mr Murali Pillai asked the Minister for Communications and Information with respect to SPH Media Group’s filing of a Police report over overstated circulation figures of SPH news publications after potential offences were flagged in an investigation by its audit committee (a) whether the Police has classified the Police report as one that discloses offences for investigation; (b) if so, what are the offences; and (c) how will the Police treat the key investigative findings by SPH Media Group’s audit committee, which include conclusions on the state of knowledge on the part of various SPH officers in relation to the inflated circulation numbers.

Mr Murali Pillai asked the Minister for Communications and Information in respect of the investigation report issued by SPH Media Group’s audit and risk committee on overstated circulation numbers of SPH news publications (a) whether the steps that have been recommended to be undertaken by SPH Media Group in the report are assessed to be adequate; (b) whether regulatory action is being considered; and (c) whether any new regulation is being contemplated to tighten reporting standards by media groups on circulation numbers and other key information to ensure accountability for the same.

Mr Zhulkarnain Abdul Rahim asked the Minister for Communications and Information in view of the findings and recommendations in the recent report by the Audit and Risk Committee of SPH Media Group, what are the lessons and safeguards that the Ministry will take on funding to SPH Media or other entities in the future.

Mr Yip Hon Weng asked the Minister for Communications and Information in view of the report released by the Audit and Risk Committee of SPH Media Holdings Pte Ltd (a) whether the Ministry still plans to continue its S$900 million funding support for SPH Media Trust over the next five years; and (b) how will the Ministry ensure that such monies are spent prudently with good accountability and oversight.

Mr Ang Wei Neng asked the Minister for Communications and Information (a) whether there is a need to set up a Committee of Inquiry to reveal the cause of Singapore Press Holdings (SPH)’s overstatement of its daily circulation numbers; (b) whether the Ministry will consider revealing to the public the companies that are involved in assisting SPH to overstate the circulation numbers; and (c) what are the lessons learnt to prevent such occurrences.

Mr Leong Mun Wai asked the Minister for Communications and Information (a) whether the Government's funding agreement with SPH Media Trust has been concluded and if any funds have been disbursed; (b) if so, whether these funds will be re-assessed in light of the report of the Audit and Risk Committee of SPH Media released on 16 June 2023; and (c) whether the key performance indicators for the funding agreement will include evaluations of SPH Media Trust's risk culture and improvements to its risk management practices and internal controls and processes.

I will also address the Question filed by Ms Hany Soh1 for a future Sitting. Madam, Members have asked for updates on the SPH Media Trust (SMT)'s review of overstated circulation numbers, which covers the period of September 2020 to March 2022.

Madam, in the February 2023 Sitting of Parliament, Members had asked a range of questions on this matter. In response, I made three key points.

The first is that the events took place before SMT was formed, when the media business was under SPH Limited (SPHL), a privately listed company.

The second point is that whatever happened had no bearing on public funds, because the Government did not have a funding relationship with SMT before the end of 2022. For avoidance of doubt, the first tranche of funding was disbursed in March 2023. In other words, the events preceded the period of funding. No public funds had been involved. Correspondingly, the question of loss of public funds does not arise.

Third, I explained the Government’s reasons for funding SMT’s transformation, which had little to do with circulation. Nevertheless, the Government made it clear that it expected SMT to properly investigate the matter and to give the public a proper account.

SMT’s Audit and Risk Committee (ARC) has since concluded its investigations and its findings have been extensively reported.

My update to Members will, therefore, focus on three areas, namely, the ARC’s findings; what SMT will do to address the underlying issues; and what the Government will put in place to ensure public funding to SMT remains prudent and accountable.

Let me first deal with the ARC’s observations. As Members will have read in media reports, there were three noteworthy findings.

First, the overstatement of circulation numbers amounted to around 82,600 average daily copies at August 2021. This is around 10% of overall circulation of their main titles. The ARC did not find any evidence of the involvement of the journalism and editorial departments.

Second, the ARC found that the accounting impact was not deemed to be material to the financial statements of SPH Media Group for the financial year ending August 2022 taken as a whole. For the financial year ending August 2021, there was approximately S$110,000 in understatement of profits.

Third, there were possible offences committed, based on several findings. Circulation numbers had been reported in a manner inconsistent with established standards, there was improper accounting of revenue and there was a barter deal which was possibly a questionable arrangement, entered into for the sole purpose of inflating circulation numbers.

Consequently, the ARC has recommended that a Police report be filed and the Board has done so.

To Mr Murali Pillai and Mr Ang Wei Neng’s questions on the specific offences being considered, I am unable to give further details as this is now an ongoing Police investigation.

Ms Tin Pei Ling asked whether the overstated circulation figures and consequent financial impact have been corrected. After SMT was formed in December 2021, it began internally reviewing the data it took over and rectified the inconsistencies detected. Its accounts since its first financial year ending August 2022 no longer have these inconsistencies. As for the period before SMT was formed, these findings have been made public and further actions to deal with the erroneous figures are matters to be decided by the relevant parties involved then.

Ms Hany Soh filed a related question for a future Sitting. She asked if NLB had been a subscriber of SPH Media’s publications. The answer is yes. NLB’s subscription provides its members with access to various titles published by SPH Media. Neither the subscription rates nor members’ access are related to circulation numbers. There is, therefore, no impact of any kind.

Members Ms Jessica Tan and Ms Tin Pei Ling asked how SMT will take up the ARC’s recommendations. SMT has shared with the Ministry of Communications and Information (MCI) that its follow-up is in three main areas.

One, they will benchmark their reporting to international standards. They are commissioning the World Association of Newspapers and News Publishers (WAN-IFRA) to review and advise on their methods for measuring the reach of various titles. These are the metrics that the public, businesses and the Government will be concerned with, to know how many people come into contact with a title’s content.

Two, SMT will improve internal controls, including tightening deal structure and pricing approval procedures, such as requirements for approvals at the appropriate levels; strengthening guidelines and checks for revenue and cost recognition; improving separation of duties among staff to ensure data accuracy and accountability; and commissioning external parties to review its governance, control and compliance measures, with the aim of embedding the enhancements into a new enterprise resource planning system.

Three, SMT will enhance its risk management practices throughout the organisation and review its risk culture. SMT has assured MCI that they will implement these measures immediately and will provide us with regular status updates on a half-yearly basis.

This leads me to the third set of questions that Members have asked: whether this affects the Government’s funding to SMT.

The Reuters Institute Digital News Report is published annually and its 2023 edition released last month is a timely reminder why funding support for mainstream media remains necessary. Even with dozens of news sources easily available, audiences in Singapore consistently turn to our mainstream media when they need something they can trust.

Specifically, trust levels in all the SMT’s major titles remained much higher than the global average – 73% of respondents expressed trust in The Straits Times, up three percentage points from last year. This is against the backdrop of the erosion of trust in news globally, from an already modest 42% last year to 40% this year.

Trusted news media made possible by quality journalism is a public good we cannot afford to compromise on. It is more important than ever when the environment is full of disinformation and sensationalised news.

However, SMT can only deliver quality journalism if they can continue to strengthen their capabilities and reach audiences in the digital age. Media consumption has moved online rapidly, disrupting the entire industry. In the same report by Reuters Institute, the share of respondents who consume print news has dropped to 22%, from 53% just six years ago.

SMT must move decisively into the online space. But the new competencies take time to build and the economics of news media in the digital era do not make it easy for newsrooms to survive, let alone fund new investments.

The costs of running a professional newsroom remain high, and data and technology infrastructure require substantial upfront costs. Yet, revenue streams are a fraction of what they were in the heyday of print media.

Advertising revenue has been squeezed, with a large share going to platforms run by Big Tech. Growing subscription revenue in a world of free news is also challenging – only 15% of Singapore readers surveyed by Reuters Institute are willing to pay for it.

The challenge is even more pronounced for vernacular publications, which have smaller readerships. Yet, it is critical to preserve them. They are an essential part of our multicultural society and unique identity and give voice to our ethnic communities.

The Government's funding is, ultimately, to fulfil a public good – that of trusted news media enabled through quality journalism.

MCI is committed to working with SMT to overcome the challenges of disruption and succeed in its transformation. Therefore, to Mr Yip Hon Weng and Mr Leong Mun Wai's questions, the Government will continue funding SMT at the amounts we committed to.

This does not, however, mean that we have no additional expectations of SMT in light of this incident. We acknowledge their seriousness in investigating the concerns and for making the findings public. As it is now a matter for the Police to consider, we should turn our focus to making sure SMT will discharge its public duties responsibly on an ongoing basis.

At the leadership level, the SMT management and board have demonstrated commitment to changing legacy practices. We expect SMT to persist in addressing internal weaknesses and systematically follow up on the required changes.

Members will recall that the circulation data issue emerged because SMT was conducting its own review and due diligence following the transfer of the media business from SPH Limited in December 2021. This point has often been overlooked. This whole set of findings arose out of SMT's own internal review, which no one in particular asked them to do. They themselves felt it was important to start on a clean slate.

SMT has assured us that it intends to follow up on the ARC's recommendations to ensure organisation-wide accountability and to bring the organisation forward. We welcome the plans SMT has set in motion, including instituting internationally accepted benchmarks and extensively reviewing its governance and control measures. This is an ongoing process and MCI will work closely with SMT to ensure these measures are implemented.

To Mr Murali's question on reporting standards, the key point is to ensure reports are consistent with international best practice. It is in SMT’s own interest to uphold reporting standards, with or without regulation.

Ms Tin and Mr Zhulkarnain asked if we will impose additional safeguards, and Mr Leong asked if we would put in key performance indicators (KPIs) evaluating SMT's improvements in risk management and controls. To assure Members, the funding agreement concluded in March this year already contains measures to ensure accountability, for example: (a) SMT is required to submit specific information on KPIs, including their methodologies and sources. These must be agreed upon and SMT is not allowed to change them without MCI's consent; (b) SMT's KPI performance and financial statements must also be audited by independent external auditors.

However, the evaluation of and improvements to internal processes are clearly the responsibility of SMT's executive team. The Government will intervene if there is a case of misconduct or mismanagement of public funding. In this regard, we have built in safeguards that allow the Government to conduct our own ad hoc audits. If serious wrongdoings are found, we have the right to terminate funding.

MCI will also be reviewing the terms of the funding agreement, including the KPIs and funding quantum, at the mid-term juncture. SMT's ability to address these management issues will be taken into consideration.

Madam, I have updated Members on what I can. The outstanding matter of the Police investigation should be allowed to take its course. At its conclusion, the follow-up actions will also be made public.

Thank you, Mdm Deputy Speaker. I thank the Minister for the very comprehensive reply. It must be painful for the journalists to report the wrongdoing of their colleagues, or sometimes it could be their supervisors in the newspapers. I have two supplementary questions.

The first question is, in the funding formula for SMT, will the circulation numbers be one of the KPIs or is there a KPI for them to increase the circulation because that will add pressure on them? Two, why is it that the names of the companies involved in helping to inflate the circulation numbers are not revealed? Is it because they are subject to Police investigation and the Minister cannot reveal that? In the public interest, we hope that the Ministry can get the papers to release them.

Mdm Deputy Speaker, I thank the Member for his two questions. Maybe I will take the second question first. Mr Ang had asked why were the names of the companies and the staff who were involved in the potential wrongdoing not made public. As Members will know, the matter has been referred to the Police for investigations. SMT has provided all the findings that the ARC submitted to the Board and this full set of findings would have already been made available to the Police. They include the names of the companies and the people involved.

So, as far as the ARC's findings were concerned, the Police have full view of it. Nothing that was provided to the Police was redacted.

Because it is an ongoing investigation, as to who will eventually have to be held liable under the law, these things will need to take their natural course. It is for the relevant authorities, after they have completed their investigations, to determine what information to publicly disclose and when to do so, so as to not affect the outcome of their investigations. That will be something that has to be left to a later date.

Mr Ang asked specifically whether circulation is part of the KPIs. As I explained to Members in February 2023 during the Parliament Sitting and in response to Members' questions, and as I have also alluded to earlier in my response, circulation is a metric that is no longer as relevant. A title that is being circulated in print today can be read by multiple people. And as media move more and more online, it is not so much the circulation that matters. It is the reach. The reach measures how often people come into contact with the contents of a particular title. So, it is reach that is more important.

The KPIs, therefore, that we have included in the funding arrangement include the total reach and engagement of SMT's full range of products, with a focus on their digital platforms, because we have to keep in mind that the whole purpose for funding SMT is to ensure that the digital transformation is successful. Therefore, the KPIs must be reached, and, in particular, digital reach.

We will, in fact, also ask for specific reach indicators for vernacular groups and youths, because the funding is directed mainly in three areas: the technology upgrade; the talent development, building up the newsrooms; and, very importantly, in terms of how vernacular media continue to be safeguarded. Therefore, the KPIs follow the thrusts of our funding objectives.

SMT is required to submit regular reports on their KPI performance, which must also be independently audited, as I mentioned earlier. And if the KPI targets are not met, the amount of funding will be impacted.

Thank you, Madam. I thank the Minister for her reply. I just have a very short supplementary question. I am heartened to hear that SMT is committed to improve its accountability and its risk measures. I just want to ask the Minister whether the Ministry is prepared to consider ring-fencing an amount out of the $900 million funding support for SMT, to strengthen its internal accountability and to prevent incidents from happening in the future.

Mdm Deputy Speaker, as I explained in my response to the Member Mr Ang earlier, the thrust of the funding is directed towards talent development, technology upgrade and sustaining vernacular media. We expect that some of the funding will be needed for general purposes.

These measures that SMT needs to take obviously require some resource allocation on their part, both in terms of the manpower as well as the management bandwidth. We expect them to manage within the block of funding that is provided to them. As far as possible, we size the funding according to the needs that are most pertinent to successful transformation.

Strengthening governance is certainly a big part of it, but we also expect SMT to allocate its own resources accordingly. So, for the time being, there is no specific intention to ring-fence resources for improving governance, but to expect SMT to direct resources towards improving governance. That is part of the expectation.

Thank you, Madam. Madam, the ARC report stated that the X Barter Deal was not a genuine arrangement. The corresponding revenue and expenses should not have been recognised and the corresponding circulation numbers should not have been counted. So, my question is, if it was found that the X Barter Deal was not a genuine arrangement, will there be any investigation into the other media company, which was named as "X" in the report, and whether they were also inflating their numbers?

Secondly, the Minister said that the question of loss of public funds does not arise. But what kind of accountability has been given to the donors and the clients who had contributed to the NIE Fund on the understanding that they were helping the underprivileged in society but were instead used to shore up the circulation figures for SPH?

Mdm Deputy Speaker, at this point, we will not be at liberty to disclose the full range of the Police's investigations. Are they specifically looking to establish liability in the context that Mr Giam described? That is for the Police to decide.

On the Member's second question on accountability to the donors and the other parties that made resources available to SPH Limited, the purpose of making full disclosure on the findings is precisely to allow these entities to decide if they want to take further action. So, they can, if they choose to. It is not for us to decide on their behalf.

Thank you, Mdm Deputy Speaker. I have two supplementary questions for the Minister.

First, when was the first tranche of the public funds paid out to SPH Media Trust? Was it before or after the completion of the audit committee report?

Two, can the Minister confirm that the Ministry is not pursuing the responsibility of the past top management of SPH Limited at the moment?

Mdm Deputy Speaker, I believe Mr Leong may not have been in the Chamber when I addressed his first question. I can confirm that the Government started disbursing funds to SMT in March 2023. At the time, the ARC had not completed its findings. But the important point to note is that by March 2023, only then, funding arrangements with SMT started, whereas the events in question took place well before March 2023. So, I hope that answers the Member's question.

The second question is whether there will be further action taken against those who had been involved in this incident. That is a matter for the Police to decide. A Police report has been filed. The Police have commenced investigations. The investigations will have to take its full course and then a decision will be taken.

Thank you, Mdm Deputy Speaker. I have just one supplementary question. Since the revelation of this incident, is MCI keeping track of whether the international standing and the local public's confidence in SMT's products have dipped subsequent to the announcements? And as what the Minister has shared earlier in response to Member Ang Wei Neng, are we seeing the trend of a drop in terms of the reach of their contents and their engagements with the general public at large as well?

Mdm Deputy Speaker, I thank Ms Soh for her question. It is a very good one. In my engagements with SMT, they are themselves equally concerned if the level of trust that is ascribed to them by the public suffers a loss as a result of this incident. I believe this is a key consideration why SMT has taken great pains to ensure that it has undertaken a full and thorough investigation. It took pains to make the findings public; it took pains to be quite careful about whether there was a potential offence to have been committed and they decided not to take any chances but, instead, to file a Police report. So, the seriousness of this incident and its potential impact on the levels of trust that the public has in SMT and its titles, are not lost on its Board as well as the management.

There is another matter that MCI would be equally concerned with and SMT knows this. Henceforth, SMT is in receipt of public funding. Therefore, its ability to be held accountable will be carefully scrutinised, both by MCI as well as by the public. This accountability in relation to funding will include the extent to which SMT has been successful in its transformation, especially towards digital media. It will also be held accountable for maintaining trust. Therefore, the measures that the Member talked about, not only will MCI track, SMT itself will be interested. We will rely on independent reports, such as those carried out by Reuters Institute, but we will also have our own studies to confirm what these independent resources have established as findings.

Accountability to the public also extends to improving governance. If you look at the media reports and also in the ARC's findings, there is a significant portion of the reports that cover governance measures. In other words, SMT is well aware that it is one thing to tell people what the findings are; it is quite another to commit to making improvements. And the improvements in governance essentially are to do three things. It is to make sure that bad things do not happen again; it is to ensure that your systems for controls and contracting, pricing have to be cleaned up, made better; and the other aspect of governance that needs to be improved is also the culture – how people view these kinds of things and their willingness to tolerate them or to speak against them.

MCI takes all of these matters of accountability seriously. SMT knows it at the Board level as well as the management level. They know that in the reviews that we will be conducting as a part of this funding arrangement, this topic will consistently come up. And we will have to satisfy ourselves that the remedies have been implemented and effort is being made to sustain trust by the public.

Thank you, Mdm Deputy Speaker. Just one supplementary question for the Minister. Given that there may be potential breaches of the Companies Act involved, is the Accounting and Corporate Regulatory Authority (ACRA) looking at its own investigation and enforcement actions when it comes to not just the employees and ex-employees that were mentioned in the report but, potentially, also the directors of then-SPH for potential breach of fiduciary duties?

Similarly, given that it was a listed company back then, is SGX also looking at its own regulatory actions in relation to some of these misstatements of circulation and financial figures?

Mdm Deputy Speaker, the findings have only been made available recently. As to whether the other agencies intend to take regulatory action, this is something for them to decide and I cannot answer on their behalf.

Thank you, Mdm Deputy Speaker. I would like to ask the Minister whether ARC had looked into the failure of internal and external audit processes and the internal auditing that were done in the relevant years, because these relate to the governance aspect of the entire issue of the inflation of circulation numbers. And if they have not done so, will the Government be asking them to look into this?

Mdm Deputy Speaker, the ARC's report is public except for the redaction of names of individuals as well as companies. I have no more information to offer to Mr Tan other than what he is able to access from the public records.

It was asked by the Board to meet a set of terms of reference. The intention of the Board was to establish the scale of the circulation numbers being overstated. I am not aware of the terms of reference asking for the ARC to investigate the matter before September 2020. I am not aware of them being asked to investigate the goings-on before that. So, therefore, myself, what I can share is that, from the report, I did not see them making conclusions. I did not see them drawing conclusions for the period before that.

Sorry, Mdm Deputy Speaker. I did not answer one part of the question. Are we requiring them to do that? I think I have to remind Members that we did not have a funding relationship with them before the period that was being investigated by the ARC. What reason do we have to ask for an investigation of that nature? But going forward, henceforth, that is where the accountability has to be very clear.