Post Office faces huge claim from stokvel body
This is another of the deals signed by former CEO Maanda Manyatshe that fell apart under his successor, Khutso Mampeule.
Many of these soured deals sparked massive lawsuits against the Post Office — and it is understood that the institution is now seeking to settle some of them.
But news of this legal dispute will add to the impression that the Post Office is under siege, as it comes in a month when three more senior officials, including the head of its audit committee, Victor Christian, quit.
Court papers in Business Day’s possession outline how the Post Office signed the deal with Nasasa Cellular on September 13 2004, but then “failed to perform its obligations”.
Crucially, the court papers claim the Post Office may have lost itself R493m in potential profit-sharing income from the joint venture, which it would have made without taking any risk.
Nasasa is seeking an order from the Pretoria High Court forcing the Post Office to implement this deal.
Although it has not said as much in the papers, if the deal does not go through, Nasasa Cellular could claim the potential profits it lost from the venture — an estimated R630m.
Nasasa Cellular is equally owned by the investment arm of the National Stokvels Association of SA (Nasasa) and television marketing company GloCell, in which Investec Bank has a stake.
The Stokvels Association represents 14000 community savings groups and burial societies with 150000 members.
The deal gave Nasasa Cellular the exclusive right to sell cellphone contracts and products in post offices around the country for five years. In exchange for this, Nasasa says the Post Office was to get “substantial remuneration”.
The Post Office was to get commission on the cellphone sales and a third of net profit. Nasasa Cellular guaranteed that the Post Office would get a profit of “not less than R4m” a year.
But according to Nasasa Cellular projections, the joint venture could have made profits of R945m over the five years. Of this, the Post Office could have taken R315m while Nasasa Cellular would have made R630m. The Post Office would also have got R178m through a 5% fee over those five years.
But in an affidavit for the court action, Nasasa Cellular chairman Sothomela Ndukwana said the Post Office had “without furnishing reasons for its failure to do so, failed to perform its obligations under the agreement, and to co-operate … to (allow) the roll out to take place”.
Ndukwana said attempts to speak to the Post Office about this stalled contract “proved fruitless”.
Although Manyatshe signed the deal in September 2004, he left the next month, and Motsoanetsi Lefoka was appointed acting CEO.
In November 2004, Lefoka wrote to Nasasa Cellular, saying that she was “reviewing the contents” of the agreement in the context of the obligation to care for public money.
But the Post Office flouted the deal to the extent that it even set up MTN stores in post offices, which Nasasa saw as a “deliberate violation”.
Matters then dragged on, and new CEO Khutso Mampeule met Nasasa Cellular and evidently said he could see “no reason why this agreement should not have been implemented”.
But last June the Post Office met Nasasa, and “suddenly indicated that it did not wish to continue with the relationship”.
Ndukwana said the Post Office appeared to be showing “purchaser’s remorse”, which was no valid reason to scrap the deal.
Post Office spokesman Twiggs Xiphu said yesterday that “we will be opposing this”, but said that because the Post Office was still in the litigation process he could say no more.
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