Billions wasted at the Post Office — no punishment for execs

The South African government hasn’t punished any Post Office executives for spending money destined for the state-owned enterprise’s turnaround plan.

This is according to communications minister Mondli Gungubele’s response to parliamentary questions from Inkatha Freedom Party MP Zandile Majozi.

“No one was brought to book for the non-investment of monies to implement a turnaround as the usage was linked to the cashflow situation,” said Gungubele.

“The funds were utilised for operating activities, repayment of terms loans and creditors as the severity of the cashflow situation at SAPO intensified.”

The minister added that the South African Post Office’s (SAPO) outdated operating model exacerbated the situation.

“We do acknowledge that better management decisions should have been taken,” he said.

The minister also detailed the government’s intervention measures to get SAPO back on track, including an injection of R7.3 billion rand between 2016 and 2019.

“Unfortunately, despite all the previous government interventions, SAPO’s recovery has been slow. The entity continued battling to generate enough revenues to fully meet its monthly financial obligations,” said Gungubele.

He said the state-owned company’s previous management had struggled to make suitable financial investments and failed to modernise Sapo.

“They kept maintaining operations under difficult financial challenges and accumulated debts in the process,” the minister said.

“The past funding allocations which were intended to invest in the turnaround strategy ended up being depleted by operations and debts as the severity of the financial challenges intensified.”

In addition to the R7.3 billion injection it received between 2016 and 2019, the Post Office was awarded a bailout of R2.4 billion from the National Treasury in the budget announced in February.

However, this fell short of the R3.4 billion funding it had requested.

Sapo was placed under provisional liquidation in April 2023, with the company owing billions of rands to its creditors.

It was placed under provisional liquidation following a successful court application by a creditor owed money for rent.

However, former Sapo CEO Mark Barnes said the state-owned mail carrier had been technically bankrupt for over a year and a half.

“I’ve looked at the public numbers, and I’ve compared the balance sheet that I signed in 2019 to those submitted to the portfolio committee in 2022, and that told the story of absolute bankruptcy then,” he said.

He added that when he left Sapo in 2019, it was the only state-owned enterprise other than the South African Reserve Bank that had no Treasury guarantees or outstanding liabilities with National Treasury.

Mondli Gungubele, South African Minister of Communications and Digital Technologies

Sapo fails to pay staff medical aid contributions

Despite the Post Office squandering financial injections on operational costs rather than implementing its turnaround strategy, it was revealed in September 2021 that Sapo wasn’t paying the full medical aid contributions deducted from staff salaries.

Trade union Solidarity brought an urgent court application against the Post Office regarding its failure to pay contributions of more than R600 million to employees’ medical funds.

“Not only does the Post Office violate its statutory and contractual obligations towards its employees, but it also poses a threat to the lives of its workers through this failure,” said Anton van der Bijl, head of Legal Matters at Solidarity.

“Some of our members are suffering from serious chronic conditions such as cancer, and they rely on their medical cover to access treatment and medication for those conditions.”

The state-owned entity’s failure to pay the contributions put its staff’s access to medical care at risk.

Industry commentators have also questioned whether the Post Office’s directors and public officers are legally personally liable for its failure to pay staff medical and pension fund contributions.

In mid-September 2022, Sapo paid over R3 million in overdue contributions to the Medipos medical scheme on behalf of employees who are members of Solidarity.

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Billions wasted at the Post Office — no punishment for execs