One state-owned company missed 87% of its targets and has R2.6 billion in irregular expenditure

The South African Post Office (SAPO) has been a victim of severe and persistent financial mismanagement, poor record-keeping, and non-compliance with the Public Finance Management Act (PFMA).

This was revealed by the Auditor-General of South Africa (AGSA), which painted a bleak picture of the Post Office during a briefing to the Standing Committee on Public Accounts (SCOPA).

For the fourth consecutive year, the Post Office received a disclaimer audit opinion, pointing to serious problems at the company.

The Auditor-General raised concerns about the quality of the South African Post Office’s annual financial statements.

It also highlighted the continued challenges of fruitless and wasteful expenditure, as well as a persistent lack of consequences for corrupt officials.

In its presentation, the Auditor-General revealed that the SA Post Office’s total irregular expenditure balance hit R2.594 billion.

The reason for the widespread mismanagement and corruption is that the Post Office does not take action against the perpetrators.

“Consequence management remains ineffective, with delayed investigations, poor record-keeping, and minimal disciplinary action,” the Auditor-General said.

It added that investigations lack evidence and have weak accountability, and there was no political will behind them.

The delayed investigations appear to have been conducted primarily to seek condonation from the National Treasury, aimed at facilitating additional financial assistance.

The Post Office’s culture is marked by weak accountability, delayed action, and poor consequence management.

“There is little urgency to investigate irregular expenditure, with many cases unresolved due to noncompliant condonation submissions and ineffective disciplinary processes,” it said.

“Accountability is often pursued only when financial relief is needed, reflecting a tolerance for non-compliance and a lack of ethical commitment.”

Missed deadlines and targets

The Auditor-General said the SA Post Office’s financial statements were not submitted within the prescribed period, breaching the PFMA.

The annual financial statements were not prepared in line with the reporting framework, which also breached the PFMA.

There were uncorrected material misstatements and missing supporting records that led to a disclaimer of opinion on the financial statements.

Again, this breached the Public Finance Management Act, as did the continued irregular, fruitless, and wasteful expenditure.

SAPO also failed to report theft and fraud allegations exceeding R100,000 to the South African Police Service (SAPS), thereby violating the Prevention and Combating of Corrupt Activities Act.

It failed in all areas regarding compliance with legislation in the 2023/2024 financial year, pointing to a deterioration in corporate governance.

The Post Office also failed to meet numerous targets, including those for regulated mail delivery and domestic and international courier delivery standards.

• Regulated mail delivery standards: It achieved 45.15% against a 92% target.
• Domestic courier delivery standards: It achieved 49.60% against a 90% target.
• International courier delivery standards: It achieved 45.20% against a 90% target.
• Resolution of customer complaints recorded at the call centre within 7 days: It achieved 78% against a 100% target.

The Auditor-General said the Post Office’s poor performance, where it only met 13% of its targets, impacts its turnaround and its ability to stay relevant.

The impact includes reduced access to postal services for citizens, lost revenue, and the erosion of public trust and institutional credibility.

Serious concerns about the SA Post Office

Many SCOPA members expressed deep concern over the Post Office’s deteriorating operational and financial state.

They lamented the collapse of a once-vital institution with a broad community footprint, especially in rural areas.

They were worried about the loss of Post Office branches in townships where residents now incur travel costs to access services.

There were also questions around the Post Office’s business rescue process (BRP) which was instituted in July 2023.

The Auditor-General reported that R86 million had already been spent on the business rescue practitioners and associated consultants.

SCOPA members said that while the business rescue practitioners helped address historical debt through a compromise with creditors, it did not save the institutions.

They remained sceptical about the institution’s long-term sustainability and ability to generate new revenue streams.

They questioned the lack of progress on strategic initiatives and the use of consultants without resulting in lasting capacity-building.

There was also no indication that government bailouts, including a recent R381 million Unemployment Insurance Fund (UIF) allocation, were yielding sufficient returns.

They added that the Post Office’s failure to achieve more than 13% of its performance targets was unacceptable, given the scale of fiscal support received.