A-G Tsakani Maluleke finds SA Post Office commercially insolvent – report
For many years, the SA Post Office (Sapo) has been struggling to get its ducks in a row.
Now it has officially been found to be commercially insolvent by the Auditor-General (AG) Tsakani Maluleke, according to reports by Sapo’s fellow parastatal, the South African Broadcasting Corporation (SABC).
This comes after the broadcaster reported that the AG found that Sapo had incurred losses of over R1.7 billion, whilst its liabilities are in excess of its R1.5 billion-worth of assets, for the 2019/2020 financial year.
According to the broadcaster, Sapo also amassed irregular expenditure of over R200 million, as well as fruitless and wasteful expenditure exceeding R26 million.
Yet, there is no evidence that officials behind the irregular as well as fruitless and wasteful expenditure have been held to account – the AG reportedly found.
On the soundness of the business, the SABC reports that the AG “could not obtain enough audit evidence to confirm the reasonableness of management’s assessment of the group’s viability for the foreseeable future”.
If anything, AG Maluleke was constrained by SAPO’s “poor status of the accounting record” and also found Sapo’s internal controls to be grossly inadequate, reports the SABC.
It says that the AG found Sapo management did not implement proper record keeping to ensure that complete, relevant, and accurate information was accessible and available, to support credible financial and performance reporting.
The reports about the poor financial state of Sapo come hardly as a surprise. Its former chief executive, Mark Barnes, as recently as January this year, accused the government of interfering with the institutions' turnaround strategy, which had led to financial difficulties at the post office.
Barnes left Sapo due to a fundamental difference with the shareholder (the government), on the future strategy, and direction of Sapo, particularly the location of Postbank, which he saw as a crucial solution to some of the post office’s financial woes.
Over the past seven years, Sapo has received R8 billion in bailouts from the government but last month, it was reported that the post office was temporarily closing 53, or about 3.7% of its branches due to payment disputes with its landlords.
When another parastatal, the South African Land Bank, recently defaulted on its debt obligations Finance Minister, Tito Mboweni committed R7-billion in recapitalisation over the medium-term, to help put the bank on a stable and sustainable development path.
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