R2.1bn Post Office scandal

By Lebogang Seale Time of article published Sep 4, 2014

Share this article:

Johannesburg - Senior executives at the South African Post Office (Sapo) have been branded “a bunch of incompetent and greedy fat cats” fiddling around while the entity continues to crumble.

As Sapo reels from a fresh wave of crippling strikes, The Star has seen documents appearing to show that the entity blew R2.1 billion of taxpayers’ money in irregular expenditure in the past financial year alone.

The financial losses were as a result of the irregular awarding of tenders.

A draft independent audit report for the financial year ending May 31, 2014, by auditing firms Deloitte & Touche and Nkonki appears to show that the organisation is haemorrhaging millions of rand in public funds.

“During the current year, management completed a full review of all procurement contracts, which resulted in the identification of irregular expenditure amounting to R2.1bn,” the report reads in part.

The audit outcome is contained in Sapo’s integrated 2013/14 annual report, which was due to be submitted to Telecommunications and Postal Services Minister Siyabonga Cwele last Friday.

The 190-page report does not specify the exact details of the tender irregularities, but states that the financial losses were incurred as a result of “non-compliance with the mandatory Treasury regulations”.

It states that the Post Office did not follow the mandatory tender procedures and that pricing and quotations were not done when procuring goods and services.

The report paints a grim picture of an ailing organisation hamstrung by mismanagement, incompetence, and weak and chaotic control systems.

It shows, among others, that the Post Office:

* Recorded a net loss of more than R361 million in the year under consideration.

* Spent R184m on the use of external consultants.

* Spent R39.6m on legal costs.

* Spent R114m on travel expenses, including overseas trips.

* Recorded a net loss of R361.2m after tax – representing an increase of 59 percent from the previous year.

The report appears to show that Sapo is currently operating on an overdraft of R250m, but sources dispute this figure and put the amount at R365m.

They alleged that the parastatal had since used the employees’ funds to redress the overdraft. They said this decision “is atrocious because the pension fund is sacrosanct”.

Crucially, the organisation is also struggling to fulfil its mandate. “Of the total number of 55 targets planned for the year under review, 31 were achieved. This represents 56 percent of the total planned targets.”

High-placed sources within Sapo accused the board of running down the entity by using it as their cash cow.

“The Post Office is run by bunch of incompetent and greedy fat cats only interested in lining their pockets. It’s time the government intervened to stop this rot,” one source said.

Another source said: “When these guys were appointed, they were tasked with developing a turnaround strategy. After two years, that remains a mere draft.

“How do you (expect that) they deliver on a basic task while they draw hefty salaries and allowances?”

Sapo staff have also blamed the problems at the entity on the “sheer incompetence” of its executive board members.

The staff, who are familiar with the board and spoke on condition of anonymity for fear of reprisal, accused the executives of using the Sapo as a cash cow for self-enrichment.

“Most of the executive board members have no relevant qualification or experience whatsoever. How do you justify their suitability for such key positions when they can’t even work out a turnaround strategy?” asked one staff member.

He said the executives had been tasked with developing Sapo’s turnaround strategy two years ago, but had failed to deliver on that task.

A special investigation announced in March is also probing “allegations of irregularities relating to the recruitment, selection and appointment of officials or employees as well as payments made by Sapo to fictitious officials or employees”.

Sapo staff accused the board of wasting funds through fruitless meetings.

“They duplicate and prolong meetings, some of which only last for 30 minutes while they claim allowances in full.

“Meetings have become a day-to-day feature, but they are nothing more than talk shops to line the executives’ pockets,” said another employee.

The employees pointed their fingers at Sapo’s chief executive Christopher Hlekane, alleging he “epitomised the worst kind of incompetence”.

“The Post Office has, under his leadership, stumbled from one crisis to another. It’s almost a matter of time before services collapse.

“If we were a private entity, we would have been liquidated,” said another staff member.

Hlekane was appointed chief executive in 2011, replacing Motshoanetse Lefoka, who was axed after a R425 million lease scandal. The staff questioned why Hlekane and other executives were drawing “hefty” salaries when the entity was running at a loss.

“These executives, especially the chief executive, get paid an astronomical salary when the Post Office is not making any profit.”

Documents that The Star has seen indicate Hlekane earns an annual salary of R2.8m plus R264 000 in pension fund benefits, bringing his total to R3m.

Sources also questioned Sapo’s decision to sponsor the Nelson Mandela Day Marathon to the tune of R800 000 while the organisation was leaking public funds.

The marathon, held last week, was organised by the Umgungundlovu District Municipality in Pietermaritzburg. The Star has seen documents confirming Sapo was a sponsor.

“What is the rationale for channelling millions of rand into it while Sapo is bleeding funds and failing to meet its targets?” asked another source.

The staff allege Hlekane and some executives are abusing their powers by employing their cronies.

They accuse Hlekane of appointing a man, alleged to be his pal, to a key strategic executive position in his office.

The exact position and name of the executive are known to The Star, but have been withheld for legal reasons.

It was reported last year that Hlekane had appointed former Ekurhuleni municipal official Miyelani Holeni as an executive despite a pending investigation of corruption against him. Holeni has since left Sapo.

Staff accused other executives of abusing their powers by sexually harassing junior female colleagues.

The Star has learnt that Sapo is investigating multiple cases of sexual harassment against one of its executives.

The charges were instituted after several staff members laid complaints against him.

Repeated attempts to obtain comment from Sapo and Hlekane were unsuccessful.

Hlekane asked The Star to send him a note with queries, but he had not responded to the questions emailed to him at the time of publication.

[email protected]

The Star

Share this article: