After its proposal to striking workers was rejected by the Communications Workers’ Union (CWU) on Monday, the beleaguered South African Post Office (SAPO) went cap in hand to Parliament’s communications and public enterprises select committee on Wednesday, 15 October. Andrew Nongogo, SAPO GM of public affairs stated that, “The financial situation of the post office is dire. Seriously dire.”
The DA and the Freedom Front Plus are calling on the government to extend a financial hand to the distressed SAPO by reinstating a subsidy it withdrew last year.
The subsidy SAPO received from the government was the biggest contributor to its profits between 2006 and 2011 before it was reduced to R180m in the 2011/2012 financial year. The subsidy was further decreased to R52m in the 2012/2013 year before it was withdrawn completely.
Freedom Front Plus MP Anton Alberts described the Post Office as being on the brink of bankruptcy.
He was quoted as saying: “It is clear that the state will have to intervene immediately to rescue the situation before the organisation’s wheels totally grind to a halt. If government is willing to bail out South African Airways, then why not the Post Office?”
According to Business Day, the two political parties believe that the withdrawal – coupled with mismanagement and corruption – has played a major role in the parastal’s financial downward spiral from a R943m before tax profit in 2005 to a R206m before tax loss last year.
Nongogo blamed the 10 week strike for its cash flow problems and warned that without a bailout SAPO may not be able to pay salaries this month.
"The fact that we are not at work right now (due to the strike,) and we are losing customers, we are losing the public in general, means that there is no money — that should be coming into SAPO — that would allow us (to) even go and continue to pay salaries on the 25th."
Last week it was reported that SAPO was in negotiations with UNISA, one of its largest customers, even as the correspondence university was being forced to extend deadlines and make alternative arrangements for its students. It now seems that Edcon – a large South African clothing, footwear and textile retailer - another of SAPO’s largest clients has pulled its contract with the parastatal.
Employees were paid late last month, after what Nongogo described as an anomaly. SAPO told staff at the time it was a computer glitch and later said that the financial administrators were unable to access the building due to striking workers.
Rosey Sekese, telecommunications and postal services director-general reiterated Nongogo’s position that the Post Office is in a predicament.
"We acknowledge that the entity is in a crisis. If we continue, and we don’t get business and the entity operating, we fear we will have a scenario none of us would want," she warned.
Sekese went on to say that the labour and business situation of the Post Office meant that it’s finances posed “serious challenges.”
"This has resulted in us having intense discussions with the National Treasury, and also with minister of finance (Nhlanhla Nene,) in terms of how they can assist us in stabilising the finances of the entity."
These discussions were not yet concluded.
Sekese went on to admit that to date it does not have a sustainable turnaround plan, but that her department was trying to develop it.
Although SAPO has yet to table its financials that were due out in March of this year, Sekese blames modern technology and mass media for its financial problems.
"Sixty-five percent of the revenue comes from SAPO’s main business. Now this whole issue of technology is impacting massively on the SA Post Office. The post office had to diversify to cope with this new technology," she said.
Wednesday’s parliamentary meeting was principally called to get an explanation from the department on the reported R2.1bn misspent in the past (2013 – 2014) financial year. Sekese said that her department was “taken-aback” by these reports in the media and suggested a “Copy/Paste” mistake had been made on the document seen by the media as these related to irregular spending in the 2012 – 2013 financial year.
The Post Office was due to table its 2013 – 2014 Annual Report to Parliament at the end of last month, but the Auditor General’s audit into the Post Office has not been concluded. An announcement regarding the matter is expected to be made on 22 October when Finance Minister Nhlanhla Nene tables his medium-term budget policy statement.
The committee then heard that R400m of money connected to SAPO’s employee’s pension fund had been tapped into. Department spokesperson Siya Qoza tried to allay fears by stating that the parastatal had official clearance to dip into these funds.
"The figure was about R400m ... it was basically the surplus that was identified," he said.
By Jenni McCann