Madonsela clamps down on Post Office deal

The board of directors of the SA Post Office has 30 days to come up with a plan to recover the R22 million spent on a dodgy deal for the parastatal’s posh head offices in Centurion. Public Protector Thuli Madonsela yesterday released her report showing the cash-strapped state entity flaunted procurement processes when it moved its headquarters from Pretoria to Centurion a few years ago. It was a source of concern that the post office “moved to more lavish offices at much higher rental at a time it was experiencing service-related financial constraints”, she said. Madonsela found that the deal was tainted with maladministration and corruption, and recommended the post office board of directors recoup the money. The company secretary of the board should submit an implementation plan to the public protector indicating how the remedial action would be implemented.

Madonsela said her office would follow up to see whether her recommendations had been implemented. In her report, titled Postponed Delivery, Madonsela found that the parastatal paid for an empty Eco Point Office Park 10 months before it moved its head offices there, which was against the provisions of the lease agreement. The public protector’s investigation uncovered that the post office paid a monthly rent of R2.37 million to Centurion Vision Development, the owners of the building, between May 2010 and March 2011. The matter had its roots in a complaint by the Communications Workers Union, largely based on the fact that the lease agreement was done without following proper regulations. The labour union asked Madonsela to investigate the allegations of maladministration regarding the 10-year lease agreement worth about R161 million. It alleged the rentals constituted maladministration and improper or unlawful enrichment of owners of the building. According to the union, systemic looting in the financial year 2014/15 crippled the parastatal so much that some of its employees had to be paid half their salaries.

At the time of the finalisation of her report, the post office was asking for a cash injection from Parliament. Madonsela found that the transaction did constitute irregular expenditure, because it was contrary to the provisions of the lease agreement. In terms of the agreement, the post office was due to start paying upon taking occupation of the building. In addition, she said, the procedures followed in processing payments did not comply with the post office’s own prescripts. Madonsela flayed the deal for being irregular and unlawful and said the acquisition of the building was never preceded by a competitive bidding process, in accordance with the Public Finance Management Act. The legislation prescribes that every deal worth more than R500 000 should go out on public tender. Madonsela said the deal was also in violation of the entity’s corporate procurement policy of 2009. According to Madonsela, the post office had already taken disciplinary action against its employees suspected of wrongdoing in the deal, and others resigned at the time of the investigations.

There were also allegations of improper appointment of labour brokers to procure casual workers. This happened amid the suspected corrupt relationship between the labour brokers and certain post office officials. Public money involved in the procurement of labour brokers was estimated at R2.7 billion, she said.