Post Office on a knife edge

2014-10-12 15:00

“We just don’t know what’s going to happen to this place,” a frustrated SA Post Office employee told City Press, summing up the view of many stakeholders as the debacle at the institution unfolds.

With a strike entering its fifth week, the CEO placed on special extended leave and continued speculation about huge losses and wasteful expenditure, the ­parastatal is on a knife edge.

An internal memo sent to staff last week said group CEO Chris Hlekane had “decided” to go on extended leave, and the group executive for the mail business, ­Janras Kotsi, has apparently been suspended. This was confirmed by Post Office spokesperson Lungile Lose, but he declined to provide further details.

Financially, things have been going south for years, with its woes exacerbated by labour unrest and management issues. In 2005, profit before tax was R943?million. This dropped to a pre-tax loss of R206?million last year.


There is speculation that the timing of Hlekane’s special leave coincides with the parastatal’s long-awaited annual report, which is moving slowly through the parliamentary ­process.

According to numbers provided to Parliament’s port­folio committee, the Post Office’s overdraft ­increased from R233?million in June to R353?million in August.

In an internal email from the chief financial officer to staff titled Touching Base, the Post Office disputes the numbers reported recently in The Star newspaper, ­including R2.1?billion in irregular expenditure.

According to the email, wasteful expenditure incurred in the 2013/14 financial year was actually only R2?million, while irregular expenditure was R71?million.

There has also been an issue regarding the company’s pension fund, and employees have accused the Post ­Office of misusing R401?million of their pension fund money.

Employee salaries were not paid on time last month. This was attributed to a technical glitch, but it gave rise to concerns about the Post Office’s financial situation.


The mail business has been declining – not only ­because people are using more advanced technology to communicate, but because companies like PostNet are able to offer a more reliable service.

The situation is outlined in a Communication Workers Union email reflecting a meeting of the National Bargaining Council on August 20. In the email, it was recorded that Hlekane (who is not named in the email but simply referred to as CEO) arrived suddenly and made a presentation on some of the biggest challenges facing the Post Office. These include:

.?A continuous decline of mail distribution;

.?The Courier freight group is bleeding financially and its survival is dependent on the SA Post Office;

.?The failure to secure R3.5?billion from the Treasury for ­corporatisation;

.?Trying to reverse costly decisions like paying rent when the company could use its own building;

.?The withdrawal of a subsidy by government but still being expected to honour its universal service obligation;

.?Continuous strikes; and

.?Key business partners, like Unisa, pulling out of their contracts because of instability.

In the email, the union also said it was exerting pressure on government to patronise the parastatal.

“We were reliably informed SA Post Office will partner with digital terrestrial TV to deliver the set-top boxes to customers before the digital migration comes into place,” it said. “However, this will be just a test to see if it can deliver what it takes before they can bid for other government business.”


As the strike enters its fifth week, the DA has called the Post Office out for being economical only with the truth when it comes to how many casual workers it

employed on a permanent basis.

The strike is a reaction to the slow progress of converting casual workers to permanent employment, a process the organisation committed to last year.

The Post Office has said that since the process began, more than 2?600 casual employees have been given

permanent contracts and a further 900 contracts are being processed.

But DA MP Cameron MacKenzie, who sits on the portfolio committee of the telecommunications and postal services department, said this is in contrast with what the Post Office has presented to Parliament.

“I asked the Post Office the question in Parliament and the answer I got was the following: on August 1 2014, 7?556 workers were still employed on a casual basis, and on February 19 2014, in a report to Parliament’s portfolio committee, the Post Office had 7?911 casual workers ­employed.

“So in the 12 months since the commitment was

made, only 355 people have been permanently ­employed – that’s 17 people a month,” MacKenzie said.

“This points to gross inefficiency and a lack of will on the part of the Post Office management to actually honour their obligation to these workers. Now that’s why the workers are on strike.”

Post Office spokesperson Johan Kruger said the discrepancy could be that employees were given permanent positions but on a part-time basis.

Parastatal is struggling to put on a brave face as workers’ strike enters fifth week, with no end in sight


Companies like PostNet have been able to thrive as they make up for the Post Office’s failure to operate efficiently.

Ian Lourens, the CEO of logistics company OneLogix, of which PostNet is a subsidiary, said it was impossible to pin PostNet’s growth on one thing, but strikes at the Post Office have been a contributing factor.

“There are definitely people coming to us?...?rather than the Post Office. It is a part of the growth that we have seen.”

Lourens said PostNet and the Post Office generally operate in different markets, although there are gaps PostNet is able to fill that the Post Office cannot, like courier services.

Lourens said PostNet does a small percentage of its business with the Post Office.

“There is a Postal Act and in effect with that the Post Office has a monopoly relating to the movement of post in the country,” said Lourens.

“But every courier company has to register with the regulator and pay a fee to operate. What this means is that if we get a letter, we are obligated to give it to the Post Office, because the only place to get stamps is from the Post Office.”

He said because of this, many customers choose to courier parcels instead of send them via post.

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