Post Office boss vows to rein in reckless spending

South African Post Office. (Duncan Alfreds, Fin24)
South African Post Office. (Duncan Alfreds, Fin24)

Cape Town – The new chief executive of the South African Post Office (Sapo) has promised serious financial controls after years of instability at the struggling parastatal.

Former banker Mark Barnes, who became Sapo CEO last month, told Parliament's Portfolio Committee on Telecommunications and Postal Services on Tuesday that despite the company's dire financial circumstances, there is a plan to return to profitability by the 2018 financial year.

Sapo on Tuesday reported a loss of R1.5bn in the 2015 financial year.

Sapo also struggled to pay staff salaries on time in October 2015 because of financial constraints.

“We’re an outdated organisation, but we have the capacity to get back to the revenue line in our basic business which was in evidence between three and four years ago and we have no greater ambitions than that,” said Barnes.

“We will hold the chequebook in the middle of the company and monitor it on a real-time basis,” said Barnes.

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Barnes' comments on Tuesday came hours before Public Protector Thuli Madonsela released a damning report on previous maladministration at Sapo.

Chief among Madonsela's findings were that Sapo's acquisition of a R161m ten-year lease in 2010 for its head office building in Centurion, Gauteng was "unlawful" as it contained a number of "procurement irregularities".

READ: Post Office Centurion lease was unlawful - public protector

The public protector's report on Sapo - which is entitled 'Postponed Delivery' - also found that the company incurred “fruitless and wasteful expenditure” in upfront rental towards Centurion's Eco Point Park building before occupation.

Sapo made rental payments from May 2010 to March 2011 totalling R22m prior to occupying the building, said Madonsela.

Madonsela has subsequently ordered Sapo to recover the R22m amount. 


READ: Post Office grilled at parliament hearing

Meanwhile, MPs in Parliament on Tuesday also heard results regarding the Auditor General’s report into the financial health of Sapo.

The AG found regression in key indicators of leadership, financial and performance management, and governance.

The organisation’s financial prospects are bleak and its provisional results indicate a loss of R1bn in the current financial year.

Acting chief financial officer Nicola Dewar said that the organisation scored just 14% on its performance indicators owing to “severe cash flow problems”, among other challenges.

Can't afford strikes

In 2014, Sapo's postal services were hit by a months-long strike. At the time, around 7 900 Sapo casual workers across the country demanded an 8% wage hike and permanent employment. 

Barnes on Tuesday warned the committee that Sapo could not afford another prolonged strike. He also committed to work with unions.

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