Post office director lifts lid on 'board rot'

THE meltdown at the South African Post Office, where a strike now in its 11th week continues to disrupt mail delivery, has spread to the top echelons, with the first resignation of a director this week.

THE meltdown at the South African Post Office, where a strike now in its 11th week continues to disrupt mail delivery, has spread to the top echelons, with the first resignation of a director this week.

In a stinging resignation letter sent to Telecommunications and Postal Services Minister Siyabonga Cwele on Thursday, Nobuhle Mthethwa painted a damning picture of weak controls and poor board decision-making, partly to blame for the operational and financial decay at the company.

She called on Cwele to appoint a new board.

Mthethwa was appointed in March 2012, and has left "with immediate effect".

This comes two weeks after CEO Chris Hlekane went on "special leave", leaving the institution rudderless at a time when there were more than 800 of its 23000 staff on strike over a 15% pay hike demand.

Mthethwa's resignation is expected to open the floodgates, similar to those at SA Airways, where five board members resigned last week after the state-owned airline failed to produce an annual report for the year to March.

At least two other post office board members might leave this week, said a source who declined to be named.

In her letter, Mthethwa said that "over an extended period of time, it dawned on me that there are major deficiencies in the collective functioning of the board".

The board's major handicaps were a "lack of decisiveness, consequence management and agility ", which were to blame for its "suboptimum performance ".

"When we welcomed the new board members, my optimism was heightened as I believed their presence would augment the glaring weaknesses among the pre-existing members," said Mthethwa. However, this was short-lived, as they soon added to the liabilities ."

She urged Cwele to "appoint capable South Africans, who most importantly, have the absolute appreciation of the mandate and the cost which accrues to the state arising from lack of leadership".

When contacted, Mthethwa confirmed that she had resigned, but said that "given the fact that I tendered my resignation and [have] since not received a response from the minister, I cannot comment further".

Asked for confirmation of Mthethwa's resignation, Cwele's spokesman, Siyabonga Qoza, said only that "the minister is abroad".

Like South African Airways, the post office has still not published its financial results seven months after the year-end.

The auditor-general had not yet signed off on the report, Hlamalani Manzini, the chairwoman of the post office, said in an interview on Thursday.

The major factors that had prevented the auditors from signing off the financial report were a lack of financial controls and irregular expenditure, said the source, who is familiar with the process.

A draft, unsigned annual report obtained by Business Times shows that the post office lost about R2.1-billion due to "irregular expenditure", while another R115-million was spent on flights and travel overseas by the company's executives.

Mthethwa's resignation came as the company has again held out a begging bowl for the taxpayer to fill.

Manzini revealed that the post office had approached the National Treasury for a R700-million guarantee to enable the business to continue to operate in the short term.

This was in addition to the request that the post office made to the Treasury just last month for permission to expand its overdraft facility by up to R320-million as it struggled to pay its employees.

Manzini said that the overdraft had been "used variably" during the past month, and that the latest request was for a letter of support from the Treasury.

"We are not going to borrow money. We'll be able to trade. This is a guarantee so that we are able to expand our turnaround strategy," she said.

The company generates about 67% of its revenue from delivering mail, which has been severely curtailed since most of its employees embarked on a violent strike three months ago.

They are demanding the hiring of all contract workers on the permanent staff, with full benefits, and that the parastatal cease all dealings with labour brokers.

A separate but related pay strike is also still under way. Workers are demanding a 15% increase while the post office is offering a 6.5% increase in salaries and wages.

Jabulani Sikhakhane, spokesman for the National Treasury, said that it was aware of the post office request for a guarantee to the Department of Telecommunications and Postal Services.

"Once the [department] has analysed and is supportive of the request, the minister of telecommunications and postal services will then request the minister of finance's concurrence. It is only then that the Treasury will assess the request," he said,

Manzini said the post office, which is grappling with high costs related to transport, property and employees, was sustainable, and sought to cut R300-million in costs over the next three months by consolidating its transport division and reviewing the "use of goods and services, hotel fees, meeting places and flights".

She said the post office, which in some cases jointly owns land with Telkom, was not keen on the sale of its properties, but would be guided by Treasury regulations on how to enter into partnership with property developers to unlock value in its property portfolio. Selling would be a last option.

"The essence of the matter is we want revenue that is sustainable."