SA Post Office in hot water over R200m Postbank transfer

Mark Barnes, chief executive of the SA Post Office (Sapo), has been summoned by the telecommunications ministry for allegedly dipping into the coffers of its subsidiary, Postbank, and transferring R200m to Sapo to pay creditors.

Minister of Telecommunications and Postal Services Siyabonga Cwele has called Barnes, Post Office officials and the chairpersons of the two entities – Phumzo Noxaka for Postbank and Sapo’s acting chair, Zibuse Comfort Ngidi – to a meeting tomorrow. This after he was alerted to the matter by a City Press enquiry.

“The minister was not informed of the transaction in question. He has summoned the chairpersons, chief executive officers and chief financial officers of Sapo and Postbank to a meeting on Monday, August 20,” said Siya Qoza, the department’s spokesperson.

In his response to City Press, Barnes said the money did not belong to depositors and that no lines were crossed. He added that such transfers has no effect on either the capital adequacy ratio or any requirements imposed by National Treasury regarding the deployment of the assets in the Postbank division.

“Certain contractual obligations [that exist] between divisions within the Sapo Group for the rendering of services, the utilisation of infrastructure and systems capabilities, or for bridging timing differences in facilities, can result in inter-divisional transfers in the normal course of business,” said Barnes.

“Where applicable, these give rise to loan accounts which are dealt with at arm’s length and serviced at market-related interest rates, so as to result in no net transfer of economic value.”

The parastatal is under financial strain and, just two months ago, was facing legal action from eight suppliers which, collectively, were owed a total of R101m.

Barnes could not give details about how much the company currently owes its creditors.

“The balance of monies owed to creditors moves every day, in the normal course of business,” he said.

“Amounts due to creditors are disclosed in the annual financial statements, as required. Sapo is an extensive organisation and will – again, in the ordinary course of business – be involved in any number of legal matters at a point in time. It is not Sapo policy to deal with these matters in the media.

“As part of both the adjustment budget and the medium-term expenditure framework, Sapo has submitted its funding requirements to National Treasury, which will be processed in due course,” Barnes said.

The parastatal recorded a net loss of R142m in the year ending June, despite having raised R4.8bn in funding over the past three years which went to paying its creditors backlog.

According to a confidential document outlining the company’s financial state – signed by Barnes and the group chief financial officer, Jabulani Dlamuka – the company is far from being financially healthy.

The document, dated June 28, which City Press has seen, also hints at the transfer which was done earlier this month.

“Postbank has free cash flow of R1.8bn after meeting the capital adequacy ratio requirements set by the SA Reserve Bank. It is entirely logical and commercially sound for this amount to be transferred into Sapo’s accounts to assist with the current financial crisis,” reads part of the document.

Among the proposals outlined in the document are the following:

• Sapo’s service agreement with the SA Social Security Agency (Sassa) will require R1.92bn in funding. An agreement has been reached that R541m would be made available as an advance payment, but the remaining R1.4bn still has to be raised.

• Sapo would approach Telkom and the Public Investment Corporation for a potential 40% equity investment. Its net asset value of R3.6bn could potentially increase with the projected Sassa revenue stream.

• The company needs a R2.7bn cash injection to last it till March 2019 and wants R400m in bank loan repayments, due in December, to be deferred for a further six months to June next year.