Post Office Centurion lease was unlawful - public protector

2016-02-23 16:39 - Gareth van Zyl, Fin24
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The SA Post Office was put under administration in November last year after a protracted four-month illegal strike. Picture: Emile Hendricks/Foto24

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Pretoria - The Post Office’s acquisition of a R161m ten-year lease in 2010 for an office building in Centurion, Gauteng was “tainted by procurement irregularities and corruption”.

This is according to Public Protector Thuli Madonsela’s findings on Tuesday afternoon after a years-long investigation into the South African Post Office (Sapo).

The report on the findings, dubbed ‘Postponed Delivery’, comes after the Communication Workers Union (CWU) lodged complaints about Sapo with the public protector in 2011.

At the time, the CWU asked the public protector to investigate issues such as Sapo’s alleged maladministration in a head office leasing contract, the procurement of services from a catering company, the usage of labour brokers and “possible corrupt relationships” between employees and service providers.

And after evaluating evidence, Madonsela announced that the “acquisition” of Sapo’s Eco Point Office Park in Centurion, Tshwane was “unlawful”.

“The allegation that the procurement of the Eco Point Office Park to accommodate the head offices of Sapo was irregular is substantiated,” Madonsela said as she read out the report.

“The Sapo board further failed to ensure that the acquisition for the Eco Point Park building was preceded by a competitive bidding process,” said Madonsela.

“The acquisition of the Eco Point Office Park was, accordingly unlawful,” she said.

Madonsela explained that Sapo had failed to ensure “proper demand management before the acquisition of the Eco Point Office Park as the business case on which the board relied”.

She said that this included the “misrepresentation of facts and falsified information” regarding structural defects in the National Postal Centre (NPC) in Pretoria’s central business district, where Sapo’s head office was accommodated previously.

The public protector said that a KPMG report had also previously found a “corrupt relationship between Centurion Vision Development (Pty) Ltd, the owners of the Eco Point Office Park and one of the Sapo officials who was at the centre of the transaction”.

However, Madonsela found that Sapo had “failed to act expeditiously to review the deal with Centurion Vision Development” in light of the finding.

“This conduct was in violation of section 195 of the Constitution,” said Madonsela.

Other findings of the report detail that Sapo had incurred “fruitless and wasteful expenditure” in upfront rental towards the 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.

Subsequently, she has ordered Sapo’s board of directors to recover this R22m.

The public protector also found that the CWU’s allegation that Sapo had improperly appointed a company to project manage the procurement of a catering company called Fedics to operate a canteen at the Eco Point building was not substantiated.

CWU’s allegation that extreme cost curtailing measures at Sapo compromised service delivery was also found to lack evidence, said Madonsela.

Claims that Sapo had corrupt relationships with labour brokers was also not substantiated. However, Madonsela said that Sapo had improperly appointed labour brokers who operated without contracts.

“The total amount involved in the procurement of labour brokers is estimated at about R2.7bn,” added Madonsela.