No cheque in the post

Arbitrators have dismissed a claim by the SA Post Office for the return of R31-million it believes it overpaid on a project to revamp branches, saying the parastatal had only itself to blame.

The arbitration ruling accentuates the breakdown of corporate governance at the post office — an issue also tackled by Communications Minister Ivy Matsepe-­Casaburri, who is expected to release the results of a wide-ranging forensic investigation soon.

Most of the R31-million in suspect payments were made between 2003 and 2005 during Maanda Manyatshe’s tenure as CEO and a stint by Motshoanetsi Lefoka as acting CEO.

Lefoka, the chief operating officer, is standing in as CEO again, this time for Khutso Mampeule, suspended in November.

It was Mampeule who finally stopped the suspect payments after being appointed to the top job in 2005. His tough action against Manyatshe and the contractor responsible for the branch upgrades contributed to the action against him by the post office board.

The saga, first reported by the Mail & Guardian last year, goes back to March 2003, when the post office invited tenders for the upgrade programme.

Some 19 bids were submitted, but the adjudication was aborted and a company trading as Vision Design House (VDH) was appointed, on a branch-by-branch basis, to do the work. Though VDH was not among the original bidders, Manyatshe and two senior officials drove its repeated reappointment.

In May 2004, the board approved VDH’s appointment as project managers for the entire upgrade programme, but subject to the availability of money, proper proposals being made for each branch upgrade, and to the CEO and chief financial officer signing off on each.

The post office and VDH signed an umbrella contract that June.

But the conditions were not re­spected. Geoff Mabote, then a post office general manager and one of the officials who drove VDH’s appointment from the start, signed off on projects with neither full proposals nor authority.

By the time Mampeule cancelled the contract in September 2005, after he had been alerted to irregularities, about R100-million had been paid to VDH to upgrade more than 60 sites.

VDH sued in the high court, claiming it was owed millions of rands for work done.

The parties agreed to arbitration, a quasi-legal process conducted in private, where VDH quantified its claim at R4,2-million.

Opposing the claim, the post office obtained documentation showing VDH added undeclared mark-ups totalling more than R31-million to its contractual project management fee of 12,5%.

In a counter-claim, it demanded VDH repay the money. It argued the contract implicitly imposed a duty on VDH to declare all profits; alternatively that the post office was entitled to repayment because it had paid in the ‘mistaken but reasonable belief” that the money was due.

In an affidavit last year pressing criminal charges against VDH, Manyatshe and others, Mampeule claimed the ‘secret profits” were fraudulent.

His affidavit requested an investigation into the tender irregularities and secret profits.

In their ruling this week, arbitrators Chris Petty and Lionel Melunsky dismissed VDH’s R4-million claim, saying it had not followed contractual procedures and should have ensured that the officials (chiefly Mabote) who approved projects had authority.

But they also dismissed the post office counterclaim, saying there was no evidence VDH was contractually obliged to charge a reasonable fee. ‘That VDH’s charges were excessive admits of no doubt, but the main agreement simply provided for negotiated contracts for each rollout.”

The post office had ‘itself to blame for paying charges … It allowed Mabote to carry on unchecked, it failed to heed the various concerns expressed by Els [a senior official who raised the alarm], and nothing was done to ensure that each project was approved of by the appropriate officials, or that the payments were authorised.”

Meanwhile, Cabinet said this week that Matsepe-Casaburri had received the report on the post office, and would ‘release the findings … and announce the steps she will be taking … at a later date”.

Communications department spokesperson Albi Modise said he understood the minister would make her announcement after the Cabinet had fully considered the matter.

Matsepe-Casaburri asked auditors SizweNtsaluba VSP last November to probe corporate governance and management conduct. The probe superseded another called by the post office board.

The board suspended Mampeule earlier that month, without giving precise reasons.

Then-chair Phuti Tsukudu was quoted as saying: ‘He appears to undermine the board’s authority and his impartiality has been called into question with regards to the management of the planned forensic audit …”

Also in November, MTN South Africa asked Manyatshe, who had headed the cellphone company since leaving the post office, to resign.