‘Corruption’ at Post Office – but not in billion-rand deals

Public protector Thuli Madonsela. (Madelene Cronje, M&G)

Public protector Thuli Madonsela. (Madelene Cronje, M&G)

Someone is going to have some explaining to do.

When the Post Office signed a 10-year lease for a swanky new headquarters just outside Pretoria, Public protector Thuli Madonsela said on Tuesday, it was ripped off to the tune of just under R70-million. It was charged some 30% above market-related rental, and paid another R22-million it never should have for a building that stood empty.

And in that instance there is a villain.

The leasing deal had been “tainted by procurement irregularities and corruption” Madonsela said in her report titled Postponed Delivery, and a previous investigation by consultants KMPG had found “a corruption relationship between Centurion Vision Development”, the suppliers of the building, “and one of the [Post Office] officials who was at the centre of the transaction.”

Several high-level South African Post Office (SAPO) officials have variously resigned or been removed from the organisation since the investigation started in October 2011. The current board chairperson was appointed in August, and the chief executive in January.

Madonsela did not name the allegedly corrupt official in question, but hinted that the matter would be before the courts shortly. In December the Special Investigating Unit handed over a report on its own investigation into the Post Office. That report is not public, but Madonsela said the SIU had told her the Asset Forfeiture Unit should “become involved” “and that civil proceedings be instituted to challenge the validity of the lease contract”.

Madonsela directed the Post Office to “immediately” forward “evidence pointing to the contravention of the Prevention and Combatting of Corrupt Activities Act” to the police.

Centurion Vision is controlled by property mogul Irene Tsai and her family, best known through the more public-facing company M&T Development, which developed vast swathes of land to the south of Pretoria. Tsai could not immediately be reached for comment.

Madonsela did not specify the mechanism of corruption in the R161-million lease deal, but explained in some detail how it was concluded on the basis of lies and fabrications. The Post Office board had been told it would cost R14.2-million to move into the new offices, she said, while the actual cost was R110.5-million. Officials also lied about how big the new office was, how many parking bays it had, its state of readiness for occupation, and its environmental credentials.

The R2.7-billion gap
Far bigger than the suspect head-office leasing deal was the amount of money the Post Office spent with labour brokers, Madonsela also reported – on the basis of sometimes non-existent and sometimes expired contracts.

Between September 2001 and September 2014, Madonsela said, the Post Office paid various labour brokers R2.7-billion for jobs it had outsourced. A full R1.8 billion of that was split between just five companies.

“As these relationships were not properly regulated and the billing difficult if not impossible to control to prevent irregular scope creep, overbilling, overcharging and false billing, it cannot be said that the runaway expenditure involved did not contribute to SAPOs current liquidity and cash-flow problems,” Madonsela said.

The Communications Workers Union, which had lodged the complaint that led to the investigation, believed there existed corrupt relationships between some Post Office staffers and labour-broking companies. But Madonsela said she could not find “any evidence to suggest that there were any such relationships” and nor could KMPG investigators.

“I was also advised by the SIU [Special Investigating Unit] that due to the lapse of time and the non-availability of records/data it was also not able to identify the specific role-players and to investigate possible collusion between such role-players and the labour brokers,” Madonsela said.

Phillip de Wet

Phillip de Wet

Phillip de Wet writes about politics, society, economics, and the areas where these collide. He has never been anything other than a journalist, though he has been involved in starting new newspapers, magazines and websites, a suspiciously large percentage of which are no longer in business. PGP fingerprint: CF74 7B0F F037 ACB9 779C 902B 793C 8781 4548 D165 Read more from Phillip de Wet

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