Parliament of South Africa
Parliament of South Africa
09/04/2024 | Press release | Distributed by Public on 09/04/2024 06:38
Communications Committee Raises Concerns With SAPO’s Presentation on Work of BRP
For the soundbite of the committee Chairperson, Ms Khusela Sangoni Diko, please click - https://iono.fm/e/1477253
Parliament, Wednesday, 4 September 2024 - The Portfolio Committee on Communications and Digital Technologies has raised concerns with the South African Post Office's (SAPO) presentation on the work of its two independent business rescue practitioners (BRPs). The presentation was delivered during a sitting of the committee yesterday, 3 September.
While acknowledging the significant work done to date by the BRPs, the portfolio committee believes there is room for a more aggressive and innovative approach to improving the fortunes of the ailing state entity.
Since their appointment in July last year, following a court application made by SAPO and the Department of Communications and Digital Technologies, the BRPs have made some progress - what Deputy Minister Mondli Gungubele calls "green shoots" - including reaching compromises with creditors on their claims and reducing SAPO's historical debt burden from R8,7bn to R440m after improvements in the net asset value of the company from negative R7,9bn to R840m, as at 30 June 2024.
The committee noted, however, that these achievements came at great cost to SAPO, its employees and underserviced communities, as evidenced by the more than 4 800 employees dismissed for operational reasons through a Section 189A retrenchment process and the almost 500 branches shut down countrywide. Even more alarming was SAPO's revelation yesterday of a pending "day zero" scenario, where SAPO is expected to exhaust all its cash reserves by October 2024, in the event it does not receive a cash injection from the fiscus.
According to SAPO, based on the latest financial projections at the current run rate and with no further capital injection, "day zero" means that it will have no more funds to operate. This will place a legal obligation on the BRPs to place the company in liquidation in line with Section 141(2) of the Companies Act 71 of 2008.
Among other things, the committee was unhappy about the unexplained departure of the previous SAPO CEO, Ms Nomkhita Mona, and the perceived lack of urgency and proactiveness on the part of the BRPs to present to the committee viable alternatives to the day zero scenario, as per the objective of the adopted business rescue plan, which is to stabilise and restore the SAPO to solvency and liquidity. The committee also criticised the BRPs' lack of a coherent plan to protect current and find new revenue streams for the post office.
To this end, the committee called on the department and SAPO to intensify their engagements with their counterparts in government to enhance cooperation and collaboration and expand government-to-government business directed to SAPO in their areas of operation. Furthermore, the committee called on the Minister of Communications and Digital Technologies, Mr Solly Malatsi, to consider renewing SAPO's exclusive licence for the distribution of mail and parcels weighing less than one kilogram.
The portfolio committee Chairperson, Ms Khusela Sangoni Diko, said: "The alarmist announcement of 'day zero' made at such extremely short notice is gravely unfortunate and can only be read against what seems to be a lacklustre attitude by the BRPs in the turnaround of the SAPO. The committee has requested a detailed and time-bound strategy on the envisaged turnaround of the post office, beyond expenditure cuts - most notably reduction of the labour force and branch network - to future-proofing SAPO and truly positioning the entity as the Post Office of the future."
This plan must include novel recommendations to leverage SAPO's strategic assets, including its extensive property portfolio and the opportunities offered by digital innovation. "SAPO's properties value over billions if the right equity partnerships are forged," said Ms Sangoni Diko.
The committee notes and welcomes the ongoing engagements with the National Treasury, led by the department, on a further cash injection for SAPO if the BRPs and SAPO are able to demonstrate a sustainable reduction in overhead costs, timely payment of historical debt and a viable and realistic long-term sustainability plan. The portfolio committee will schedule a follow-up meeting with SAPO to assess progress on these and other measures put in place to avoid the day zero scenario presented.
At the same meeting, the committee also welcomed the Postbank's presentation on the KPMG investigation into the theft of R91 million and contract mismanagement. Acting in its capacity as shareholder representative, the Department of Communications and Digital Technologies had directed the Postbank to institute a forensic investigation, following anonymous correspondence containing damning allegations against the bank.
The Postbank lost about R109.5 million in 2022 due to theft and an investigation is ongoing to identify the perpetrators. Ms Sangoni Diko said that the committee will follow up on this matter until the perpetrators are brought to book.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS AND DIGITAL TECHNOLOGIES, MS KHUSELA SANGONI DIKO.
For media inquiries, please contact the committee's Media Officer:
Name: Justice Molafo (Mr)
Parliamentary Communication Services
Cell: 081 424 7481
Email: [email protected]
Parliament, Wednesday, 4 September 2024 - The Portfolio Committee on Communications and Digital Technologies has raised concerns with the South African Post Office's (SAPO) presentation on the work of its two independent business rescue practitioners (BRPs). The presentation was delivered during a sitting of the committee yesterday, 3 September.
While acknowledging the significant work done to date by the BRPs, the portfolio committee believes there is room for a more aggressive and innovative approach to improving the fortunes of the ailing state entity.
Since their appointment in July last year, following a court application made by SAPO and the Department of Communications and Digital Technologies, the BRPs have made some progress - what Deputy Minister Mondli Gungubele calls "green shoots" - including reaching compromises with creditors on their claims and reducing SAPO's historical debt burden from R8,7bn to R440m after improvements in the net asset value of the company from negative R7,9bn to R840m, as at 30 June 2024.
The committee noted, however, that these achievements came at great cost to SAPO, its employees and underserviced communities, as evidenced by the more than 4 800 employees dismissed for operational reasons through a Section 189A retrenchment process and the almost 500 branches shut down countrywide. Even more alarming was SAPO's revelation yesterday of a pending "day zero" scenario, where SAPO is expected to exhaust all its cash reserves by October 2024, in the event it does not receive a cash injection from the fiscus.
According to SAPO, based on the latest financial projections at the current run rate and with no further capital injection, "day zero" means that it will have no more funds to operate. This will place a legal obligation on the BRPs to place the company in liquidation in line with Section 141(2) of the Companies Act 71 of 2008.
Among other things, the committee was unhappy about the unexplained departure of the previous SAPO CEO, Ms Nomkhita Mona, and the perceived lack of urgency and proactiveness on the part of the BRPs to present to the committee viable alternatives to the day zero scenario, as per the objective of the adopted business rescue plan, which is to stabilise and restore the SAPO to solvency and liquidity. The committee also criticised the BRPs' lack of a coherent plan to protect current and find new revenue streams for the post office.
To this end, the committee called on the department and SAPO to intensify their engagements with their counterparts in government to enhance cooperation and collaboration and expand government-to-government business directed to SAPO in their areas of operation. Furthermore, the committee called on the Minister of Communications and Digital Technologies, Mr Solly Malatsi, to consider renewing SAPO's exclusive licence for the distribution of mail and parcels weighing less than one kilogram.
The portfolio committee Chairperson, Ms Khusela Sangoni Diko, said: "The alarmist announcement of 'day zero' made at such extremely short notice is gravely unfortunate and can only be read against what seems to be a lacklustre attitude by the BRPs in the turnaround of the SAPO. The committee has requested a detailed and time-bound strategy on the envisaged turnaround of the post office, beyond expenditure cuts - most notably reduction of the labour force and branch network - to future-proofing SAPO and truly positioning the entity as the Post Office of the future."
This plan must include novel recommendations to leverage SAPO's strategic assets, including its extensive property portfolio and the opportunities offered by digital innovation. "SAPO's properties value over billions if the right equity partnerships are forged," said Ms Sangoni Diko.
The committee notes and welcomes the ongoing engagements with the National Treasury, led by the department, on a further cash injection for SAPO if the BRPs and SAPO are able to demonstrate a sustainable reduction in overhead costs, timely payment of historical debt and a viable and realistic long-term sustainability plan. The portfolio committee will schedule a follow-up meeting with SAPO to assess progress on these and other measures put in place to avoid the day zero scenario presented.
At the same meeting, the committee also welcomed the Postbank's presentation on the KPMG investigation into the theft of R91 million and contract mismanagement. Acting in its capacity as shareholder representative, the Department of Communications and Digital Technologies had directed the Postbank to institute a forensic investigation, following anonymous correspondence containing damning allegations against the bank.
The Postbank lost about R109.5 million in 2022 due to theft and an investigation is ongoing to identify the perpetrators. Ms Sangoni Diko said that the committee will follow up on this matter until the perpetrators are brought to book.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS AND DIGITAL TECHNOLOGIES, MS KHUSELA SANGONI DIKO.
For media inquiries, please contact the committee's Media Officer:
Name: Justice Molafo (Mr)
Parliamentary Communication Services
Cell: 081 424 7481
Email: [email protected]