The embattled SA Post Office (Sapo), which requires almost a further R4bn in funding as adopted in its approved business rescue plan, continues to be bogged down by poor financial management, and operational and leadership lapses.
This was revealed by a team from the Auditor-General of SA during a sitting of the standing committee on public accounts (Scopa) in parliament on Wednesday.
Sapo received a disclaimed audit opinion with findings during the 2023/24 financial year, as has been the case since 2021/22. A disclaimer signifies the company’s accounts cannot be relied on and often suggest the company is in a serious financial state.
The business rescue plan (BRP), approved by creditors in 2023, was premised on Sapo receiving R3.8bn from the government to settle a second payment to creditors of 18c in the rand as well as infrastructure upgrades and operational requirements.
The state-owned company received R150m from the department of communications & digital technologies in March to cover operational expenses. However, the business rescue practitioners have said that money will sustain operations for just six months.
Sapo’s debts include R259m owed to the Post Office Retirement Fund, R125m to the SA Revenue Service, and R123m to the group’s medical aid scheme, Medipos. No provision for the Post Office has been made for the 2025/2026 fiscal year in the national budget.
According to the auditor-general’s presentation on Sapo, the entity achieved a paltry 13% of its targets during 2023/24. It had revenue of R1.6bn, with expenditure accounting for R1.7bn and of that R16.2m was fruitless and wasteful expenditure.
“A total of R6.2bn was required of which R2.4bn was received and supported the current operations, partial payment of retrenchment costs and payment of the 12c creditors dividend due to relevant affected parties of the company,” the report states.
“To fully implement the approved BRP, the SA Post Office requires a further R3.8bn in funding as adopted in the approved BRP.”
Among other things, the BRP seeks to use R600m for retrenchment packages for about 600 employees. This is expected to result in savings of about R1.3bn in annual employee costs; and R900m would be invested in modernisation of IT infrastructure.
The auditor-general’s report was scathing on how Sapo is run, saying high vacancy rates at the institution undermined financial controls, “and although the BR practitioners’ use of consultants provided temporary relief, sustainable capacity was not restored”.
“This contributed to poor record keeping and unreliable financial reporting, resulting in continued audit disclaimers. Furthermore, the internal control deficiencies that contributed to previous years’ disclaimed opinions were not addressed by management,” the report said.
“Repeat findings were noted in areas such as trade and other receivables, expenditure management, procurement & contract management, and consequence management.
“Irregular and fruitless and wasteful expenditure continued to be incurred without effective remedial action or enforcement of accountability measures.”
The quality of financial statements remained “poor”, “indicating that corrective measures are either ineffective or not implemented at all”.
Annual financial statements were not submitted within the prescribed period, and were not prepared in line with the reporting framework, as per the Public Finance Management Act.
The auditor-general noted that theft and fraud allegations exceeding R100,000 were not reported to the police, violating sections of the Prevention and Combating of Corrupt Activities Act.
“Sapo’s culture around fruitless and wasteful expenditure is marked by weak accountability, poor financial management — such as entering contracts without cash flow confirmation — and a tolerance for inefficiency, resulting in repeated financial losses,” the auditor-general’s report noted.
“Its consequence management is reactive and permissive, with delayed actions often justified by financial difficulties, undermining effective financial control.” Irregular expenditure accounted for R51m during the year under review.
That the entity had failed to meet its performance targets had resulted in reduced access to postal services for citizens, especially those in rural and underserved areas; loss of revenue due to inability to deliver on its mandate; erosion of public trust and institutional credibility; and undermining of the business rescue efforts, “indicating operational and leadership weaknesses”.
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