The Post Office’s acquisition of a R161m, 10-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 Post Office.
The report on the findings, dubbed “Postponed Delivery”, comes after the Communication Workers Union (CWU) lodged complaints about the Post Office with the public protector in 2011.
At the time, the CWU asked the public protector to investigate issues such as the company’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 the Post Office’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 the Post Office was irregular is substantiated,” Madonsela said as she read out the report.
“The Post Office 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 the Post Office 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 in Pretoria’s central business district, where its head office was accommodated previously.
The public protector said that a KPMG report had also previously found a “corrupt relationship between Centurion Vision Development, the owners of the Eco Point Office Park, and one of the Post Office officials who was at the centre of the transaction”.
However, Madonsela found that the Post Office 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 the Post Office had incurred “fruitless and wasteful expenditure” in upfront rental towards the Eco Point Park building before occupation.
The company made rental payments from May 2010 to March 2011 totalling R22m prior to occupying the building, said Madonsela.
Subsequently, she has ordered the board of directors to recover this R22m.
The public protector also found that the CWU’s allegation that the Post Office 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.
The CWU’s allegation that extreme cost-curtailing measures compromised service delivery was also found to lack evidence, said Madonsela.
Claims that the Post Office had corrupt relationships with labour brokers was also not substantiated. However, Madonsela said that the company 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.