DA lays criminal charges against SAPO Directors 

Today, 12 October 2015, I will be laying criminal charges at the Cape Town Central Police Station against the previous Directors of the South African Post Office (SAPO) for, among other crimes, their failure to exercise their fiduciary duties in terms of several sections of the Companies Act (2008). A copy of the affidavit is available.

Even as the SAPO was being crushed under fast accumulating debt and an increasingly negative cash flow, until they were forced to resign by the Minister of Telecommunications and Postal Services in November 2014, these SAPO directors continued to meet regularly in order to take home millions of rands in Director’s fees. During 2013/2014, Dr Manzini pocketed almost R600,000; Christopher Hlekane R3,108,000; Khumo Mzozoyana  R2,345,000; while the remainder took home more than R3,600,000 between them.

These include former Board Chairperson, Dr Hlamalani Manzini, CEO and Executive Director, Christopher Hlekane, CFO and Executive Director, Khumo Mzozoyana, as well as nine other Non-Executive Directors. 

Notwithstanding a warning from the independent auditors in the SAPO Annual Report for year ended March 2014 projecting a group loss of R1.3 billion for the following year, these directors continued leading an entity that was trading recklessly, technically insolvent, problematic as a going concern, and in need of business rescue.

The Companies Act states a director is liable for any loss, damages or costs sustained by the company as a direct or indirect consequence of the director having “persisted and went along with any action or decision despite knowing that it amounts to reckless trading”, and “been a party to any action or failure to act despite knowing that the act or omission was calculated to defraud a creditor, employee or shareholder of the company.”

As a direct consequence of the SAPO Directors criminal neglect, the entity has once again failed to table its Annual Report for 2014/2015 before Parliament. It has also abused its legislated monopoly by failing to deliver mail; failed to meet its universal service obligations; failed to pay suppliers for more than 120 days placing many at risk of business failure; and failed to pay staff, some for more than a year.

The SAPO’s fabled turnaround plan presented to Parliament at the beginning of the year that aimed to reduce its R1,3-billion projected loss for 2014/2015 into a relatively insignificant R102 million loss for 2015/2016 – and then into a R1,2-billion profit is nothing more than wishful thinking. 

The fact that state-owned companies are able to continually solicit taxpayer bailouts disguised as “guarantees” based on numerous turnaround plans that never materialize, renders them immune to bankruptcy and in the processes, subsidises gross inefficiency, a lack of innovation and uncompetitive business models. Even more concerning is that subsidies are at the expense of the already burdened tax payer.

Filing these criminal charges sends a clear message to the new SAPO Board as well as to other Directors of state owned companies that it is not business as usual, that they are not secure in the comfort of their boardrooms, and that there are serious criminal consequences for their actions – or inaction.

Issued by Cameron MacKenzie, DA Shadow Deputy Minister of Telecommunications and Postal Services, 12 October 2015