The South African Post Office (Sapo) board of directors must take effective steps to recover R22-million paid to Centurion Vision Development as rental for the lavish Eco Point Office Park over 10 months even though the building was unoccupied, Public Protector Thuli Madonsela said on Tuesday.

“The allegation that Sapo incurred fruitless and wasteful expenditure in the form of irregular upfront rentals towards the Eco Point Office Park building before occupation is substantiated,” Madonsela told reporters in Pretoria.

“However, the amount involved was not R3.6-million per month but R2 372 050. Furthermore, the irregular payments that were the subject of the original complaint were later conceded as irregular and refunded.”

Releasing her long-awaited report into allegations of maladministration and improper conduct at the Sapo, Madonsela said she found that the the “strategic organ of state” made payments towards the rental for the Eco Point Office Park, in Centurion, for a ten months period stretching from May 2010 to March 2011.

Madonsela said the rentals amounted to approximately R22-million prior to occupying the building and was contrary to the lease agreement signed in February 2010.

“The conduct of the Sapo group chief executive in approving the said payments for an unoccupied building was in violation of the provisions of section 83 of the Public Finance Management Act which prohibits irregular expenditure and/or fruitless and wasteful expenditure,” she said.

Madonsela was probing allegations of maladministration and improper conduct at the Sapo. The investigation followed complaints lodged by the Communication Workers Union in 2011.

Titled “Postponed Delivery”, the period covered by the investigation is restricted to transactions and conduct that took place between April 2002 and September 2012.

In her remedial action, Madonsela said the R22-million should be recovered.

Madonsela also found that the ailing institution’s acquisition of a ten year lease costing around R161-million, in 2010, at the lavish Centurion building was tainted with irregularities, corruption and was subsequently unlawful.

“At the outset of the process, Sapo failed to ensure proper demand management before the acquisition of the Eco Point Office Park as the business case on which the board relied on included misrepresentation of facts and falsified information regarding structural defects in the National Postal Centre where Sapo was accommodated at the time,” Madonsela said.

“Sapo further conceded that in violation of the PFMA [Public Finance Management Act], the relocation to the Eco Point Office Park had not been captured in its strategic plan for the year 2009/2010.”

Madonsela said the Sapo board further failed to ensure that the acquisition of the Eco Point Office Park building was preceded by a competitive bidding process, which was in violation of the PFMA and its corporate procurement policy of 2009.

“The procurement of the lease for the Eco Point Office Park building was therefore not fair, equitable, transparent, competitive and cost effective as required by section 217 of the Constitution read with paragraph 3. 1 of the Sapo Procurement Policy,” she said.

“The failure by Sapo to follow proper bidding process could not be justified under permissible deviations in terms of the Sapo Policy and the PFMA as there was no urgency and the Eco Point building was not the only building available to justify a single source deviation. The acquisition of the Eco Point Office Park was accordingly unlawful.”