Cliffe Dekker Hofmeyr’s legal experts did not mince words regarding the Post Office’s unlawful use of employee funds.
Legal experts at Cliffe Dekker Hofmeyr have warned the South African Post Office that using employees’ pension or medical aid contributions to pay off other debts could have severe financial and criminal consequences for their board’s directors.
SAPO has struggled to pay its debt to an array of creditors since the Covid-19 pandemic started, including ‘statutory creditors’ such as retirement fund, medical aid scheme, UIF and Sars.were operating profitably, with many closed due to unpaid rent or water and electricity bills. The SCA found that SAPO was not entitled to use contributions to pay other creditors and said SAPO’s financial woes pre-dated the Covid-19 pandemic, were foreseeable, avoidable, and caused by managerial failures.In their commentary on the ruling, Cliffe Dekker Hofmeyr’s Imraan Mohamed, Vivien Chaplin, and Tobie Jordaan highlighted that the company had effectively unlawfully appropriated its employees’ pensions for the payment of its operational expenses.
“However, the consequences of the actions of the SAPO board are no less heinous than those involved in state capture, given SAPO’s unlawful use of employee’s funds and the potential reckless trading by a custodian of taxpayers’ assets.”Cliffe Dekker Hofmeyr’s experts estimated that SAPO’s debt was now well over R1 billion when including obligations to other creditors, which meant a further bailout would not make any commercial sense and should be scrutinised by the public if considered.
“Directors are required to act in accordance with their fiduciary duties, with proper purpose and in the best interests of their companies, including a duty to exercise care, skill and diligence to promote company success through independent judgment,” they explained.