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Home / New Zealand

NZ Post venture coming unstuck

10 May, 2001 03:40 AM3 mins to read

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By FRANCESCA MOLD political reporter

New Zealand Post's flagship overseas venture, to rescue the South African mail service, has run into serious trouble.

The South African postal service, facing losses of up to $220 million, has asked its Government to terminate the estimated $54 million, three-year contract with consultants Transend Worldwide, a
subsidiary of NZ Post.

The news has come as a blow for NZ Post, which trumpeted Transend after it contributed substantially to the company's 8 per cent growth this year.

In March, Post chief executive Elmar Toime promoted Transend, one of the world's largest postal consultancies, as an example of the company's success in diversifying its business.

The threat to the South African contract follows an investigation by a New Zealand-based auditor into allegations about the appointment of staff and expenses claims within the subsidiary company.

The report is understood to have been completed and will be presented to the NZ Post board at its next meeting.

South African Post Office managers claim that despite a "very expensive" contract signed in 1999 in a bid to transform the poorly performing postal service, Transend failed to ensure that the agency broke even by March this year.

Other problems cited included insufficient attention paid to black empowerment and a failure to meet a target of delivering mail to four million homes throughout the country.

South African Communications Ministry spokesman Robert Nkuna told the Herald a full audit into the postal service's problems, which included "financial irregularities," had been launched.

The inquiry was broad and included "individual players" such as Transend.

Mr Nkuna said the question of terminating Transend's contract was separate to the audit at this stage.

Communications Minister Ivy Matsepe-Casaburri would consider the Post Office's request to end the contract with Transend over the next few weeks.

"We're not going to just wake up in the morning and say, 'New Zealanders go back home.' That's not our way.

"We would have to go back to the agreement that was signed and see what is the best way out in the interests of both parties," said Mr Nkuna.

Transend's country manager for South Africa, Doug Maclean, told the Herald the request to scrap the contract came as a surprise. He expected to meet post office managers in the next few days to discuss their concerns and was waiting for formal feedback from the Government.

He said he had a clear idea of the organisation's financial position but did not want to comment on it.

To suggestions that losses could be as high as $220 million, Mr Maclean said: "The figure may be at that level, but you need to understand losses can contain a lot of extraordinary items that aren't necessarily normally considered."

State-Owned Enterprises Minister Mark Burton received a written briefing about the South African concerns from NZ Post yesterday and his spokesman said he was not particularly concerned at this stage.

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