By Lehlohonolo Lehana.
Communications and Digital Technologies Minister Mondli Gungubele says the Postbank board members who’ve resigned did so due to serious allegations involving illegal contracts.
Gungubele told a media briefing in Pretoria on Thursday afternoon that a forensic investigation by KPMG found the bank failed to follow proper processes when contracting certain service providers.
The minister’s remarks came hours after the resignation letters of Postbank chair, Thobile Wonci and two other non-executive directors, became public.
They’ve accused Gungubele of interference and an oppressive and hostile attitude.
Gungubele said poor governance cannot be tolerated.
“One of the fundamental problems has been the continuation of an illegal contract which was paid no less than R140 million and without a justifiable explanation why it was allowed continue. As a matter of record which I know it is transparent, it’s public.
“You know Postbank has had disclaimer for no less than two years. No serious minded-nation can allow a financial institution to tolerate that. Normally financial institutions are held in the highest regard as compared to any other institution.”
The resignations took place two days ahead of the Postbanks annual general meeting. Gungubele described the resignations as “pre-emptive”.
The forensic report recommended that the department act against the board of directors.
On Thursday, the day of the annual general meeting, Gungubele removed the board, which had already resigned, and the only remaining board director in line with section 71 of the Companies Act.
The developments also come amid the bank’s delays in the payments of social grants.
About 600,000 of the most vulnerable in society were left destitute, desperate and hungry last week after a technical glitch in Postbank’s social grant payment system, with some elderly still yet to receive their money.
This was revealed during a briefing by Postbank, social development and the communications department on Thursday.
The bank has said technical glitches from a systems upgrade are to blame.
Postbank which distributes social grants on behalf of the government, confirmed the system difficulties last week left grant recipients unable to get cash from ATM, the Post Office, and retailers.
Gungubele said some individuals trying to defraud the system in order to get paid twice have caused further delays in resolving the payment issues from last week.
“Our systems are very thorough therefore people will not be able to defraud the system instead, what they are doing is clogging up the system and thereby delaying the process of dealing with the valid reversals. We condemn these attempts and further warn those people to stop this.”
Gungubele said most payments had now been made but admitted some of the elderly were still waiting to get their pensions.
“Unfortunately, though, due to the automated reversal not working on the 5th and 6th, a number of clients, mainly the elderly, were unable to access their funds for a prolonged period of time as a manual process had to be implemented to credit their accounts,” said Gungubele.
He said the glitch which hampered their service was a result of a systems upgrade the bank is introducing to provide a better service. The system challenges led to the transactions of beneficiaries resulting in ‘transaction incomplete errors’ because of the system’s communication timeouts, he explained.
Postbank CEO Nikki Mbengashe said the bank could not promise the glitch would not happen again.
Gungubele urged those still struggling to get their money to contact Postbank.
“Government assures South Africa and social grants beneficiaries that all social grants beneficiaries that have not yet received their social grants payments will be paid their money in full. We encourage our clients who are still encountering challenges with accessing their grant money and require support to contact the Postbank call centre,” said Gungubele.
Gungubele apologised on behalf of government, with Postbank’s Mbengashe saying she “personally relates to what happened”.
“We are sorry, we promise everyone who applied for their grant will get their money. Even if we say we are sorry, it is not enough, we recognise that. I personally relate to what happened as I was raised up by a mother who relied on a Sassa grant”.
Despite calls for her to intervene when the glitch was first noted, Social Development Minister Lindiwe Zulu denied the government had failed.
“We have not been failing to pay grants. What might happen is these technical challenges. We want to keep improving our systems. What is important is what we do about these challenges.”
This was not the first time Postbank has faced technical challenges that left social grant recipients impoverished. A technical glitch in January left thousands stranded. Last year, Postbank confirmed it suffered a cybercrime attack incident resulting in a financial loss of approximately R90m.
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Video Courtesy of GCIS.