South African Post Bank board members have resigned en masse, citing alleged hostility and political interference in grant payments by Minister of Communications and Digital Technologies Mondli Gungubele.
In a joint statement released on Wednesday, board members who threw in the towel said Gungubele’s alleged arrogance and unfounded claims about their performance forced them to resign as he prevented them from executing their fiduciary obligations.
According to their resignation letters, Chairperson Thabile Wonci and members Martin Mahosi, Adv Leigh Hefer, Vuyelwa Matsiliza and Gcobani Mancotywa are five of the seven board members who resigned, pointing accusing fingers at Gungubele.
Letlhogonolo Noge-Tungamirai and Ashley Latchu remained.
Their departure, expected to be announced officially by Gungubele’s department on Thursday, is the culmination of months of tension between the board and the ministry over the delayed payment of grants by the South African Social Security Agency (SASSA).
Postbank, a subsidiary of the South African Post Office (SAPO), is a state-owned company established to encourage and attract savings amongst South Africans through transactional services and lending facilities catering to the rural and lower-income markets with little to no access to commercial banking services. In 2018, SAPO was mandated to assist with social grant payments.
The joint statement released by the board members further accused Gungubele of dishonesty and oppression.
“To us, dignity, character, status and reputation are everything. It is for this reason that we could not be associated with any form of dishonesty, malfeasance, corruption or negligence. The single reason for our summary resignations was the ever-increasing hostile and oppressive attitude of the minister towards the board, which made it impossible for us to continue to discharge our duties to the bank as required by law,” the statement reads in part.
“Critical to our resignation was a recognition on our part to act always within the ambit of the law without any undue influence from anyone and having to act in the best interest of the Bank.”
SAPO was mandated to assist with social grant payments in 2018 and created an IT system to support the national payment system. FSS Technologies South Africa (FSS) and SAPO signed a software licencing agreement for an Integrated Grant Payment System (IGPS) for social grants in the year.
According to the board, FSS continued switching providers without payment for six months, prompting their mass resignations. The then-Minister of Communications and Digital Technologies, Stella Ndabeni-Abrahams, named six five-year non-executive directors to the bank’s board in 2020.
The board members’ statement said FSS banned switching services for two hours in February 2021, hurting 160,000 social grant users. SASSA fined the bank R17 million. Negotiations led to an agreement where the bank would seek National Treasury condonation to regularize FSS services and a valid contract.
The bank agreed to pay FSS 21 cents per month from January 2021 to March 2023, 10.5 cents for unpaid switch use beyond the six-month free services term, and the balance for payment switch used by the bank.
In December 2022, the bank hired KPMG to investigate consequence management. The KPMG report and National Treasury denied condonation, and therefore, the bank continued using FSS/EC to minimize service disruptions. In the same month, the bank agreed to pay FSS/EC R46 881 264.35 to keep switching services and help the bank migrate the IGPS into its system.
FSS/EC sued for R23 million. However, the Court allowed the motion without ruling on the payment agreement’s legitimacy.
Ndabeni-Abraham’s successor, Minister Khumbudzo Ntshavheni, nominated five non-executive directors to the Bank’s Board on 18 October 2022, with Ashely Latchu, Andrew Martin Robert Mahosi, Vuyelwa Viola Matsiliza, Letlhogonolo Noge-Thungamirai, and Lebogang Refilwe Mokgabudi.
According to Wonci, Mahosi, Hefer, Matsiliza and Mancotywa, things worsened when Gungubele became minister on March 6, 2023.
“Upon the minister’s appointment, the relations between the minister and the board increasingly deteriorated from dismissiveness to outright hostility on the part of the minister. The height of the minister’s hostility was at full display when he attended a meeting of the board on or about 14 June 2023. The board was of the view that the purpose of the meeting was to discuss the SAPO business rescue / provisional liquidation process, only to be presented with the previous financial period audit report, with reference to the FSS/EC report.
“From the onset, the minister made it clear that he had not attended the meeting to ‘have a conversation’ with the board members, he only wanted answers. He asked the members to introduce themselves, and as they stood to introduce themselves, he would point at the member asking ‘who are you, and what do you know about the EC contract?’ Without affording the member to even a sentence, he would move to the next member, and so it went until he walked out of the meeting without the matter being addressed,” stated the board members.
The board said Gungubele wrote to them on July 17, 2023, demanding replies and supporting documentation regarding the KPMG report.
While the board sought the report from management and the minister’s review, on July 25, 2023, Gungubele is said to have found the board guilty of violating its fiduciary duty by allowing FSS/EC payments without legal procedures.
The board asked senior counsel for legal guidance on the KPMG report and Gungubele for permission to consider the FSS/EC matter’s history. They also told him SS/ECC would shut down services at midnight on 31 July 2023 without payment. Without the switching service, the bank could not pay SASSA grants and was advised of the urgent interdict enabling FSS/EC payments until review proceedings.
Moreover, Wonci, Mahosi, Hefer, Matsiliza and Mancotywa accused Gungubele of determining that the board had prolonged unlawfulness for two years and that its oversight failure could not be disregarded, thus invoking a legal statute asking each board member to explain why they should not be removed.
According to them, they wrote another letter to Gungubele explaining the FSS/EC contract, KPMG report, and efforts taken to regularize it without affecting SASSA grant payments or penalties.
They also asked Gungubele to give the normalisation payment switch time without disrupting SASSA social grants.
“On 11 September 2023, the individual members who had not already submitted their responses duly did so. In our responses, we again reiterated that the allegations against us by the Minister were unfounded and were damaging to our reputation; and referred him to all the correspondence that had been sent to him addressing these allegations. In this letter, we again stressed the point that the continued payments to FSS/EC were now pursuant to a Court Order and further stressed the disastrous impact of any cancellation of the FSS/EC contract prior to the outcome of the review application.
“It was, however, clear to the Board that the Minister had made the decision to remove the Board, or at least some of the members, and that the invitation to provide responses on why he should not remove us was a mere formality, for him to be seen to be complying with section 15 (2) of the Act. Consequently, the majority of the members tendered their resignations, without awaiting the clearly predetermined decision of the Minister,” the board’s statement added.
Tlangelani Manganyi, a spokesperson in Gungubele’s office, said African Times should wait for a media briefing on September 14 where everything would be explained.