An Post Faces 50m Hit After ‘Cosy Deal’ Grumble

Struggling semi-state firm, An Post, could be facing a devastating 50m hit, following a complaint that the lucrative social welfare payments contract was a “cosy deal” in breach of Government procurement policies.

The British government has added to the pressure on An Post, with a report that pinpointed the contract with the Department of Social Welfare as one example of British companies being discriminated against by other countries when public contracts were being awarded.

Payments firm TNS Ltd lodged two complaints with the EU following the extension of An Post’s contract in 2002. A complaint relating to alleged breaches of procurement policy is expected to be ruled on in the first half of next year, according to Department of Social Welfare sources.

A second complaint has been dismissed. The Irish Government is fighting the action, saying the delivery of benefits is not a financial service.

It is understood that a number of financial institutions, including banks, have expressed interest in the contract, when the situation is resolved. A Bank of Ireland spokesperson said, “We have received the tender documents and we are studying them.” The Department of Social Welfare has not signed a new contract with An Post, having decided to wait for the outcome of the case in Europe.

The department makes about 40m benefit payments a year. An Post handles about 60 per cent of these transactions through its post office network. A further 30 per cent of the payments are delivered by direct debit, with the remainder paid by cheque.

It is forecast that electronic transfers will become the primary method of paying benefits, and recipients will be able to withdraw cash from ATM points or with LASER cards.