New Zealand Post accused of botching one of its overseas contracts again
New Zealand Post must feel quite at home before Parliament's finance and expenditure committee. The big State-owned enterprise is being accused of botching one of its overseas contracts — and that is something it is well used to.
For at least a year NZ Post has been kept busy defending its actions in South Africa. In response to a running series of charges that it messed up its operation there and tried to cover its tracks, the State-owned enterprise has had to duck and weave, barely maintaining its position.
The allegations are damning. They amount to a charge that NZ Post gained the contract to run the South African postal service by lying, that it promised to make the service break even within three years even though it knew this was impossible, that NZ Post's management of the project was in disarray, based on unrealistic budgets, disjointed, and unco-ordinated.
The source of these accusation is the Kroll report, which was commissioned by the South African Government. Its content and status is disputed by NZ Post, but the unsatisfactory nature of the experience in that country is indisputable. The $54 million contract was cancelled by the South Africans half way through its term, and millions of dollars were exchanged between the two parties in settlement.
The cancellation does not seem to be all NZ Post's fault. Its chief executive, Elmar Toime, says South African Post altered its objectives, suffered from poor management, and was affected by strikes, but refused to allow NZ Post to renegotiate the contract to accommodate these changed circumstances. In any case, Mr Toime says, his company made a profit from the project.
Maybe so, but far too little is publicly known about the business. Questions in Parliament and select committee probing have failed to extract more than a general disclosure from New Zealand Post because of what it says is the commercial sensitivity of the detail.
This is just one more example of the unsatisfactory connection between Parliament and State-owned enterprises. They are often involved in commercial ventures and therefore are frequently unwilling to disclose all their business to the people's representatives.
In New Zealand Post's case, this conflict of interests is becoming marked because of the almost continuous controversies that afflict the organisation's operations. Worsening the problem is the international scope of the State-owned enterprise, its contracted projects extending to several countries. Other companies and governments thereby come into the picture, none of them with any obligation to disclose anything to the New Zealand taxpayer.
But the latest affair is entirely a matter of New Zealand Post's governance of itself. Its foray into Europe was bungled. Buying a $3 million Madrid house for an office and closing it a few months later was just one element of a seriously mismanaged Spanish operation. Other inadequacies included the staff not having work permits, $73,000 being spent flying executives to the Spanish office opening, no business plan in operation, and no effective relationship being developed with the Spanish postal authorities.
New Zealand Post is maintaining another undesirable aspect of its usual behaviour by allowing the Spanish affair to emerge by way of leaks and partial disclosures. The habit is damaging because it inflames matters, prolongs controversy, confuses the issue, and leads to speculation.
In this Spanish business New Zealand Post does not even have the excuse that full disclosure is impossible because commercial dealings with other companies are involved. The case is mainly one of things going wrong within its own organisation.
The man in the best position to tell all has the perfect forum in which to do so this week. Drew Stein, the retiring head of New Zealand Post's overseas operations, is to appear in front of the finance and expenditure committee, but he is unlikely to be very forthcoming. For one thing, he is under attack from committee member Rodney Hide, and will want to avoid possible self-incrimination. For another, he has a lucrative continuing relationship as a consultant to New Zealand Post that he will want to protect.
A full accounting to the New Zealand public is not the only thing needed from the State-owned enterprise. Also required is an improvement in the way it administers its overseas forays. The succession of expensive goofs must be eroding the New Zealand public's confidence in one of the most important State-owned enterprises.
