Postbank has been left rudderless after almost all of its board members resigned in protest, citing “severe and hostile treatment” from the Minister of Communications and Digital Technologies, Mondli Gungubele, for their decision.

In a letter to Gungubele dated 12 September, more than four non-executive directors of Postbank and the board chair, Thabile Wonci, said they had no choice but to resign with immediate effect, citing a breakdown in their relationship with the minister. Only one person was left on the Postbank board.

Gungubele is the shareholder representative of Postbank, responsible for the bank’s governance affairs. Postbank is affiliated with the SA Post Office, particularly when it comes to the distribution of social grants to more than 100,000 beneficiaries every month. However, Postbank’s operations were, until recently, separate from the state-owned postal service company.

The mass exodus from Postbank’s board comes after the bank’s systems faced a technical “glitch” last week that left an estimated 60,000 social grant beneficiaries, mostly the elderly, without their money for a week. 

Social grant recipients were prevented from getting cash from ATMs, the Post Office and retailers.

The letter by the former Postbank board members said they had been subjected to severe and “recurring bad and negative treatment and hostility” that sought “to undermine the very foundation and credibility of Postbank and our individual responsibility”.

“There is absolutely no self-respecting board that can perform any meaningful work with the level of external interference, undue pressure, and influence that our board has endured over the past couple of months,” the letter reads.

“This was particularly painful as we did everything in our power to manage and ameliorate consequent risk to the bank and hardship that would ultimately be suffered by the most vulnerable stakeholders of the bank, especially grant recipients.”

Board dissolved

Following the letter, Gungubele dissolved the entire board on Thursday, 14 September, even firing the one remaining member. The communications minister then issued a public notice calling for individuals to be nominated to fill the vacancies.

Gungubele and the former board members blame one another for the situation.

In a statement, Gungubele said he was planning to fire the Postbank board at the company’s annual general meeting scheduled for 14 September. He was planning to fire them after they were implicated in “damning allegations” from a forensic investigation report by KPMG, accusing them of continuing to use service providers that had not been lawfully contracted.

He said governance failures resulted in members of the now-dissolved Postbank board allegedly approving irregular contracts worth R140-million. 

“These service providers were being paid millions without valid contracts and proper procurement processes being followed. The forensic report recommended that the shareholder must act against the board of directors, a recommendation that was supported by senior counsels’ legal opinion, taking into account the details contained in the report,” Gungubele’s statement read.

Before the forensic report, Gungubele said he had several engagements with the full Postbank board about alleged governance matters which, “if not attended to, will impede the ability of the Postbank to continue its journey to a full banking licence.”

The government wants Postbank to obtain a full banking licence from the SA Reserve Bank to become a “development state bank”, moving its offering from basic transactional and deposit-taking banking services to offering loans, credit and investment products.

In a media statement, the departing board said there were two agreements in place with a payment-switching company to assist in making payments to recipients, and denied any irregularities.

The arrangement between Postbank and the payment-switching company started in 2018, while many of the board members only joined in 2020 or 2022.

Cancelling the contract without an alternative would have led to grants not being paid, they said. DM