Sue to recover Sh3.4 billion debt, MPs urge broke Posta
Posta employee at work. Parliament has asked the Postal Corporation of Kenya to take legal action against its debtors who owe it over Sh3.4 billion, stating that the debts have left the institution limping financially.
Parliament has asked the Postal Corporation of Kenya (PCK) to take legal action against its debtors who owe it over Sh3.4 billion, stating that the debts have left the institution limping financially.
The National Assembly’s Public Investments Committee (PIC), in a report assessing Auditor-General findings on PCK’s financial health between 2012 and 2018, observed that Posta was owed at least Sh1.2 billion by debtors outside the country, through its foreign administration and Express Mail Service (EMS) and about Sh1 billion in rental arrears by Post Bank.
The debts, PIC observed, have left Posta unable to fulfil some of its key financial obligations such as paying salaries and retired staff, who are owed over Sh2 billion.
“As at June 2018, total debt was over Sh3.4 billion (foreign debt alone was about 800 shillings). This shows that the corporation was not operating in prudent financial practices. The large debt had led to salary delays to an extent that the government had to bail them out up to a tune of Sh810 million and payment of statutory deductions,” the committee says in the report.
Monies to elderly
While observing that the government’s decision to take away the corporation’s work of distribution of monies to elderly and poor contributed to its reduced revenues, the committee recommended that the postmaster general should take the legal route in bid to get the money.
“The corporation’s postmaster general should aggressively follow recovery of the receivables including instituting legal proceedings against the debtors,” the committee said.
In response to audit queries, Posta’s management said that international receivables were regulated by Universal Postal Union (UPU). But the Auditor-General observed that Posta had made little efforts to get its money, stating “no evidence was provided of debts forwarded to UPU for collection or enforcement.” Posta management disclosed that as at June 2020, foreign debts had accumulated to Sh1.27 billion, with Sh654.88 million allocated as provision for bad debts in the 2019/20 financial statements.
“An ageing analysis of these debtors was done to assess their collectability and an appropriate risk of default by specific debtor country (administration). Beside the ageing criteria the UPU guidelines and collection mechanism was also applied in determining the provision. The UPU provisions were that a debtor country can be reported in the UPU post clear system where the debtor proceeds from other countries were utilised to pay Kenya, for instance,” the management stated.
