An Post speaks from both sides of poor mouth

Business Opinion: Isolde Goggin, the chairwoman of the Commission for Communications Regulation (ComReg) seems like a nice woman. It's hard to believe that she and her two fellow commissioners, John Doherty and Mike Byrne, are little better that fifth columnists hell bent on destroying one of the State's great institutions and generally wrecking the fabric of society.

But this apparently is pretty much the ComReg game plan if one is to put much store by the sworn testimony of Donal Curtin, the chief executive of An Post, in an affidavit supporting An Post's successful application last week for a judicial review of ComReg's decision not to approve an increase in the price of sending a letter. Curtin paints a picture of An Post as a company facing into the abyss that will shortly have a boot applied to its posterior by ComReg.

The regulator's failure to sanction a price increases for letter post means that An Post "simply will be unable to comply with the obligations imposed on it . . . to ensure that its revenues are sufficient to enable it to be properly financed to avoid deficit financing", states Curtin.

In his affidavit he predicts that An Post will lose at least €6 million this year without a price increase. Next year things will pick up thanks to the expected increase in postal volumes if there is a general election. But thereafter its all down hill, with losses growing to at least €5 million in 2008, €30 million in 2009 and €70 million by 2010.

"Consequently, the financial stability of An Post and the viability of the national postal service will once again be jeopardised. ComReg's decision to reject the price proposal places An Post back on a financial knife-edge in the immediate future," warns Curtin.

In fact, he argues "the actions of ComReg in failing to concur with An Post's price proposals risks precipitating a financial crisis in An Post similar, if not worse than, that experienced in 2001 to 2003".

And it just gets worse. ComReg, argues Curtin, has placed An Post "in the perverse position" of having to fund the letter post monopoly out of the postal service, rather than fund the postal service out of its monopoly over letter post!

This in turn "places An Post in breach of its legal obligations both under Irish and European law, and indeed in breach of the tariff principles which ComReg is charged with supporting and indeed enforcing".

If that was not bad enough, ComReg is also trampling on decades of tradition and culture, not to mention the legitimate expectation of the average An Post worker to serve the nation. "The vast bulk of the employees of An Post are involved in the collection, transport, sorting, and delivery of the mail to every institution, island, farm, home and flat in the land. That is what An Post wants to be allowed to do, and do well. But ComReg refuses to concur with the price increase necessary to achieve these goals."

And he just keeps on going. "The refusal by ComReg" says Curtin "has jeopardised the Strategic Recovery Plan for An Post which has been implemented progressively since October 2003. This recovery required major change throughout An Post and major sacrifices have been made by all involved in the national postal service".

It's hard to see how Goggin and the other ComReg commissioners can sleep at night given the extent of their crimes against An Post and society in general as elucidated by Curtin. But perhaps they draw some solace from the bullish comments attributed last week to Larry Donald, the company's chief operating officer.

Donald would appear to work in a rather different An Post to Curtin. The one he works in is about to conclude a joint venture with Belgian group Fortis that will see it offer "a range of banking services, not just transaction services".

He also works in the An Post which decided not to sell its courier and distribution businesses last year because it was awash with cash from other asset disposals and cost-cutting. "Two and half years ago An Post had no cash. Now it has around €200 million," Donald was keen to point out.

His An Post is also the one that stands to pocket something in the region of €30 million from the sale of the 14-acre site in west Dublin that used to be occupied by SDS, the parcels business which closed last year.

Which An Post will the High Court recognise when the judicial review opens?