Crikey subscribers have recently read a series of updates about alleged fraud and bungling at Australia’s biggest mailhouse company Salmat, which Rupert Murdoch’s News Ltd owned 49 per cent of for 15 years. This is what we’ve told subscribers in recent weeks.
From July 15
A Tax Office insider writes:
“The Tax Office, like most government departments, is full of entertaining buraucratic bungles that really deserve more publicity than they are currently getting.
A significant number of tax office employees will be getting a tax bill when they put in their 2002 income tax return this year, because the ATO forgot to take tax out of a relocation allowance it paid them for moving from the Cheltenham to Melbourne office. Understandably they are not happy.
After paying out redundancy packages to several hundred supposedly excess GST field staff in 2001, the ATO is currently going through a massive recruitment drive for 350 new GST compliance field staff members. The redundant staff, who arguably have some of the best experience and qualifications for these positions, are unable to apply because it has been less than 12 months since they were paid out a redundancy package.
I look forward to providing more stories about the ATO’s publications provider Salmat. Not only did they run out of paper for debt collection letters earlier this year, they ran out of envelopes for posting out new ABN letters the year before. Perhaps they were too busy using all the paper for printing and delivering 20,000 Business Activty Statement Instruction Booklets delivered by three trucks to a accounting firm. The accounting firm had requested a mere 200 copies for their clients.
ATO’s publication stuff-ups
Sealed section July 16
“Just a slight correction and some additional info re the ATO’s publications provider, Salmat, which is a division of PMP.
Firstly, it wasn’t Salmat that ran out of paper for Debt collection letters earlier this year, it was actually the ATO themselves. The Sydney Morning Herald ran this story earlier this year and subsequently issued a correction for this reason.
Apart from that, I look forward to reading any other stories your Tax Office insider contributes, as Salmat have an interesting history with the ATO.
Perhaps the best example (and I’ll keep this brief so as not to steal the spotlight from the ATO insider) is Salmat’s efforts with the printing and distribution of 1999 Group Certificates for ATO staff – an absolute stuff-up. Many were wrongly addressed, many were sent to the wrong person, many just didn’t get there at all. I look forward to the inside story!
It’s not unusual for companies to outsource the printing of group certificates, but to stuff up the printing and distribution of the ATO’s group certificates is a pretty impressive effort.
Salmat also came under Federal Police investigation a few years ago, apparently for mail fraud or similar, and I believe that this was successfully prosecuted but not sure of the details.
Another interesting thing to note is that News Limited once part owned Salmat but I believe the Salmat have since done a share buy back and resumed total control.”
Clarifying Salmat ownership
17 July sealed section
Yesterday in your Crikey newsletter, there was an article with a number of errors about our company Salmat.
Phil Salter and I started Salmat twenty three years ago. Since then we have built the company into Australia’s largest customer communication company. Phil and I still own Salmat.
Salmat has never been a division of PMP nor do we have any association with PMP, except in the normal course of business.
We sold 49 per cent of Salmat to News Ltd in 1984 and we bought it back in 1999.
The ATO is a large customer of Salmat. However, we did not do the printing and distribution of the 1999 ATO Group Certificates.
On the issue concerning the Federal Police, the AFP did conduct an investigation into mail lodgement practices within the mailing industry and within Salmat. For your information, Salmat has never been charged with mail fraud or fraud of any kind.
I hope this sets the record straight.
Stephen, if you have any further questions about Salmat, give me a call at anytime.
Joint Managing Director
The Salmat scandal
Sealed July 18
A subscriber in the media management side of things writes:
“The Salmat scandal on mail fraud went on for a few years, so there are some urban myths out there in the re-telling of the story in the Direct Marketing Industry. He’s what I was told:
Salmat (either WA and/or Melb) were doing mail fraud. The Federal Police were called in – and put in hidden video cameras.
Large mail houses like Salmat have special little Aust Post offices inside the premises which are lockable. What Salmat did was to build the offices, have a lockable door – as well as a hidden sliding door that could be opened from the outside, without Aust Post knowledge! The staff would go in at night – change the paperwork to their advantage and sneak away.
The staff were sprung, with much finger pointing and conjecture as to how high in the management this was known/accepted. One staff person, quite high up, actually went to prison, without fingering anyone higher. It was quite strange as it was most unlikely that he would have profited personally by his actions.
News Ltd decided to get out at the height of all this drama in 1999 and Salmat had planned to go public about 14 months ago, but then things went quiet after that.
Cosy deals with Aussie Postl
Email to Crikey on July 19
Interesting piece from Peter Mattick.
“On the issue concerning the Federal Police, the AFP did conduct an investigation into mail lodgement practices within the mailing industry and within Salmat. For your information, Salmat has never been charged with mail fraud or fraud of any kind.”
Can he say the same about Salmat executives and Directors? This turned the whole industry upside down when it happened. Amounts in the tens of millions of dollars were reportedly involved (just in Salmat’s case). It involved the understating of mail volumes to avoid postage charges. And, of course, it was not the end-customers who benefited of course.
APost procedures and governance had to be overhauled as a result. It would be interesting to know how hard Australia Post pursued the culprits in the end. After all, it’s only Joe Public’s money. It was a cosy relationship between AP and the large mailhouses.
CRIKEY: We’re certainly keen to hear more about this company. Did News Corp make a profit? Why didn’t News Corp papers report the fraud investigation more fully. How many people were caught up in the fraud? What ongoing relationship does the taxpayer have with Salmat through Aussie Post?
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