For immediate release 2 June 2000

NEW ZEALAND POST RECOVERY OF UNBILLED REVENUE

New Zealand Post has made inquiries and believes the issues raised yesterday in Parliament by Rt Hon Winston Peters in Oral Question No.5 relate to the recovery of unbilled revenue from an Auckland mail house operating as two separate companies that understated the amount of bulk mail it lodged with New Zealand Post, rather than fraud from franking machines.

Unbilled revenue is a concern for postal operators world-wide and New Zealand Post operates a revenue protection programme to minimise it. Some unbilled revenue occurs by mistake, such as when a customer mistakenly posts a letter without a stamp, some is deliberate.

In this case, New Zealand Post made a written complaint to police that an Auckland mail house had defrauded New Zealand Post by understating the amount of bulk mail it had lodged for posting.

Police responded that a criminal case relating to possible fraud was unlikely to succeed on the information that had been gathered. New Zealand Post then took civil action in the Auckland High Court in June 1997 to recover the unbilled revenue. The final amount was settled out of court in August 1998. (Further details follow on page 2).

Over the last few years, New Zealand Post has taken steps to improve its revenue protection processes to reduce the likelihood of unbilled revenue, this has included:
 the appointment of a dedicated national revenue protection manager;
 revenue protection teams at mail centres now check all bulk mail to validate the amount of mail lodged;
 daily audits for unbilled revenue are carried out at mail centres;
 bulk mail is no longer accepted for posting without documentation;
 billing processes are now more accurate;
 pre-paid envelopes and other products have been introduced to our range to assist customers.
For the last financial year, after extensive effort, New Zealand Post recovered
$5 million of unbilled revenue. Note: this is approximately 0.6% of revenue based on 1998/99 revenue of $789.5 million (1999/2000 revenue will be released at the end of this month in the 1999/2000 Annual Report).

Recovery of unbilled revenue from Auckland mail house due to understating of bulk mail:

 In late 1996, New Zealand Post conducted a 12-week audit on bulk mail posted by an Auckland mail house which was suspected of understating the amount of mail it was lodging with New Zealand Post.
(Mail houses organise bulk mail-outs for their clients, then lodge the mail with New Zealand Post for posting. When the mail is presented to New Zealand Post, the mail house completes a form stating the volume and type of mail that is lodged. New Zealand Post then bills the mail house for that amount.)
 The results of the audit showed that the mail house had understated the amount of mail by around $58,500. This was estimated at $234,000 over a 48-week year, and estimated at over $1 million for the previous five years.
 A written complaint was made to police. Police considered the complaint, and responded that a criminal case relating to possible fraud was unlikely to succeed on the information that had been gathered. A greater level of proof was required than the information that had been obtained to estimate the amount of unbilled revenue.
 New Zealand Post then took civil action against the mail house in the Auckland High Court in June 1997, claiming for $58,500 for the 12-week audit period and
$1.17 million estimated for the previous five years.
 Concerns regarding the ability to prove and recover the estimated unbilled revenue led to a settlement out of court in August 1998. The settlement was completed in relation to the $58,500 unbilled revenue in the 12-week audit period. The final settlement terms are confidential.

ENDS

For further information:
Simon Taylor, New Zealand Post Media Relations Manager
04-496-4015 or 025-248-6715

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