The Government has accused An Post in a strongly-worded letter of providing "seriously inaccurate" information to it about the deepening financial crisis in the State-owned company.
Details of the letter sent by the Minister for Communications, Mr Dermot Ahern, emerged as An Post prepared to disclose to its 10,000 staff today that it expects to lose more than €30 million this year, despite telling the Government last January it would make a €1 million profit.
In the letter delivered yesterday morning to the An Post chairwoman, Ms Margaret McGinley, Mr Ahern expressed concern at the sharp escalation in the company's losses even though he was told months ago that the situation was under control. The losses expected for this year will be almost double last year's deficit of almost €18 million.
The Minister has given An Post's board four weeks to produce a report "outlining how this state of affairs was allowed to occur".
He has asked directors for specific information "on how the board exercised its oversight function in relation to the financial well-being of the company".
The letter to Ms McGinley, seen by The Irish Times, states the latest figures were "substantially worse than the budgetary information supplied to me and my officials".
"That the finances of the company could have disimproved in such a short period of time is a matter of grave concern," he said.
"Since late last year, my officials on numerous occasions have expressed disquiet about the An Post financials but were assured that the situation, while difficult, was under control.
"It now appears that this was not the case and I view the submission of budgetary information which, at this stage, appears to be seriously inaccurate as entirely unacceptable," the Minister added.
It has been learned that An Post's chief executive, Mr Donal Curtin, will today inform the company's trade unions about the worsening financial position.
As well as forecasting €30 million losses for this year, Mr Curtin will also warn of multi-million losses in 2004 unless radical cost-cutting measures are taken.
A spokesman for An Post declined last night to comment on Mr Ahern's letter.
News of the projected losses follows the release of records that show An Post told the Government last December that there was no need for a rescue plan.
The company said in a confidential report released under the Freedom of Information Act that it would return to profits this year.
Its then chief executive, Mr John Hynes, wrote: "We would argue there is no case, at present, for the preparation of a survival plan for the business as we are within the parameters of the existing plan, already agreed with the shareholder."
The report was produced after Mr Ahern's Department warned that the outlook for An Post would be bleak - "with the possibility of cash flow difficulties by 2004, if not sooner" - if the company did not reduce costs radically and secure an increase in postage rates.
Although the price of a national rate stamp rose by seven cent to 48 cent last Saturday, the company expected its regulator, ComReg, to grant the increase in April.
The forecast of losses follows a complete reworking of the company's internal budgets.
While the implications for staff of a new business plan are unclear, the company is known to have set aside €52.5 million last year for a severance plan.
An Post told Mr Ahern that its failure to increase revenues was attributable to the economic downturn. It also said that cost savings expected from the use of automatic mail-sorting machines have not materialised.
Mr Ahern sought assurance from the company's board and management "that the cash position of the company is sound for the remainder of this year".
He also asked Ms McGinley to confirm that the new projections represent, "to be best of your knowledge, and that of the board, an accurate account of the An Post group financials as they currently stand".
