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Christine Holgate gave evidence about the purchase of four Cartier watches,worth $19,950 in total,on Thursday.Credit:Alex Ellinghausen

The investigation's terms of reference,released on Monday,show it will probe the roles of Ms Holgate,then-chairman John Stanhope and the board in thepurchase of the Cartier watches for four senior employees in 2018.

As part of this,it will examine whether Ms Holgate and the board acted within their obligations as chief executive and directors,and whether this was consistent with the"efficient,effective,economical and ethical expenditure of money and use of public resources".

The inquiry will also delve into Australia Post's"governance arrangements and management culture",and whether the giving of"gifts,rewards and expenses,including personal expenses of executives"meets public expectations and requires further review.

The four-week investigation will be jointly led by the Communications and Finance departments in conjunction with a law firm,which has not yet been announced.

The luxury watches are the latest expenses scandal to plague her three-year tenure,following revelations she spent about $300,000 on corporate credit cards and chauffeur-driven cars in 2019-20. She also paid areputation management firm $119,000 for just 38 days' work for the organisation between June and July.

Former Australia Post chair David Mortimer,who served on the board for 11 years including six years as chair,said there was no culture of gift-giving when he was at the organisation.

"Certainly not at the level of the board. We didn’t have any gift-awarding experiences at all. There were bonuses,"Mr Mortimer said.

"It was always going to become public. The optics don’t look very good."

But he said the expense was not large enough to warrant the board's sign off.

"The magnitude of the amounts is minor and probably they would've been better off giving a cash bonus. That would've been the way I would have considered it,"he said.

Ms Holgatewas forced to stand aside from her position on Thursday,after she told a Senate estimates hearing her office had spent $3000 each on Cartier watches for four senior employees in October 2018 as a reward for landing a major deal with three of the big four banks.

Australia Post chairman Lucio Di Bartolomeo was forced to correct this evidence in a statement on Friday,in which he said the watches cost $7000,$4750,$4400 and $3800,totalling $19,950.

Ms Holgate told the Senate the gifts were organised through her office on the recommendation of Mr Stanhope and justified them on the grounds they were not paid for by the Australian taxpayer.

Mr Mortimer said that while Australia Post was a commercial operation it was still accountable to the public.

"Certainly in my day,and I’m sure it would have followed,everyone would have recognised that the stakeholder was the government and therefore you had a standard of behaviour which was consistent with being held accountable by the government to the public,"he said.

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