Former Pact CEO Louis Bezuidenhout was given a secret “severance package” before being immediately re-employed on contract by Pact. And the amount – estimated at around R500 000 – was never reflected in Pact’s financial records.
These are the findings of an investigation into the existence of a secret trust fund set up for senior Pact managers. And the slush funds are only the tip of the iceberg.
The M&G has had access to confidential minutes from an earlier Pact board meeting which record a mandate given to former board chairperson Michael Cook to negotiate – in consultation with Bezuidenhout – a severance package for the Pact CEO. The decision was taken after meetings during 1993 made it clear that Bezuidenhout would lose his job and a new CEO be appointed when a post-elections arts ministry was formed. Bezuidenhout denies being party to any special deal but admits receiving a “severance package” and believes he “deserves credit” for establishing the funds.
Two secret trust funds – one called Pact Employees’ Fund of
R14.275-million, established in May 1995, and a Pact Senior Managers’ Fund which was set up in August 1993 and valued at R714 333 in January 1996 – were uncovered by members of Pact’s new board soon after they took office in November 1995.
Formally ratified in April and May 1995, the Employees’ Fund – according to confidential documents in the M&G’s possession – were purported to have been set up to provide some measure of security for general employees whose jobs were threatened by the takeover of the new government’s management.
As such it was signed by Bezuidenhout for Pact and by representatives of Pact’s two employees’ unions – Sandra Laubscher for the (mainly white) Performing Arts Staff Association of South Africa (Pasasa) and Jabu Ngwenya for the Paper, Printing and Allied Workers Union (Ppawu).
Both neglected to inform their membership of the package that was in theory available. It was only after elections at Pasasa returned a new committee in November last year (by which time the original deadline for claiming against the fund had already passed) that incumbent chairperson Monty Schippers began asking questions. Subsequently the cutoff date for application to the fund was extended to April 1997.
Confidential minutes faxed anonymously to the M&G confirm that around the time that talks on the transformation of Pact were imminent the special Senior Managers’ Fund was established under a cloak of secrecy for 10 heads of department who have had more than 10 years’ service at Pact and who resign on similar grounds.
Although he is not named as one of the beneficiaries of this controversial trust fund for Pact’s management, Bezuidenhout in fact took a similar package when his contract with Pact ended on March 31 1994.
Bezuidenhout’s special deal included one year’s salary (around R200 000) along with Pact’s pension contributions, housing subsidy and medical aid. In addition, Pact would foot the bill for outstanding payments on Bezuidenhout’s Mercedes Benz -which was less than a year old at the time. Added together the package comes to around R500 000. Bezuidenhout was immediately re-employed – on a contract basis – calculated according to his old salary, but with all the perks added in. In fact he remained with Pact as CEO well into 1995.
Similar packages were later offered to the 10 top employees who were party to the Special Managers’ Fund and who subsequently resigned from Pact. Artistic director of opera, George Kok, and head of the Pretoria State Theatre, Jean Claude Laurent, who had received substantial severance packages, were immediately re-employed by Pact at the request of Arts and Culture Minister Ben Ngubane. They did not return their packages.
Apart from the 10 department heads whose contracts were amended in accordance with the provisions made by the fund, few other Pact staffers knew anything about the controversial funds. A first audit has failed to establish where the money for the two special trust funds came from. It was never reflected in Pact’s financial records.
Like the existence of the trust funds, the payout to Bezuidenhout was never reported in Pact’s financial records – and had therefore remained unknown to the new management until a full audit was called last month. This was apparently justified by designating the moneys as constituting “reserve funds” and thus separate from the budgetary turnover.
It has since emerged that the document for the Employees’ Trust Fund may not be legal in the first place. It is signed by PK (Jabu) Ngwenya as Ppawu “secretary”, a position he never held, having been no more than an alternate member of the Ppawu delegation to management.
According to Gabriel Twala, the union’s branch organiser, Ngwenya had no authority to sign on behalf of the union. Twala himself was the proper representative, yet he was unaware that Ngwenya had signed the document until Bezuidenhout allegedly asked him to attend a standing committee meeting concerning the fund.
When Twala raised objections about clauses in the Trust Fund document he was then informed that Ngwenya had in fact signed the document in April. Ngwenya has subsequently left both Pact and Ppawu.
Bezuidenhout insists that he dealt with the legitimate representatives of Ppawu and that Twala attended one or two Standing Committee Meetings “without questioning Ngwenya’s authority”. But Twala disagrees: “We hadn’t even received the document when it was supposedly signed by
Ngwenya,” recalls Twala. “Anyway, we had real problems giving our approval to a fund set up to protect the interests of the white old guard against the much needed transformation of Pact.
The Ministry of Arts, Culture, Science and Technology has confirmed that the matter is under investigation.