Union torn by dispute over investment division

Political infighting, disputed minutes of meetings and allegations of misconduct are threatening to tear one of the country’s largest unions apart.

This is the scenario currently playing out at the Chemical Energy Paper Printing Wood and Allied Union (Ceppwawu) and it centres on disagreement about control of investments worth more than R1-billion held by the union’s investment arm, Ceppwawu Investments.

In the latest development, union deputy general secretary Thabani Mdlalose has launched an urgent court application to have independent trustees appointed to the union trust that controls the investment company. Mdlalose has also lodged a complaint with the Law Society against attorney Ronnie Mendelow.

Mendelow is the legal representative of well-known businessman and Ceppwawu Investments trustee Isaac Shongwe.

Mdlalose has been fighting for nearly two years to have Shongwe removed as trustee.

Mdlalose asked that action be taken against Mendelow for communicating directly with union president Jacob Mabena instead of with the union’s lawyers.

As reported two weeks ago, Mdlalose and Mabena head opposing factions in the union.

At issue is the fact that Shongwe has an interest in Letsema, a company appointed to manage the Ceppwawu Investments portfolio.

‘Overly generous’ contract

Mdlalose has challenged the terms of the management contract, which he has argued is overly generous to Letsema.

But Mendelow and other members of the union’s national office-bearers committee (NOBC) have hit back.

Union president, Jacob Mabena, has filed an affidavit questioning Mdlalose’s right to take legal action in the name of the union.

Mabena, together with a former member of the union secretariat, is claiming that the minutes of the union executive committee meetings on which Mdlalose relies for his authority have been doctored to reflect decisions that were never taken at the meetings.

Mabena states that he has, in turn, also asked his lawyer to report the conduct of the union’s attorney, Trevor Versfeld, to the Law Society. Mabena claims that he and other members of the union executive concluded a settlement agreement with Shongwe, notably without consulting the union’s lawyers, but that Versfeld ignored his instruction to withdraw pending legal action against Shongwe.

In a letter to Mabena, Versfeld set out his complaint against him, accusing him of acting in concert with Shongwe and Mendelow and ignoring reasonable legal advice, to the detriment of the union.

Versfeld said: “A meeting of the NEC was scheduled to take place on 20-22 May 2010.
Shortly prior to this meeting, Mr Shongwe furnished you with a draft deed of settlement, drafted by Mr Mendelow.

“At no stage did Mr Mendelow see it fit to forward this draft deed of settlement to Webber Wentzel, notwithstanding that Webber Wentzel was Ceppwawu’s attorneys. You also did not see it fit to forward this draft.

“At this NEC meeting, you were a vocal proponent of Ceppwawu accepting the terms of the draft deed of settlement and you urged the delegates to do so with haste. You had also arranged in advance of the NEC meeting for Mr Shongwe to be available to address the delegates.

Last-minute invitation

“You chose to bypass the offices of Webber Wentzel and it was only at the last minute that our Mr Versfeld was invited by other members of the NOBC to attend the NEC meeting in order to dispense legal advice to the delegates regarding the terms of the draft deed of settlement.

“Notwithstanding, you led a motion not to allow our Mr Versfeld to address the meeting, a motion which was rejected.

“Mr Versfeld was then given some 15 minutes in which to peruse the draft deed of settlement, which had never before been furnished to him, before addressing the meeting.

The essence of Mr Versfeld’s advice to the NEC delegates was that the terms of the draft deed of settlement were entirely one-sided, inappropriate and should be rejected.”

But Mabena has countered that Mdlalose has dragged the union into “utterly unnecessary and costly” litigation when there is no real dispute with Shongwe. In a replying affidavit, Mabena claimed that as far as the union was concerned, the validity of the Letsema management agreements was never in question.

He accused Mdlalose of wanting to remove Letsema to create space for a third party to take over the lucrative contract.

Mabena said he had tabled a revised settlement agreement at an office-bearers meeting on 26 November 2010. Of the five office-bearers present, only Mdlalose had voted against accepting the settlement proposal.

Said Mabena: “Under no circumstances will I enter into an agreement that will disadvantage my members. “Because of electioneering, there are some senior leaders and service providers who are running to the media to conceal the real facts about the dispute,” he said.

Ceppwawu is set to convene its congress in Durban on August 30.

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The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are ours. See www.amabhungane.co.za for all our stories, activities and sources of funding.

Nelly Shamase

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