/ 11 May 2012

Gloves off as union heads for elections

NUM general secretary Frans Baleni says everything was above board.
NUM general secretary Frans Baleni says everything was above board.

With two weeks to go before the elective congress of the National Union of Mineworkers (NUM), the two factions contesting for top positions are at each other’s throats, with the faction aligned to the union’s deputy general secretary, Oupa Komane, calling for an immediate investigation of alleged tender irregularities by general secretary Frans Baleni.

Komane and Baleni will contest for the position of general secretary at the conference, which starts on May 24 at Gallagher Estate in Midrand.

The Mail & Guardian has established that NUM leaders supporting Komane were up in arms during the union’s last national executive committee (NEC) meeting three weeks ago and demanded an investigation into the awarding of multimillion-rand tenders, allegedly without proper procurement procedures by Baleni.

The tension between the two rival groups was sparked by the finding made by auditing firm Sizwe Ntsaluba Gobodo that indicated that the union was owed R6667850 less than the balance included in its financial statements. This resulted in the union receiving a qualified audit. Baleni’s opponents are accusing him of awarding two renovation tenders amounting to more than R10-million without following proper procurement procedures. The money for internal and external renovations of the NUM headquarters in Johannesburg was donated by the union’s investment companies between 2009 and 2012.

According to Baleni’s opponents, the money should have been transferred by the union to NUM Property, a subsidiary owned by the Mineworkers’ Trust. But the union, under Baleni’s leadership, decided to pay the contractors directly instead of transferring the money to NUM Property, which owns all the buildings under the NUM and is responsible for renovations, selling and acquiring of new properties.

The auditors have now raised concerns over why the union used money to renovate buildings that did not belong to it. What complicates matters further is that NUM Properties, which is chaired by Komane, is now refusing to issue an acknowledgement of debt to the union to clear up the matter.

David Macatha, the union’s treasurer general, acknowledged that the union might have erred by not transferring the money donated for the renovations of the building to NUM Property, but this did not mean the funds were misappropriated.

“There are some organisational decisions why we did not allow NUM Prop to deal with the matter,” Macatha said. “The first refurbishment that was conducted under NUM Prop was shady. Things did not go well. The major problem is the capacity of NUM Prop to handle such matters.  The fact that the auditors view this as an error from the NUM side means that NUM Prop should have run with the renovation.

“NUM Prop would not have a problem acknowledging the debt, but they say they were not involved. Their feeling is that they should have been involved. The money went to NUM. It was supposed to go to NUM Prop. The money was meant for refurbishment. NUM Prop just need to agree that the money went for refurbishment. We paid. NUM Prop was supervising. It just has to agree that the money was used for refurbishment purposes.”

He said NEC members agreed to convince NUM Prop to issue an acknowledgement of debt to clear up the matter. “As far as the NEC is concerned, the matter is clear,” said Macatha. “The finances were approved by the NEC. I don’t know where the matter of investigation comes from.”

Acknowledgement of debt
Approached for comment, Komane said NUM Prop was yet to receive a formal request from the union to issue an acknowledgement of debt. “Even if it comes, we never handled a request of such magnitude.

“If the request comes, we will convene a board meeting. The request came through verbally. I heard it from my management team.”

Komane said that, in looking at the union’s request, NUM Prop would observe issues of good governance. “Any request must not deviate from good governance. NUM Property was not involved. You must account for money that came under your supervision. You can’t absorb such liabilities,” said Komane.

Baleni this week defended the decision not to transfer the donated funds to NUM Prop and said it was unfortunate that people were so desperate that they would manufacture things. “We are still discussing the issue of the qualified opinion with NUM Prop. The refurbishing can’t be linked to the audit because the external refurbishment only happened in 2012.”

‘You owe us’
The internal refurbishment (which the opinion is based on) took place in 2010. “We raised money from investment companies before and it went straight to NUM Prop,” said Baleni. “We said to them, the building belongs to you. We raised money and for that you owe us. Num Prop said there was no problem this, but their books were bad. If they accepted to issue the acknowledgement for debt now they would be regarded as bankrupt. They still wanted to see how to accept acknowledgment of debt without losing the going status. The MD [managing director] of NUM Prop agreed to send the letter of acknowledgement of debt this week,” said Baleni.

He said it was strange that people were selective about raising issues just few weeks before the conference.

“Look at how we performed since we took over. We had a target to make a saving of R15-million. We made R30-million. When we came, the reserve was R70-million; today is R220-million. On salaries, we made savings of R4-million. Salaries make 23% of the total expenditure. Other unions are over 45%. There is lot of good work.

“But because is election time, people want to find negative things. We are the only union that has a procurement committee … These things are extreme attempts to discredit us,” said Baleni.