Deputy general secretary Bheki Ntshalintshali wrote in a letter to the Sowetan on Tuesday that a report by the newspaper on the purported probe was devoid of any truth.
"The report is based entirely on lies from some anonymous sources, who we are told preferred to remain anonymous for reasons that are obvious," he wrote.
"The sources could not possibly have revealed their identity since beyond the fact that a meeting of union presidents and general secretaries took place on Monday, there is not a word of truth in any of the comments."
Ntshalintshali said the Congress of South African Trade Unions (Cosatu) was "utterly disgusted" by the report and viewed it was a personal attack on Vavi.
The Sowetan reported that presidents and secretaries from all the unions affiliated to Cosatu had met on Monday and formed a task team to investigate Vavi's political and financial management of the union federation.
According to the report, three independent investigators had been appointed.
"The forensic auditors Sizwe Ntsaluba Gobodo will examine administrative issues, including claims of financial mismanagement by Vavi.
'Pack of lies'
The political investigation will be headed by labour lawyer Charles Nupen who will work together with Petrus Mashishi, the former president of the South African Municipal Workers' Union," reported the Sowetan.
The paper said its sources, within Cosatu, were expecting the report to be completed in time for the central executive committee's (CEC) next sitting in May.
"This pack of lies clearly comes from disgruntled individuals who are pursuing some kind of personal vendetta again Vavi, all the national office bearers and the federation as a whole," Ntshalintshali said.
The National Union of Metalworkers of South Africa (Numsa) also rejected the Sowetan report. Spokesperson Castro Ngobese said it was "spurious and misleading".
"We want to state categorically that comrade Vavi is not being investigated by the CEC.
We view the story as part of a well-calculated and continuous offensive to publicly smear, humiliate and embarrass Vavi." He said forces inside and outside Cosatu were involved in making the allegations.
He said they were the same people who wanted to dethrone Vavi in 2012.
"These forces see comrade Vavi as a threat to their self-centred political agendas, and want to use Cosatu as a bargaining political power tool elsewhere, at the expense of the workers and the poor," he said.
Ngobese said National Union of Metalworkers South Africa (Numsa) had faith in Cosatu.
"Numsa shall battle and fight with all our might not to turn Cosatu into a toothless labour desk," he said. – Sapa