Top union man's World Cup junket

Samwu's reserve funds, built up from members' contributions, are depleted. (David Harrison, M&G)

Samwu's reserve funds, built up from members' contributions, are depleted. (David Harrison, M&G)

An inexplicable trip to the World Cup finals in Brazil, swanky cars, massive pension fund lump-sum payments, fraudulent claims and enormous debts paid off – these are allegedly some of the ways in which the top six leaders of the South African Municipal Workers’ Union (Samwu) have been living it up.

This follows a financial disaster that saw more than R120-million of workers’ subscription money vanish from the union’s coffers and senior leaders ousted for raising questions about the missing funds.

At the end of 2012, the union’s cash reserves, which are separate from its operational account dealing with monthly expenses, were more than R177-million, according to the union’s annual financial statements seen by the Mail & Guardian.

By February this year, the reserves had unaccountably declined to slightly more than R50-million.

Samwu’s deputy general secretary, Moses Miya, who seems to wield the most influence within the top six, went early to a Brics (Brazil, Russia, India, China and South Africa) trade union summit in Brazil – in time for the final two games of the Fifa World Cup. The airfare cost the union R57 168, nearly double the normal price, according to two sources familiar with the transaction. In addition, he took along a “bodyguard” who is not employed by the union or has been approved by the relevant structures.
His ticket cost the same.

Miya and the “bodyguard” flew to Brazil on Friday last week, although the summit only took place from Monday to Thursday this week.

World Cup expenses
An invitation was extended to union leaders to attend the summit on June 24 by its mother body, the trade union federation Cosatu.

The M&G has seen an internal mail from a Cosatu official, urging union leaders to book timeously, noting that flights at that time to Sao Paulo were about R27 000. Instead, Samwu spent over R112 000 on flights.

Their accommodation cost R2 400 per person per night at the Hotel Diogo in Fortaleza, a well-placed source in Samwu’s office said. They stayed for seven nights, bringing the total cost of their accommodation to R33 600, instead of R12 000 just for Miya for the conference.

Meanwhile, the top leadership has restructured the salaries and allowances for all national and provincial secretaries, the only elected officials who receive an income from the union, resulting in payouts of hundreds of thousands of rands to them, according to a campaign launched by the ousted group of leaders.

Substantial allowances have been incorporated into the secretaries’ salaries, forcing the union to increase its monthly pension payout for each secretary. Plus this has been backdated, resulting in lump-sum payouts of up to R172 000 for Samwu’s general secretary, Walter Theledi, and more than R16 000 for Miya.

Paid-up BMWs
Samwu president Sam Molope, who has been seen driving several new cars since the end of last year and has boasted about buying a new BMW X5, according to five current and former colleagues, allegedly rapidly paid off large debts and incurred new ones during the period in question.

Molope, who took office in August 2012, paid off a R652 306 Wesbank car loan within 19 months of about the same period, according to a consumer trace report seen by the M&G.

Another account with BMW Finance from 2005 for over R373 000 was paid up in full in July 2013. But it is not clear whether it was a bulk payment.

With these and two other personal loans totalling nearly R70 000 paid off, Molope has racked up four new loans since he took office, including over a million rand with Standard Bank Vehicle and Asset Finance, taken out in November 2013. He currently has a total of nearly R1.8-million in various loans and debts, with monthly repayments totalling over R30 000.

Molope can earn no more than R50 000 a month before tax at his current job level at the Ekurhurleni municipality, according to the union’s former treasurer, Gati Malete, who was allegedly ousted over her questions about the union’s finances. It is unclear what his wife earns. Malete said Molope once claimed she worked in disaster management.

According to a consumer trace report into Miya, he has over R1.4-million in debt and a monthly repayment of R26 484.

Loans and fraudulent claims
He took out seven loans from Capitec bank, between R4 000 and R7 000 each, over a nine-month period in 2012, and an eighth loan for R20 000 in July 2011. But he paid off six of the eight, including the R20 000 loan, after he took office at Samwu.

Malete also alleges she caught the union’s second deputy president, Lorraine Baitsiwe, making a fraudulent travel claim for a meeting she never attended.

“It was for a general meeting on April 20 2013,” she said. “But I was the only national office bearer there.”

That was one of the last bank statements Malete saw.

The M&G tried for two days but could not get a response from the union’s national office bearers about the allegations. The union has not had an official media liaison person since its spokesperson, Tahir Sema, left at the height of the infighting over the missing funds several months ago.

The union’s phones went unanswered and Miya, the national office bearers’ chief spokesperson on the matter, is in Brazil and did not answer text messages or emails. Neither did Theledi and Molope.

Baitsiwe refused to respond to questions, including to allegations about the fraudulent travel claim.

Mass purge
But the national office bearers issued a media statement on June 25, acknowledging that “central to [the ousted leaders’] dissatisfaction has been the alleged missing R140-million [sic] in the coffers of the union” and an internal task team has been established to investigate the allegations, it said.

Nineteen officials and representatives of the union have been kicked out since a meeting in April at which the issue of missing money was raised.

The mass purge, as its critics describe it, took place between May 8 and June 4 this year. They claim the provinces, who called for the national office bearers to step down and for a forensic audit, represent over 70% of the union’s membership.

They are staging a fight-back campaign called “SOS: Save Our Samwu”, which has included over 100 mass meetings with ordinary members, a court process to stop the dismissals, and a police investigation guided by the National Prosecuting Authority (NPA) to track the missing money.

The NPA’s Nathi Mncube confirmed that the matter was under investigation by the police “and is being monitored and guided” by the Hawks’ Johannesburg Specialised Commercial Crimes Unit.

Siphoning off funds
Allegedly at the centre of the row is Samuel McDonald Phaswana, of Mpamba Solutions, a consultant who was hired without the due processes being followed, according to the former treasurer and members of the financial committee who have since been expelled.

The SOS campaign accuses Phaswana, who has taken over the financial affairs of the union, of siphoning off the funds, claiming that he was caught out making enormous transfers, some of it into his own accounts, and deleting the ledger entries. This money is thought to have been funnelled back to the union’s national office bearers, according to allegations by the ousted group (see “R32-million later, union is still renovating its offices”).

It is difficult to ascertain where the missing millions went. During 2013, over a dozen transfers of up to R8-million each time were made every month out of the account, rapidly depleting the reserves. The transfers bear no reference other than “FNB OB TRF” each time, marking it as an internal account transfer.

In the minutes of the discussions about the missing funds at the April central executive committee meeting, the national officer bearers justified the transfer of some funds from the reserve account into the main account as a stop-gap measure to cover expenses while subscriptions were coming in.

But the money was never transferred back, according to a former member of the union’s finance committee.

Mysterious ‘law firms’
Several amounts to two mysterious “law firms” – Motshweneng Attorneys and Matsepe Attorneys – seem to be bunkum, according to the expelled Gauteng provincial secretary and a former financial committee member, Mohau Mokgatla. In an urgent interdict to stop his expulsion, he noted that his group discovered that the account number for both supposed attorneys belonged to Phaswane. They have allegedly traced at least over R1-million transferred to the account.

The M&G was unable to trace either of the firms.

A financial audit of the union’s finances has not been done since the current national office bearers took office in 2012 – another bugbear of union members.

In addition, the office bearers have refused to grant access to the union’s bank statements for the past 10 months, according to several sources in the financial system of the unions. It is alleged that access was denied even to the union’s financial committee and the national finance office and the treasurer, both of whom have been ousted over the issue.

“Previously, I was copied in on monthly bank statements by the HOD [head of department] once she received the bank statement,” Malete said. “Also I was connected to our FNB account. Then I was stopped. I was told it was the server and all that, but it was done deliberately.”

Voted out
Malete was voted out at an allegedly weakened central executive committee meeting earlier this year, after the dissenting majority provinces’ leaders were kept out.

The new financial officer has been in the position for two months but would not say whether she has been given access to the account or bank statements.

“The fact that our workers have spent years building up a reserve and for the fund to be depleted in a year is alarming,” said Andre Adams, who was suspended in May for “unruly conduct”, after 20 years with Samwu and 12 years as provincial secretary of the Western Cape.

Among the senior leaders forced out are Mokgatla, Adams and Samwu’s former international officer, Stephen Faulkner, who has been a trade unionist for over 40 years and with Samwu for nearly a decade. The chairpersons of Gauteng, the Western Cape, Mpumalanga and North West were also all expelled or dismissed. Most of Gauteng’s and Mpumalanga’s provincial leadership have been ousted. – Additional reporting by Pauli van Wyk

R32m later, union is still renovating its offices

If the South African Municipal Workers’ Union (Samwu) hadn’t decided to move its head office from Cape Town to Johannesburg, a lot of drama would have been avoided.

Instead, Mpamba Solutions and Consulting, hired to project-manage the move in 2012, is still working on the renovations of the office in Frederick Street. Costs have spiralled from R13.6-million to R32.7-million, according to a group of ousted leaders, who say that the union’s central executive committee did not approve the additional expenditure.

Mpamba has also extended its influence over Samwu to run its accounts, IT services and maintenance, despite the union’s ideological opposition to consultants.

According to the leaders, Mpamba’s Samuel McDonald Phaswana has taken over key accounting services within the union, and is paid a monthly salary of R399 000. Phaswana’s total earnings of nearly R7-million is despite three resolutions by the union’s now weakened central executive committee to end his contract – resolutions the national office bearers failed to act on.

Phaswana’s role began when the national office bearers claimed they had lost some of their key financial staff in the 2011 move because they were not willing to relocate.

Several sources allege that Phaswana has free rein with the union’s accounts, to the exclusion of everyone except the national office bearers.

Money has allegedly been siphoned from the union to the national office bearers through Mpamba, say sources.

Affidavits by the union’s expelled North West chairperson Sello Selepe and Gauteng provincial secretary Mohau Mokgatla also allude to this.

Mpamba director Keith Mafokoane would not comment and told the M&G that he was bound by a confidentiality clause. Phaswana did not return messages.

Two years and R32-million later, the Johannesburg head office of the South African Municipal Workers’ Union still hasn’t received a notice of occupation. (Madelene Cronjé, M&G)

Yet despite the millions spent on the building, it is unclear whether it is fit for occupation. 

“The building is still substandard, dilapidated and dangerous,” said Selepe.

“The national office bearers said that they have a clearance certificate, but we don’t believe them because they refuse to provide it.”

Three sources working in the building said that the lifts don’t work, the fire escape is faulty and the windows don’t open.

Building inspector Napoleon Nedzharata said he inspected the building last year after a complaint was received.

“I haven’t been back and I have not issued a notice of occupation.” – Pauli van Wyk

In limbo: Two years and R32-million later, the Johannesburg head office of the South African Municipal Workers’ Union still hasn’t received a notice of occupation. Photo: Madelene Cronjé

Verashni Pillay

Verashni Pillay

Verashni Pillay is the former editor-in-chief of the Mail & Guardian, and inaugural editor-in chief of Huffington Post South Africa. She has worked at various periods as senior reporter covering politics and general news, specialises in mediamanagement and relishes the task of putting together the right team to create compelling and principled journalism across multiple platforms.  Read more from Verashni Pillay

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