The collapse of the South African Commercial, Catering and Allied Workers Union (Saccawu) has narrowly been avoided for now. But the threat of liquidation still hangs over its head should it default on substantial monthly installments to pay off a debt of R30-million.
The union’s finances are further stretched by a large debt it owes to its mother federation, Cosatu, raising questions about how long the union can fend off the liquidation threat.
The 120 000-member union is largely populated by workers in the notoriously low-wage retail and hospitality sectors, where job security is increasingly threatened by casualised labour.
Saccawu missed its March 9 deadline to pay back a R30-million to its provident fund or face liquidation. The debt stems from allegations that workers’ retirement funds and disability benefits were invested irregularly.
In addition, Saccawu owes Cosatu more than R1-million in affiliation fees, according to documents seen by the Mail & Guardian.
Saccawu’s provident fund was put under curatorship in 2002 following an application by the Financial Services Board (FSB). At the time, the FSB alleged that senior Saccawu members had abused the fund for their personal gain, including funding personal holidays.
At the time, the FSB said the irregular investments had put workers at risk. Saccawu has consistently denied the allegations during several years of litigation against it. Union officials could not be reached for comment this week.
Johannesburg attorney, Tony Mostert, was appointed as curator of the provident fund in 2002.
After Saccawu missed the March deadline, with the threat of liquidation looming, a deal was struck to avoid the union’s collapse. Mostert told the M&G this week that the application to have the union liquidated was drafted and ready to be filed when Saccawu’s mother federation, Cosatu, intervened.
Saccawu is aligned to a faction in Cosatu that supports the now-expelled National Union of Metalworkers of South Africa (Numsa) and Zwelinzima Vavi, who was expelled from Cosatu on Monday.
And yet it was Cosatu president, Sdumo Dlamini, aligned to the opposite faction to Saccawu, who made called him about three weeks ago, Mostert said.
Mostert agreed to let the union pay off its debt in monthly installments of R500 000, with a bulk payment of R5-million due at the end of September. But should the union default on a single payment, “it is instant liquidation”, he added.
Previously, Mostert stressed that the provident fund was in good financial health, insisting that workers’ funds were not in jeopardy.
He said that the provident fund would not collapse along with the union, should the liquidation be necessary. Special provision was made for Saccawu to access its accounts so that staff members’ salaries could be paid.
Fighting for survival
The winding-up of the union would mean that its assets would be sold off to pay its creditors, including the provident fund. If this happens, the union will only be able to stop the process if it can prove it is financially viable
It will have to produce audited books to the court, but the court will also take into account the effect this will have on interested parties such as workers.
Saccawu represents workers in major retailers and hospitality outlets, particularly Pick n Pay and Sun International, where it is the majority union.
A report released by Cosatu in 2012 revealed that between 15 and 20 percent of workers in the hospitality, retail, transport, wholesale and clothing industries were not in permanent jobs.