SA’s biggest municipal union must restore trust after graft report

A forensic report has found that R88-million was looted from the municipal workers’ union, Samwu, between 2012 and 2015. (Cornel van Heerden/Beeld/Gallo Images)

A forensic report has found that R88-million was looted from the municipal workers’ union, Samwu, between 2012 and 2015. (Cornel van Heerden/Beeld/Gallo Images)

NEWS ANALYSIS

Allegations of widespread financial mismanagement spanning several years have left the once prestigious South African Municipal Workers’ Union in tatters, and with only dim signs of it being put back together.

Once the darling of the left — owing to its early leadership’s outward pursuit of a worker-centred union — Samwu’s reputational harm means the country’s biggest municipal union has reportedly haemorrhaged members.

A damning Ernst & Young report, tabled at a Samwu central executive committee (CEC) meeting this week, is the latest in a series of blows.

The forensic report, seen by the Mail & Guardian, was commissioned by Sawmu’s former leadership after it became concerned about the rate at which the union’s funds were depleted between 2012 and 2015.

Previous allegations were that R176-million was looted from Samwu’s coffers, but the report found the deficit was R88-million.

Samwu general secretary Koena Ramotlou said the union’s leadership had adopted the report. The CEC also took a resolution to “restore the union to its former glory”.

But the 91-page report paints a bleak picture of the Samwu’s internal systems and its ability to handle its 160 000 members’ money. Each one pays up to R65 a month to the union in subscription fees.
Former office bearers were found to have “left their computers unattended for periods and made their passwords known to others to assist with the processing of payments in their absence”.

The report said Samwu’s lax financial controls led to millions of rands leaving the union’s bank accounts without supporting documentation or authorisation. One beneficiary received more than R23-million from Samwu between January 2012 and December 2015 without documents supporting the payments.

The report gives credence to allegations that Samwu’s one-time financial consultant, Samuel Phaswane, allegedly aided by former union office bearers, funnelled millions of rands from the union’s bank accounts into company accounts linked to him. Phaswane was arrested in March 2015 in connection with the stolen money.

According to the report, investigators were unable to interview Phaswane, who said he had been advised by his legal representatives not to agree to be interviewed because of his ongoing court case.

The leaked report is just the latest in a series of controversies that have plagued the union for years.

The union’s financial position was put in sharp relief in March, when labour registrar Lehlohonolo Molefe decided to place Samwu under administration because of the union’s failure to comply with various sections of the Labour Relations Act. If the case succeeds Samwu will be the first union to be put under administration by the labour registrar.

Molefe red-flagged Sawmu’s 2017 financial statement, which revealed that the union had that year taken out an R11.8-million loan from the now-defunct VBS Mutual Bank, allegedly using its Johannesburg headquarters as collateral.

The leaked report, which was seemingly delivered to Samwu’s then general secretary, Simon Mathe, in September last year, was only tabled on Wednesday.

In December last year, the M&G reported that union insiders alleged the report was being suppressed by Mathe. On Tuesday, Mathe denied this allegation, saying he was not implicated in the report.

Mathe was replaced by Ramotlou in April after the CEC passed a motion of no confidence in the union’s national office bearers. At the time the CEC said it was of the view that the union was “not on a path which is in the interest of municipal workers”. The new national office bearers made a commitment to stabilise the union’s finances.

The union has faced a leadership crisis since 2015 as a result of persisting factional battles in its ranks.

Among the issues discussed at this week’s CEC meeting — which was scheduled a week ahead of trade union federation Cosatu’s own CEC sitting — was the restoration of unity to Samwu. Cosatu has been trying to help the process.

The federation’s general secretary, Bheki Ntshalintshali, said he believes there may be a “light at the end of the tunnel” for Samwu. He indicated that the union’s leadership had not always been co-operative in the federation’s efforts to rehabilitate it, but said its new leadership has turned a corner. “It’s not all doom and gloom,” he said.

If this is true, Samwu has a tough task ahead of it. Not only will the leaders have to dig the union out of a financial hole, but they will also have to restore workers’ faith in Samwu’s ability to safeguard their interests.

Sarah Smit

Sarah Smit

Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law. Read more from Sarah Smit

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