Zwelinzima Vavi, who spoke to the M&G last week, said that during his time in Cosatu he was against unions forming their own investment companies.
Today, former trade unionist Johnny Copelyn’s stake in Hosken Consolidated Investments (HCI) is worth close to a billion rand.
Copelyn served as the general secretary of the Southern African Clothing and Textile Workers Union (Sactwu) for 20 years before he became the chief executive of the Cape-Town based investment holding firm in 1997.
That year, Sactwu and the investment arm of the National Union of Mineworkers (NUM) reversed a number of their assets in exchange for shares in HCI. The move gave the two unions control of a JSE-listed company for the first time. In 2022 Copelyn will make R19.8-million through his shares, salary and bonus from HCI.
When Copelyn and Marcel Golding, the former deputy general secretary of the NUM, founded their unions’ investment companies in the early years of South Africa’s democracy, they changed the face of the country’s labour movement. The move towards South Africa’s variety of “business unionism” sparked a heated debate among the country’s left.
Twenty-eight years later, business unionism is at the centre of a battle for the soul of the National Union of Metalworkers of South Africa (Numsa), the country’s largest union. The Numsa rift over the alleged capture of the union by its investment company has, according to some, undermined internal worker democracy, jeopardising a huge force in South Africa’s labour movement.
‘In word and deed’
Differences over business unionism has seemingly played a part in the quarrel between Numsa general secretary Irvin Jim and Zwelinzima Vavi, the leader of the South African Federation of Trade Unions (Saftu).
As the Mail & Guardian previously reported, in his report to Numsa’s 11th congress, Jim accused Vavi of publicly critiquing business unionism to attack the union’s leadership. Numsa is Saftu’s largest affiliate, with the union’s expulsion from Cosatu giving impetus to the formation of the new federation.
When Saftu was formed in 2017, the federation took a position against business unionism.
In the resolutions taken at its inaugural national congress, its listed principles included “opposition, in word and deed, to business unionism, corruption, fraud and maladministration within its own ranks and in a capitalist society which is inherently corrupt, which we must fight continuously and support workers exposing corruption”.
But the federation did not ban its affiliates from having their own investment companies. By then, the Numsa Investment Company (NIC) had existed for two decades.
A fight over the NIC’s role in Numsa recently threatened to collapse the union’s congress, which was interdicted by the labour court. The court found that a wave of suspensions of Numsa officials went against the union’s constitution.
Numsa’s decided to go ahead with its congress and applied for leave to appeal the labour court judgement. Numsa’s application was denied and the previously suspended officials headed to the labour court for an order holding Jim and Andrew Chirwa, chair of the union’s central committee, in contempt.
‘The road to hell’
The “unsuspended leaders of Numsa” issued a statement noting that, to avert the crisis confronting the union, its leaders ought to have agreed to a request to launch a forensic investigation into the NIC, among other things.
According to those opposing the NIC involvement in the union, Jim has protected the investment company’s chief executive, Khandani Msibi, against the reproval of union members.
Jim has publicly denied allegations that he has taken Msibi’s side against the will of Numsa workers. He has also accused the suspended officials, including Saftu president Ruth Ntlokotse, of being part of an attempted hostile takeover of Numsa.
In his report to the 11th congress, Jim noted that the investment company has become “the weakest link in the chain against the union”.
“It has become ammunition and a source of attack against the Numsa leadership from within the organisation. We have experienced allegations and counter allegations that are made against the leadership of the union,” the report reads.
“This is despite the fact that the organisation would have taken a conscious decision at the level of the CC [central committee] to jealously guard the interests of workers in how the NIC and its subsidiaries should behave and conduct themselves.”
Vavi, who spoke to the M&G last week, said that during his time in Cosatu he was against unions forming their own investment companies. Vavi was fired as Cosatu’s general secretary in 2015 after he spoke out against Numsa’s expulsion.
“I knew it was trouble. But then I was defeated in Cosatu. At least in Saftu there is a discussion about whether this is the best idea. A lot of us thought that this is the start of the road to hell.”
‘There is no holy place’
There needs to be an investigation into the effect of trade union investment companies on the labour movement, Vavi said.
The Saftu general secretary said the concern about these companies is that their investments may be in conflict with the interests of workers. “Naturally, a union that delves into that is conflicted from day one. We are in a capitalist system. And the system is by design, not by some mistake. By design, it is meant to generate profits through the exploitation of workers,” he added.
“And there is no holy place where you can say, ‘If we exploit here, it is better than to exploit there’. In Cosatu, unions used to say they would not have investment companies that are active in places where we are directly conflicted. But that was just pushing your head under the sand. So it is fine if you are in mining, you won’t exploit mineworkers, because we are organising them. But you can exploit retail workers.”
There are undoubtedly benefits to these investment schemes, Vavi said, but they also inevitably “blunt the militancy of the union”.
“We have been doing this for 28 years … And I think we were right. That thing is not good,” he added.
The formation of Sactwu and the NUM’s investment companies sparked a spirited debate among the left, chronicled on the pages of the South African Labour Bulletin.
In one 1999 edition, trade unionist Stephen Faulkner argued that business unionism in the United States and the United Kingdom should serve as a cautionary tale for South Africa’s unions.
Barons
“The overwhelming drawback of business unionism, and its many varieties world-wide, is that it demobilises and depoliticises workers precisely at a time when only their mobilisation can protect working class living standards,” Faulkner wrote.
“By restricting the issues that can be raised … it paralyses activists. Even worse, it feeds into all the anti-union press publicity of unions being little more than shallow commercial empires operating only to benefit high-salaried ‘barons’.”
Political economist Dale McKinley also weighed in, telling the M&G that the investment companies stood to dull the radical politics of trade unions. “Unions had said, up until that point, that they were fighting for socialism. They were fighting for an alternative society,” he said.
“And all of a sudden the argument was, ‘No, we want to be players in the capitalist market.’ That is taking unions in a whole other direction.”
Another concern that emerged when these types of companies were first set up, was that the benefits derived from their investments would be far greater for some than for the union’s ordinary members. “And that is what happened,” McKinley said.
“People, like Johnny Copeland and Marcel Golding — who were kind of the poster boys — and many others, became multimillionaires … So basically the investment companies become conveyor belts for capital accumulation.”
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