Picture: RUSSELL ROBERTS
Picture: RUSSELL ROBERTS

THE Department of Labour has threatened to shut down the controversy-plagued Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union (Ceppwawu) for ignoring repeated requests to submit audited financial statements since 2010.

Ceppwawu claims to have about 80,000 members across South Africa, with a majority presence at paper companies Sappi and Mondi, divisions of BP, Shell and Chevron Southern Africa, Sasol, Nampak, Barloworld, AECI, Aspen, Adcock Ingram, Consol and GlaxoSmithKline Southern Africa.

The union’s investment portfolio, held through its investment arm, is worth more than R2bn, largely as a result of a 2001 empowerment deal with pharmaceutical giant Aspen.

But in recent years, Ceppwawu has been plagued by infighting, bruising factional battles and court challenges. Charges of misconduct have been laid against its leaders.

Should the department go ahead and shut it down, it could spell chaos for labour relations with some of South Africa’s blue chip companies — especially at a time when the mining sector has been driven to the brink by labour disputes.

Business Times has obtained a scathing letter sent by the registrar of labour relations to Ceppwawu’s general secretary, Simon Mofokeng, which warns that it is “very much concerned with [Ceppwawu’s] non-compliance with sections 98, 99 and 100” of the Labour Relations Act.

The act obliges all trade unions to submit audited financial statements and detailed membership figures per sector to the department every year.

The letter, dated July 15, says Ceppwawu promised on August 2 2012 “that the audits for the year ended December 2010 and 2011 would be finalised by end of September 2012 [but] to date the audited financial statements have not been submitted”.

It warns Mr Mofokeng that his union has 30 days to comply or face deregistration.

The department has confirmed that it sent Ceppwawu the letter this week.

A similar letter that was sent to the union in August last year also warned Ceppwawu that it could be deregistered if it failed to comply with its requirements.

That it has not submitted its financials raises alarming questions about exactly what the union has done with the subscription fees paid by its members over the past few years.

In its latest warning letter, the department also demands information about Ceppwawu’s regional structures, minutes and registers of national executive committee meetings, and details of the union’s bank accounts, statements and signatories.

Mr Mofokeng, in a statement issued on Friday, said the letter was “nonsensical in many respects”.

He demanded that the department explain “how a confidential letter like this came to be leaked” to Business Times.

Mr Mofokeng said the department had already been advised that KPMG, Ceppwawu’s auditors, were finalising its financial statements and these would be “submitted shortly”.

The delays were caused by the union’s inability to afford auditors due to cash flow problems caused by internal conflicts that prevented dividends flowing from its investment arm, he said.

Last year, the Ceppwawu Development Trust, which owns the investment arm, disbursed R32.7-million to the union.

According to a report submitted to the national executive in May, the money was used to settle outstanding bills. These included its Cosatu affiliation fee of almost R1-million, international affiliate fees of R1.4-million, legal fees of almost R10m and a tax bill of R8.3m.

Sasol is already investigating Mr Mofokeng’s involvement in a suspicious coal supply deal with the petrochemical firm, a conflict of interest because he is the general secretary of one of Sasol’s main employee unions.

Mr Mofokeng was recently exposed by Business Times for earning a salary of R130,000 from Khotso Batho, a coal supply company contracted to Sasol that he runs with his wife, Maureen.

The newspaper also exposed how Khotso Batho submitted fake official documents to clinch suspect empowerment deals with Sasol that the company is investigating.

Sasol spokeswoman Jacqui O’Sullivan this week confirmed that the internal investigation is continuing.

“Documents are being reviewed and interviews are being held. It is expected that a decision on the future of the business relationship between Sasol and Khotso Batho will be made by the end of next week,” she said.

Mr Mofokeng said he is the victim of a campaign to discredit him. He said it is orchestrated by “a faction in the union and Cosatu” that wants to force him out of office. The group wants to stop him from cancelling an agreement with Letsema Investments, which would entitle the company to a 27.5% stake in Ceppwawu Investments worth R550m.

“In its simplest terms, if this faction is able to discredit Mr Mofokeng and the supporters of his approach, and to force Mr Mofokeng out of office, they would then achieve the objective of silencing any criticism of the Letsema management agreement, and the owner of Letsema — Isaac Shongwe — would be free to participate in about one-third of the equity of Ceppwawu’s investment arm, and Ceppwawu and its members and their families would be at least R550m poorer,” he said.

• This article was first published in Sunday Times: Business Times