Unions.bureaucrats & investment companies

Posted on February 24, 2019

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(First published in City Press, February 24)

The investigation into Federation of Unions of SA (Fedusa) general secretary Dennis George is complete and will be produced at the federation’s management committee (mancom) meeting on Tuesday (February 26). Although reported as a probe into allegations of corruption it is more an attempt to ascertain whether George was both less than truthful and acted against the interests of the federation and the labour movement.

The investigation was commissioned by Fedusa after placing George on “special leave” on February 1. This followed reports that George had, through a company of which he is the sole director, bought shares in Ayo Technology Solutions, a company effectively controlled by media mogul Iqbal Survé. He had also, apparently without informing the federation, become a non-executive director of the company.

However, George is officially retired, having reached the age of 60. But he has an additional contract with Fedusa until 2020 to enable a “smooth transition” when a new general secretary is appointed. This appointment is expected soon.

George’s actions have caused considerable anger within, particularly, the largest Fedusa affiliate, the PSA (Public Servants Association). George took on the Ayo directorship and bought shares at a greatly discounted rate at the time when the PSA was protesting about the R4.3 billion purchase of Ayo shares by the Public Investment Corporation (PIC) which manages government employee pension funds.

The PIC bought the shares, using pensioner funds, at R43 each, while George admits that his shares cost R1.50. His admission followed media reports about the share purchase which Fedusa president. Masale Selematsela maintains was never communicated to the federation or any of its affiliates.

“I heard about it from the media,” Selematsela said. He also first heard about George’s directorship, dating from August last year, from news reports in October.

When questioned about the reports, George reportedly said he would be notifying the mancom at its November meeting. “This he did, but there was no mention of shares,” said Selematsela.

In the wake of the furore that erupted following reports about the share deal, both George and Survé responded angrily, Survé maintaining that George had been maligned by “the media”. Both maintained the share deal was a generous gesture aimed at assisting trade unions and black economic empowerment.

George also claimed that he was merely “warehousing” the shares. He was holding them in trust until Fedusa established its own investment company. At that stage the shares would be transferred.

He and Survé also pointed out that the Cosatu affiliated SA Clothing and Textile Union (Sactwu) was given a similar deal. Sactwu already has some R200 million invested in the Independent Newspapers group which, to the annoyance of the PSA, has failed to meet it repayment commitments to the PIC.

However, unlike Cosatu and most of the unions affiliated to the ANC-aligned federation, Fedusa has not established an investment company. And, according to Selematsela, there are no plans to do so although there have been discussions about establishing an investment arm.

But many unionists feel that it is contradictory to buy into a system based on the exploitation of labour. At the same time it is generally accepted that, in the absence of any alternative, worker pension funds should be invested, as profitably as possible within the present system. This is the basis for the PSA demand for worker supervision of investment decisions made by the PIC.

This demand may be reinforced on Tuesday. More importantly, whatever the decision about George, will be whether the share transfer offer is rejected as a potential bribe or accepted as a contribution to a soon to her established Fedusa investment company.