A union investment dream revisited

Posted on March 10, 2019


The purchase by Federation of Unions (Fedusa) general secretary, Dennis George of cut-price shares in the controversial AYO Technology Solutions company has thrown into sharp focus the whole question of trade unions and their investments. And it has raised again an innovative investment scheme rejected by Cosatu 27 years ago as “too capitalistic”.

George, who maintains that he is innocent of any wrongdoing, was last month placed on special leave by the Fedusa management committee. He has now been suspended while an independent investigation, commissioned by the federation’s national executive is finalised. It is scheduled to be completed by month end.

George maintains that he bought the shares in order to pass them on to Fedusa once the federation had established an investment company. In the meantime, they were held in a company he owned.

While Fedusa does not have an investment company, there have been several discussions over the years about possibly establishing one. And the federation’s largest affiliate, the PSA (Public Servants’ Association) has two investments: a holiday resort on the Eastern Cape coast and an adjoining sand mine.

The two provide additional income for the union. But, as PSA deputy general manager, Tahir Maepa points out, they are not speculative, are wholly owned by the union, and members benefit by paying preferential rates at the resort.

Last week, in the wake of the controversy surrounding George, the PSA executive met and, on the agenda, put forward by general manager Ivan Fredericks, was the matter of ethical trade union investments. One proposal, likely to be implemented, is that the union, which spends millions each year on property rentals, should invest in the properties it uses.

This proposal echoes the comprehensive plan put forward in 1991 by then recently returned exile, and now author and businessman Moeletsi Mbeki. He was supported by then National Union of Metalworkers’ (Numsa) general secretary, Moses Mayekiso.

Mbeki proposed that the unions should come together and use their pension and provident funds to establish a co-operative bank that would, in turn, invest in property, especially in Johannesburg’s Hillbrow flatland. At that stage, property prices had plunged as a number of panicky property owners deserted their investments.

It was proposed that buildings be bought, refurbished and that flats should then be sold, with bonds provided by the co-op bank, or rented to union members. This would not only ensure a reasonable return on investments flowing into provident and pension funds, but would provide decent housing for workers while also helping to break down the racial geography of apartheid.

The proposal was given added impetus following a survey of Cosatu shop stewards that revealed that a significant number of these men and women were living in shacks in the then already mushrooming informal settlements. “At the time, local capital was very nervous about the future and was happy to come aboard,” Mbeki remembered in an interview last week.

There was even an agreement from the then executive director of the Development Bank, Dr Simon Brandt, that the DBSA would help establish the proposed co-op bank at no cost. But the proposal hit a brick wall: it was opposed — and rejected — by, among others, then Cosatu general secretary Jay Naidoo who went on to become a multi-millionaire businessman.

Speaking last week from his home in the Johannesburg suburb of Lombardy East, Mayekiso recalled: “It was a great dream, but there were those [in power] who didn’t think. And then there was hypocrisy. A bit like now.”

However, the dream is not totally shattered. “Maybe, just maybe, it can be resurrected,” he said.

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