Something rotten in state of unions
Political interference in the work of labour watchdog breeds graft
● Trade unions are fleecing their members, and the government is making it difficult to hold them accountable, says former labour registrar Johan Crouse, who was fired by the labour minister for trying to do just that.
The National Council of Trade Unions recently called on the government to hold the council’s organisations accountable amid claims and proof of rampant corruption and maladministration in unions.
Crouse, who was the labour registrar for 20 years, says he has “absolutely no doubt” about these claims. But he says the call by union leaders for their organisations to be held accountable is “just rhetoric. They don’t want to be held accountable, that’s the bottom line.”
He says he also finds it difficult to take seriously Cosatu president Sdumo Dlamini’s recent remark about union investment companies being “a cancer ripping us all apart”.
He agrees with him, but points out that it was Cosatu that got Labour Minister Mildred Oliphant to intervene when Crouse as labour regulator tried to enforce accountability on a Cosatu affiliate.
Cosatu, which was instrumental in setting up many of the union investment companies that union leaders have plundered, told the minister to reverse his court application to deregister the ANC-aligned Chemical, Energy, Paper, Printing, Wood and Allied Workers Union after it had failed to produce financial records for five years.
Regardless of Cosatu’s public posturing, this demonstrates its real attitude to corruption, he says.
At stake was R6-billion worth of investments controlled by Ceppwawu. When Crouse refused Oliphant’s instruction to suspend his court application to have it deregistered, she fired him in 2015.
After an almost two-year battle, the Labour Court found that her decision was “irrational and invalid” and ordered his reinstatement.
By then, he’d almost reached the official retirement age of 65 and didn’t have time to reinstate the deregistration.
The result was that Ceppwawu was never deregistered, suspended or placed under administration, and still hasn’t submitted proper financial statements.
When Crouse tried to deregister the union, it had been in contravention of the Labour Relations Act for five years.
Unions have constitutional checks and balances, but these are easily circumvented by strong leaders who run unions with a small clique of senior office bearers who are close to them, he says.
They are past masters at playing the system for their own ends, which rarely align with the interests of their members.
“You have these individuals who know the weaknesses of unions. They [prey] on these weaknesses and take over unions to get their hands on the bank accounts which they loot.”
In addition to their “massive salaries”, they usually have their eyes on what is considered to be the main prize, which is an investment company where there’s a lot of money.
They will “usually do anything to be part of the decision-making in that investment company”, he says.
As long as they’ve got a strong base, they can get away with anything. They don’t have to worry about the branches.
“I can assure you members have got very little say in their unions,” says Crouse.
Only the “right” shop stewards and other members are invited to meetings.
“They hear about decisions at meetings to which they weren’t invited.”
Members from branches would complain to him in strict confidence that meetings were held without them even knowing.
“They are usually so scared of the consequences if they tackle the legitimacy of decisions that they’d rather just join another union.”
It is extremely difficult for the registrar to check that decisions made are valid, he says.
It was Ceppwawu’s inability to prove that it held the meetings required of a registered union that, along with its failure to produce financial records, made him seek to put it under administration, and cost him his job.
“It’s a minefield. The system is ripe to be taken by anyone who knows the system.”
The registrar is supposed to see that there is proper financial control, “but you are hamstrung”.
All he has to go on are the financial statements, where these exist. Many unions don’t submit financials as they are obliged to do by law.
Where financial statements are available, they’re often entirely inadequate.
“The auditors just sign off on a lot of things. They do the basic checks and balances but don’t ask the questions.”
In effect, they facilitate corruption because they’re not doing a proper job, he says.
The now-disgraced audit firm KPMG looked after Ceppwawu’s books.
Crouse said he saw comments by Ceppwawu investment company’s lawyers where they said auditors had signed off on things they were not supposed to sign off on.
When he brought his urgent application, Labour Court judges were scathing about what they saw and said the matter needed to go to court.
But after he was pushed out by the minister, the acting registrar withdrew the application, and it never went to court.
Political interference in the work of the labour regulator has become “the standard, the norm”, says Crouse.
“It can happen that you put a union under administration or cancel its registration, which makes big problems in the alliance.”
Deregistering Ceppwawu would have weakened Cosatu and the governing alliance politically and financially.
“Unions pay massive affiliation fees to Cosatu, which is one of the machines of the government and ANC in elections.
“So the registrar now first has to check with the minister.”
What came out in his Labour Court case was that the registrar is empowered by the Labour Relations Act to act independently of the minister or Department of Labour.
But he says the department has been restructured “so that the link of the registrar to the minister and director-general is more direct than in the past”.
“The registrar now reports to the DG or minister.”
The oversight and monitoring role of the registrar has been blunted, making it easier for corruption in the unions to flourish, says Crouse.
These individuals take over unions to get their hands on the bank accounts and loot them
Johan Crouse
Former labour registrar