Super-rich class emerges in union movement
| Thursday April 30, 2015 17:17
With assets running into the billions of Pula, leaders of the country’s unions are finding themselves under increasing scrutiny from cash-strapped members within the ordinary ranks who want greater accountability and tighter governance.
Zero nett pay – a situation where a salaried individual earns nothing due to credit commitments – is sweeping through a public service struggling with historic below-inflation wage reviews.
With the employer unable to offer better wage reviews, indications are that more civil servants battling heavy indebtedness are increasingly dissecting their own unions for answers.
And what they are seeing is inspiring fury.
Many unions with internal investment arms offer a variety of credit products for members, ranging from laptop and cellphone purchases, to personal and vehicle purchase arrangements with commercial banks.
The arrangements with commercial banks are a particularly sore point with some members, who view union leaders as mortgaging general memberships to profit motives, in return for kickbacks from banking institutions.
Many union investment arms even act as agents for insurance, banking and other financial service providers, for which they earn tidy commissions.
On a monthly basis, members are weighed down by various repayments to the unions, excluding subscriptions and the institutions once meant for their upliftment are now the millstone around their necks.
“Unions by their nature are socialist, but we are seeing capitalist, profit driven motives,” says Oaitse Diane Patle, a concerned unionist.
“My personal view is that union investment companies have been turned into cash cows for union officials and full time employees some of whom are now alleged to be drawing a salary at D4 of P165, 300.00 per annum as full time shop-stewards, while some union general secretary and union organisers are alleged to be earning a salary ranging between P45, 000.00 and P75, 000.00 per month.”
Patle says while some unions are richer than the Gaborone City Council, their members wallow in debt and poverty, while the leadership fails to equitably distribute the wealth from the investments.
“After the wealth is accumulated, how is it distributed?” he asks.
“The union’s social responsibility is towards members’ welfare, but what are they doing? “The issue should not be to promote credit, but that when the union grows, it promotes savings.
“When a member retires, they must benefit from the wealth created in the union.
“However, when someone is living in a servants’ quarters with zero nett pay, it means the union leadership is not economically empowering its members.”
According to Patle, most union leaders are “living great lives better than President Khama,” and “eating in fancy restaurants” while “their members cannot even afford a loaf of bread”.
SCI Training, a Kgale-based financial consultancy, last year revealed that one of their worst cases was a government teacher who owed P1.6 million while earning P10, 000 per month.
Where some unions say they provide funeral cover for their members, Patle is scornful.
“We must not be joining unions to die. Instead, my children must say ‘our father was a member of a union and we received this much from the union for our upkeep.
“When we say government is eating by itself, we must also then be exemplary.”
UNIGEM CEO, Julian Willie, says pooled investments by unions are not inherently a bad idea. UNIGEM, formed in 2008, represents the collective investments of four public sector unions, and has an array of products and services Willie says are designed to ease the burden on unionists.
UNIGEM, which differs from union investment arms in that it is the collective investment vehicle for several unions, manages GEMVAS, a government backed scheme allowing civil servants to access concessionary loans with participating financial institutions. UNIGEM, however, has gone beyond GEMVAS.
“The idea behind UNIGEM was to establish products that would help members benefit from low premiums,” he says.
Today, UNIGEM boasts a medical aid arm, an insurance brokerage and is in the process of launching a legal aid subsidiary, which Willie says offer market-beating rates for the benefit of members. UNIGEM has been in talks with government to secure land on which it plans residential developments for civil servants to purchase or rent, again at discounted rates, he says.
“The vision of the founding unions was never for profits. Unions believe in socialism, not capitalism or using people to make money. “We are a Pty Ltd, but we cannot forget our mandate as a union investment company,” says Willie.
He adds that the people-first approach is one reason UNIGEM will not go the way of the giant South African union investment groups that have multi-billion Rand interests in various industries such as mining and construction.
The South African investment model has suffered embarrassing contradictions such as in 1997 when mining giant JCI axed thousands of mineworkers to improve its financial performance. At the time, the National Union of Mineworkers, through its investment company, was a minority equity holder in JCI via a 2.1 billion Rand investment.
“This resulted in a situation where mineworkers through their union’s investment indirectly invested in their own retrenchments,” notes a paper prepared by Herbert Jauch. Willie explains: “That’s not the route we want to take. We want members to benefit directly. Our vision is not to make money”.
Even with his positivity, Willie subtly acknowledges the rise of the super-rich within the labour movement. The UNIGEM CEO notes complaints from union members that the labour movement has moved away from welfare issues and is now obsessed with running businesses.
“The King III governance report clearly states that the chairman of a board cannot be the person dealing directly with the day to day business of a union.
“The reason why you see people crying about self-enrichment is because of leaderships directly engaged in running the investment arms, contrary to corporate governance principles.
“They take decisions on what should done instead of hiring professionals from outside, and as a result they may make decisions that favour themselves.”
Willie adds: “My take is that when individual unions establish investment arms, they must engage professionals to run these. I’m happy because unions are realising the importance of this, which minimises problems of accountability and distribution”.
For Patle, however, the issues run deeper. The unionist believes some labour leaders deliberately exploit the financial illiteracy of their general memberships to bamboozle congress delegates during treasurer’s reports.
“Some unions don’t even have financial reports and the figures are only known by executives,” he says.
“They get away with this because their members are semi-skilled.
“Unions must engage auditors of record to look at their books. There should be forensic audits because some of these books are being cooked.”
Patle adds: “We have moved from our core mandate. The focus is on investments. They even invite the media and show you projects and other things. Some of these unions are offering loans of up to P1 million at banks and that’s why some members are retiring as destitutes. They have been made that way by the leadership itself.”
That the class struggle has permeated the socialist labour movement is an irony workers will have to contend with as they celebrate Labour Day today.