Pension money missing in SA clothing industry

South Africa

The clothing union, Sactwu, is “concerned” about the missing funds. Concerned!!! They should be outraged. It is no good to appoint their own lawyer to look into this matter. The ReDress Consultancy has repeatedly called for an independent audit of the entire bargaining council’s financial managerial systems. According to the Cape Times, (Textile pension funds missing R100m, 26 May 2011), “the interests of thousands of workers are at stake.”  In the same report, Sactwu General Secretary, Andre Kriel said, “no stone will be left unturned to safeguard the interests of our members.”

The ReDress Consultancy has learnt of a new twist in the ongoing saga taking place in South Africa’s beleaguered clothing sector. According to our information the bargaining council now deems that the December resolution which activated the new Phase-in policy removes the need for clothing companies to apply for exemptions. This contradicts the bargaining council’s former position when it said (Business Report, 5 September 2010) that “employers had the option to apply for exemptions.” Does this imply that employers have no recourse?

Over R100m of SACTWU pension money allegedly missing

Company linked to deputy minister allegedly involved.

JOHANNESBURG – Attempts, which include a liquidation application, are apparently being made to recover about R100m of workers pension monies which allegedly have gone up in smoke, according to a sworn affidavit filed in the Cape High Court.

“A good chunk of it has gone into smoke ... inclusive of interest the amount should be a good R130m according to the contract agreement,” reveals Siphamandla Jama, the author of a sworn affidavit which forms part of the liquidation application.

In the affidavit it is noted that Trilinear Empowerment Trust (administrator of workers’ provident funds) advanced about R87m of SACTWU (South African Catering and Textile Workers Union) pensioners’ money to Canyon Springs about four years ago. According to the affidavit, the amount totals over R100m including fees and interest. Moneyweb asked parties cited in the liquidation application to give an indication where the pensioners’ money was, none were able to do so.

The trustees of the Trilinear Empowerment Trust are Vuyisile Kona, the chairman of the trust, Sharon February, Monroe Mkaliphi and Sibusiso Gamede, newly appointed CEO of Pinnacle Point.

According to the affidavit, Canyon Springs is allegedly unable to repay the money. When Moneyweb queried Canyon Springs, we were told the company partly belongs to the family of Deputy Minister of Economic Development Enoch Godongwana.

After an independent search, CIPRO records listed Canyon Springs directors as Mohan Patel, the managing director and Thandiwe Godongwana, the wife of Deputy Minister of Economic Development Enoch Godongwana.

SACTWU is reportedly concerned about the matter. General Secretary Andre Kriel said the union has hired a law firm to conduct a thorough forensic investigation in order to see what action can be taken to safeguard workers’ interests. With liquidation in the picture this raises a concern on whether the millions of rands belonging to thousands of workers will be totally recovered.

The beneficiaries of the trust include the Cape Clothing Industry Provident Fund, Textile Industry Provident Fund, Textile Open Provident Fund, Textile and Allied Workers Provident Fund and Pep Limited Provident Fund.

According to the affidavit, the story goes that a loan agreement was allegedly reached by Trilinear Chairman Sam Buthelezi and Patel. Buthelezi allegedly signed on behalf of the trustees as the trust has an investment management agreement with Trilinear. It is alleged that Trilinear never informed the trustees about the transaction.

Jama, the author of the affidavit and former head of alternative investments at Trilinear, alleges that in his interactions with Canyon Springs MD Patel, there was no contestation that Canyon owes the trust over R100m. Jama points out that the first drawdown took place on March 20 2007 in the amount of R30m followed by many others.

“The loan has never been repaid. Not a single cent has been repaid. The deadline to repay was around March 2010. Not a single cent has been repaid that’s why now there has to be all of these things of liquidation and so on,” Jama added.

The former Trilinear employee points out in his affidavit that he uncovered that “as security of the loan” it was agreed that “the applicant was to take up 20% shareholding in the respondent.

“As far as I could ascertain, this never transpired. The trust thus holds no security for its claims against the respondent”, Jama said. 

Asked why he had left Trilinear, he said he resigned after his investigations revealed worrying concerns about pensioners’ monies. He claims to have found himself in an awkward position as the chairperson of Trilinear Buthelezi was allegedly friends with someone suspected of irregular behaviour.

Buthelezi was sent a list of questions, asking him among other things :

1)      Where pensioners’ money had gone to?

2)      Why Trilinear lent Canyon Springs workers’ money?

3)      How lending money to Canyon  benefitted workers/pensioners ?

4)      And why Trilinear couldn’t tell Canyon to go to a bank for a loan?

In response, Buthelezi’s attorney’s Bellairs and Solomons told Moneyweb:

“In terms of our client’s contractual arrangements, it is not entitled to give information of the nature herein requested to third parties. Whilst our client is at present is not a party to the application, it is giving consideration to make an application to intervene in the proceeding and the matter is therefore sub judice.

“In the circumstances it is not appropriate to respond to media requests for information relating to the proceedings. It should not be inferred that our client agrees that the allegations made in the application are true. In the circumstances, our client declines to reply to the queries made by you,” Buthelezi’s attorneys added.

The deputy minister did not respond to questions sent by Moneyweb and promised to talk on Thursday morning. Moneyweb has been calling and leaving messages for the MD of Canyon Springs, Patel, since Sunday. He has not replied.

Xulu Liversage Inc, the lawyers who have filed papers on behalf of the trustees said opposing papers by Canyon Springs were supposed to be filed on Thursday, May 19 in terms of the court order, but nothing had been served. The matter is expected to be heard on June 9. Late on Tuesday no indication to serve opposing papers had been made to Xulu Liversage.

Jama also alleges Richard Daniel Kawie, former national benefits co-ordinator of SACTWU, allegedly “became one of the main protagonists as to how the monies lent to the respondent were expended, with much of it, some R8m to himself, directly and/or indirectly. Kawie also shares the same business address as the respondent [Canyon Springs].

“Kawie has also apparently played a leading role in the appointment of senior management of the subsidiary of the respondent [Canyon Springs], Pan African Benefit Services (PABS), which as far as I could establish has potential to be a successful business”.

PABS referred questions to Canyon Springs.

The affidavit also alleges that Kawie ensured that the Canyon Springs lent millions of rand to a company, which allegedly belongs to Kawie’s cousin. The affidavit calls for Kawie to be investigated urgently.

Moneyweb spoke to Kawie on the weekend and on Wednesday and he strongly denied the allegations. He denied any wrongdoing on his part, stating that as an activist and former union man he would not dare steal from the worker as it was the same as stealing “from your mother”.

Kawie told Moneyweb that he is considering an application for defamation and has appointed lawyers to advise him. He said there could be a political agenda to tarnish his name.

Kawie was also confronted by his SACTWU comrades. He said he felt “deeply aggrieved with what is said”. He reiterated to the union that “whatever is said is unfounded and untrue”.

Reference: Moneyweb, 26 May 2011