Johannesburg - Embattled Cosatu general secretary Zwelinzima Vavi is likely to face more charges after a forensic investigation has found that the federation may have lost millions by changing its service providers.
A report by SizweNtsalubaGobodo also details how unhappy some Cosatu staff were about the service delivery of VMS Technologies, which has been linked to Vavi’s wife and daughter.
VMS was appointed in 2006 by Vavi, who is responsible for the fiduciary duties in Cosatu, to provide the federation’s telecommunication services such as telephones and photocopiers. It was also signed off by five other Cosatu national office bearers at the time, including president S’dumo Dlamini.
Since then, VMS’s services have increased and broadened for it to also supply security features like CCTV cameras and biometrics.
The company was appointed after Vavi and Cosatu’s former treasurer, Alina Rantsolase, decided it would be cheaper to have one service provider instead of many.
However the forensic report, which was handed to Cosatu’s central executive committee last week, suggests that savings were questionable.
Sasfin Bank, which finances VMS, made over R1.9-million in payments to various service providers to terminate their contracts early.
“Based on our consultations with the relevant parties, the settlement amounts paid by Sunlyn Rentals (the rental division of Sasfin) were factored into the monthly rental payments paid by Cosatu to Sunlyn Rentals,” the document reads.
“This then suggests that Cosatu bore all these early termination and settlement costs and not Sunlyn/VMS.”
The report recommends that Cosatu considers updating its policies to deal with a standard process to be followed when terminating contracts with service providers.
It also recommends that Vavi be sanctioned for what appears to be a breach of the federation’s policy on procurement of major goods and services.
Vavi is accused of favouring VMS, whose sole member, Craig Greene, is linked to his wife, Noluthando, in another company. Vavi’s step-daughter also worked for the company, but he put a stop to that after he found out about it.
VMS won the contract after bidding against Xerox, Canon and Gestetner.
Although Cosatu estimated that it had saved R80 000 a month as a result of hiring VMS, the auditors said they could not find any documents to back this assertion.
Some staff interviewed by the auditors said they were deeply unhappy with the services of VMS.
Enos Ramaru, head of Cosatu accounts, said VMS failed to make itself available when copy machines broke down. This was despite Greene saying that his company had a 24-hour turnaround time.
He said he did raise his concerns, but VMS’s contracts were still renewed by Vavi. This was also despite Vavi not attending a meeting to discuss their services as he was off sick that day.
According to the report, 13 contracts worth more than R50-million were concluded between Cosatu and Sunlyn on behalf of VMS between December 2006 and June 2012.
As of February this year, more than R30-million has been paid by Cosatu to Sunlyn Rentals.
“We could not establish how much VMS was paid by Sunlyn Rentals for securing the contracts between Cosatu and Sunlyn Rentals,” said the auditors.
“During our consultation with Ms Irene van der Ende (Sasfin accounts executive) she informed us that the information regarding the payments made to VMS would be provided to Cosatu upon a written request.”
However, since the request was made, no information has been forthcoming.
The report recommends that Cosatu engage Sunlyn Rentals to obtain information on how much money has been paid to VMS.
Vavi has denied the allegations against him. He says Cosatu cannot take issue with his wife being linked to Greene as the two entered into business after the VMS contract was signed. He also denies not following tender processes, saying Cosatu only has a draft tender policy, which was never adopted by the CEC, as it should have been.
The general secretary refuses to co-operate with the forensic investigators with this part of the investigation, which is the second leg, claiming it is part of a witch-hunt against him in Cosatu. He already faces nine charges, some related to the first leg of the probe which included the dodgy sale and purchase of Cosatu buildings where they lost nearly R16-million.