Vavi report: Auditors seek action against four

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Copy of st NU fredaVAVI file.JPG INDEPENDENT NEWSPAPERS Cosatu general secretary Zwelinzima Vavi and national treasurer Freda Oosthuysen, directors of Cubah Properties, sanctioned dodgy building deal. Picture: Matthews Baloyi

Johannesburg - Three of Cosatu’s national office-bearers contravened the Companies Act when they sold the federation’s old headquarters and should be held to account legally, according to a forensic report by audit firm SizweNtsalubaGobodo (SNG).

According to an explosive forensic report which details how Cosatu lost millions in the property deal, the three officials are general secretary Zwelinzima Vavi, his deputy Bheki Ntshalintshali and treasurer Freda Oosthuysen.

The 58-page document says Cosatu must seek legal advice on how to proceed against the three, as well as Eskom acting chief executive Collin Matjila, who was head of Cosatu’s investment company at the time.

The report complicates the political machinations inside Cosatu, where a faction aligned to the federation’s president, S’dumo Dlamini, is attempting to get rid of Vavi. This faction hopes to use the SNG audit to topple Vavi, and has already used it as the primary basis for a series of disciplinary charges against him.

But SNG’s findings and recommendations will make acting against Vavi difficult when no action is taken against his fellow office-bearers and Matjila.

The report lays the blame for Cosatu’s substantial financial losses largely at Matjila’s door.

Cosatu lost up to R16 million in 2011 when it sold its old headquarters at below its true value, then bought its new building for R6.3m more than its valuation. Matjila admits in the report, which followed from an investigation at the behest of Cosatu, that he did not follow due diligence.

In the section of the document on Cosatu’s old building, which has been seen by The Star, the auditors say the directors of Cubah Properties, which owned the old Cosatu House, gave the go-ahead for the sale in 2011. The company’s directors are Vavi, Oosthuysen and Ntshalintshali. Cubah Properties is wholly owned by Cosatu and manages its properties.

They contravened the Companies Act because, at the time of the sale, the building constituted the greater part of the assets of Cubah Properties and, therefore, fell in the ambit of section 228 of the Companies Act.

“It would appear that a special resolution as required by the provisions of… section 228 was not passed in respect of the disposal on the old Cosatu House by Cubah Properties. This appears to be irregular in that it amounts to a direct contravention of the provisions of the Companies Act,” the report reads.

Cosatu ended up losing as much as R9.5m in the sale. Two separate valuations were done on the old headquarters after it was decided to sell it for R10m.

This figure was based on a “desktop valuation” by Tamela Consultants, who were contracted by Kopano Ke Matla in 2011, and who said the building’s value was between R8m and R10m. Audit firm Deloitte placed the value at R12.6m, while CPF Valuers said it was worth R19.5m.

Based on the Tamela valuation, Cubah’s directors went ahead with the sale.

However, they stated in a letter to Matjila that the building should be sold for R20m, which was its value in 2007, and half of that money should be pledged to buying Cosatu’s new building.

But Matjila interpreted the letter to mean that he must get R10m for the Cosatu House building.

The building was bought by property developer Ebrahim Joosub, who also sold Cosatu its new headquarters.

Cosatu originally had a shortfall of R14m for the new building, which cost R50m, despite its 2011 valuation being placed at R43.7m.

The Star



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