Suspended general secretary Katishi Masemola. Picture: Bongiwe Mchunu
Suspended general secretary Katishi Masemola. Picture: Bongiwe Mchunu

Embattled Fawu warned of deregistration

By LOYISO SIDIMBA Time of article published May 15, 2019

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Johannesburg - The troubles facing the Food and Allied Workers’ Union (Fawu) have deepened, with labour relations registrar Lehlohonolo Molefe demanding that it account for millions of rand in subscription income and unsecured and interest-free loans.

In a strongly-worded letter sent to suspended general secretary Katishi Masemola, his deputy Mayoyo Mngomezulu, and other Fawu officials on Tuesday, Molefe threatened to remove the union from the register of trade unions or apply to the Labour Court to have it placed under administration.

At the heart of Molefe’s threats is the union’s failure to submit its annual financial statements for the 2017 and 2018 financial years, and also only submitting the 2015 and 2016 documents in April last year.

Fawu’s auditors gave the union a disclaimer of opinion, the worst possible audit outcome, in 2015 and 2016 due to its failure to put in place a system of internal control over more than R73.7 million in subscription fees.

The auditors found that a major part of the union’s revenue comprised subscription income received from employers for its members.

“There was no system of internal control over subscription income of R73.6m on which we could rely for the purpose of our audit, and there were no satisfactory auditing procedures we could perform to obtain reasonable assurance that all subscription income was properly recorded.

“Consequently, we were unable to satisfy ourselves as to the completeness and accuracy of the accounting records relating to subscription income,” the auditors declared.

Fawu, which is the SA Federation of Trade Unions’ second-biggest affiliate, has also failed to submit its VAT returns to the SA Revenue Service.

Molefe has also taken issue with several unsecured and interest-free loans to entities linked to the union, ranging from R11 000 to almost R17m.

He wants Fawu to disclose the names of the companies’ directors, how they benefit members, their funding structures since inception, and the salaries drawn by the directors.

Molefe is also demanding Fawu submit audited financial statements for 2017 and 2018, which it promised to hand to him in April last year.

Fawu must also submit the 2017 and 2018 audited financial statements for its investment company Basebenzi Investment Group, agency shop and Building Trust.

Agency shop agreements allow employers to deduct agreed agency fees from the wages of identified employees who are not union members, but are eligible for membership and benefit from a union’s bargaining efforts.

Molefe has also demanded an explanation for Fawu’s decision to suspend Masemola over the writing off of R19.2m in Basebenzi Investment Group, as reported by Independent Media earlier this month.

Fawu has until the end of June to respond to Molefe.

Masemola, also executive chairperson of the Basebenzi Investment Group, did not responded to requests for comment yesterday.

Meanwhile, Fawu president Atwell Nazo has told union structures to ignore Masemola’s instruction that they continue to co-operate with him because he decided to defy his purported and unlawful suspension.

“This serves to instruct all staff to ignore his instruction and refrain from listening to or entertaining any communication from Masemola, because he is still suspended,” reads Nazo’s letter to Fawu employees and leaders.

Political Bureau

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