The SA Municipal Workers Union is broke.
It has been looted of R176m since 2012, according to an audit report. In September it had only R538 in the bank, and it may be placed under state administration.
In its shocking audit investigation, Ernst & Young revealed that the rot started in 2012.
The report was completed and handed to the union in September. The auditors found that the union’s seven accounts and one reserve account took a nosedive from R176m in 2012 to R8m in 2015.
The union's top brass was locked in a two-day meeting in Johannesburg on Monday to discuss the report, and the notice issued last month by the labour department stating its intention to put the union under administration.
Department spokesperson Teboho Thejane had not replied to questions at the time of writing.
Samwu has about 160,000 members. The Dispatch understands that workers pay subscriptions capped at R55 per month, indicating a monthly income of at least R8.8m for the union.
The 91-page financial report requested by the union to investigate allegations of misappropriation of funds and other irregularities paints a grim picture of how corruption unfolded at the union’s highest level.
Internal ructions saw the union’s numbers drop to 18,800 in the Eastern Cape in 2016.
The Dispatch reliably learned one of the issues to be discussed at the two-day meeting is the reinstatement of axed Eastern Cape secretary Milton Myolwa. He told the Dispatch on Monday that it came as no surprise that the union was insolvent as post-2012 machinations in the union pointed to the intention of leaders to loot the union’s funds. Myolwa said he was axed after opposing the suspension of the union’s constitution, which was allegedly followed by the corruption.
The report notes that some former union leaders – including ex-president Pule Molalenyane and consultants of the union implicated in wrongdoing – refused to be interviewed by investigators.
Investigators said they had not received supporting documents pertaining to six payments totalling R7m to Samwu’s T-shirt suppliers.
“In 2012 Samwu’s operational accounts, call accounts and reserve account balances had a combined balance of approximately R176m.
“However, at the time of our debriefing on November 3 2015, the operating accounts had an aggregate balance of approximately R538 and the reserve account a combined balance of R8m only,” the report reads. It adds that there were missing bank statements for the financial year ending December 2012 and December 2013.
Samwu Eastern Cape is among the union’s top 20 listed beneficiaries in the data seen by the Dispatch. The provincial union received R10.5m from January 6 2012 to October 30 2015. Provincial leaders could not be reached at the time of writing.
One Gauteng businessman, the report said, was paid R9m in a complicated deal which involved recording the payments as legal fees and as payments to vendors, when in fact the vendors were not paid.
“The payments were not made to the genuine vendors’ bank accounts but rather to [the businessman’s] account,” the report says. The Dispatch has withheld the name of the businessman as he could not be reached for comment.
The report concludes that the union approached the police with the report, deeming it evidence of money laundering by the businessman.
The report also recommends that the union obtain legal advice as to whether they should institute civil action against those implicated in looting the union.
Samwu spokesperson Papikie Mohale said he would respond in detail to questions after the second day of the meeting on Tuesday.
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