Issue: September/November 09


Long walk to nowhere

Cosatu should be doing what it expects of others, not least in the arena of retirement funds. Greater engagement and transparency would be a good start.

Manuel...cowards fear to tread

Manuel...cowards fear to tread

National Planning Minister Trevor Manuel has accused “big business” of being cowards for not standing up to the unions. At risk of being identified with big business – a horrible smear, if ever there was – here goes an attempt at non-cowardly exception.

It’s prompted not only by Manuel’s provocation and but also by the last straw in behaviour, on the part of a senior Cosatu representative, that should no longer be met with typically limp-wristed tolerance by big businesses too poep-scared to articulate in public what they confide in private. This is particularly in reference to Jan Mahlangu, national policy coordinator for retirement funds at Cosatu.

Rarely does Mahlangu pitch up at conferences where he’s billed as a speaker. It happened again, yet again, at the Institute of Retirement Funds’ annual conference in July. Mahlangu had accepted the IRF’s invitation, inclusive of travel and accommodation expenses. At literally the last minute, he sent an sms saying he couldn’t make it.

Of course, he might well have had good reason.

More urgent matters might well have arisen; more important than entering a public debate on the explosive topic of union intervention in the governance of retirement funds. It didn’t help that the substitute nominated by Mahlangu said that he knew too little about the subject to speak, so didn’t.

Now, the IRF isn’t exactly a collection of lightweights. One way or another, all the major financial institutions are represented. Its yearly bunfight draws hundreds of industry participants, service providers and trustees. Each pay, or have their funds pay, a few thousand rand to attend. Neither did it help that the scheduled debate, with attorney Rosemary Hunter who’d been scathing about union intervention and won a landmark court victory for fund trustees against their union (TT Sept-Oct ‘07), was perhaps the highest point on the agenda.

Be that as it may, the broader issue is whether Cosatu acts contemptuously of the transparency, accountability and communication standards that the union federation demands from the business sector. It’s one thing to duck out of an isolated forum; another to exhibit a disconnect from at least some of its union affiliates, which appear left in the dark, and from other stakeholders, which means society at large.

The disconnect is variously expressed. For instance, on a random sample, few member-elected trustees associated with certain larger affiliates are even aware of mechanisms for black people to qualify as members of retirement funds for inclusion in broad-based black economic empowerment (B-B BEE) transactions.

Cosatu wasn’t in the forefront of lobbying for the relevant amendment to the good-practice codes, if it lobbied for them at all, and so has left black fund members to subsidise rather than benefit from the spate of completed corporate transactions. The most it’s done is protest against the elitism that, paradoxically, use of the amendment could have helped mitigate or substantially avoid.

For another, Cosatu successfully argued for the amendment to the Pension Funds Act which provided for half of the trustees on funds’ boards to be elected by fund members. Promulgated in 1996, there’s since been poor traction in the sense that funds have generally been lame in asserting their ownership rights as JSE-listed companies’ beneficial shareholders. Rather than actively engage with companies in a shareholder capacity, they sit on their hands. The old-style adversity of “them against us” is preferred to the ownership participation of “us” in “them”.

More than this, far too many member-elected trustees are gaining for themselves unwholesome reputations as being in it for themselves. They aren’t shy to expect, and receive from service providers, all manner of largesse from football tickets to travel perks. Where is the benefit to members? Where is the encouragement for training? Where is the leadership of Cosatu?

It’s opposed to member-elected trustees being paid for their additional duties. It believes that trustees who’re unionists should assume the plethora of timeconsuming responsibilities as part of their day jobs, as part of a public-service obligation. But with what mandate has Cosatu turned its back on transparent, direct payment? Have the systemic consequences, in terms of fund governance and skills competence, been for better or worse?

Aspirant trustees, taking a look at circular PF 130 issued by Financial Services Board two years ago, might be overwhelmed by the good-governance standards it defines. In theory, they should be rushing to acquire the proficiencies essential for its implementation. In practice, they aren’t. Is Cosatu playing the inducement role that it should? Or do its constant complaints, that service providers offer training to push their products, create a wall of constraint?

No matter that the complaints are sometimes justified. Increasingly often, however, they aren’t. When service providers do go through the effort and expense of providing platforms, they’ve become more aware than ever of the need for the training to be – and to be seen -- as independent of them. When they don’t, it’s easy to identify and dismiss anything less. Instead, when incentives like flights to exotic locations are offered, trustees happily climb aboard.

In any event, who should offer the training if not service providers? Cosatu doesn’t. Neither does it endorse service providers’ programmes. Where affiliates do their own training, undertaken on occasion by the more conscientious amongst them, it’s of their own volition and not at the instigation of Cosatu’s head office.

Where service providers sponsor the food and drinks for seminars, they’re entitled to gain from the subliminal marketing because they’ve stepped up to the plate. Invariably it’s the industry of service providers that extends the resources. They don’t deserve to be maligned for it.

At the policy level, there’s little clarity on whether Cosatu accepts the letter and spirit of PF 130. Its fundamental principle is that the board of a retirement fund “shall at all times act with utmost good faith towards the fund and in the best interest of all members”. In other words, trustees must exercise independent discretion. This flies in the face of Cosatu’s contention that trustees, elected by union members, are beholden as union representatives to advance union interests before fund members’ interests.

Its oft-repeated stance that the monies belong to members, not to the funds whose task is to optimise members’ benefits, is similarly contradicted. Such waywardness is at the heart of Cosatu propagating reintroduction of prescribed asset requirements for pension funds’ investments.

“Big business” is painfully accused by Manuel of “running like hell” and “keeling over” when “anybody in the trade unions opens their mouths”. Conspicuous by their absence are such basic questions to Cosatu as the source of its authority to propound prescribed assets; or, for that matter, to oppose inflation targeting; or, similarly, to align with one political faction against another. you see him, now you don’t you see him, now you don’t

How, it might be asked, are mandates derived when the bulk of union members (like the public at large) have little notion of what prescribed assets or inflation targeting actually mean. Or to question the hegemony of a federation that cannot prevent its rank and file from trashing city streets, let alone from disrupting businesses in which their members’ retirement funds are invested.

One not privy to the inner workings of Cosatu might be forgiven the confusion over whether it’s a top-down or bottom-up organisation, with some sort of vacuum between. Either way, it’s not the same as the organisation that once prided itself on Cyril Ramaphosa, Jay Naidoo and Mbhazima Shilowa amongst leaders who provided leadership.

Difficult as it is to establish how Cosatu obtains authority from over a million members to speak on such specific issues of economic policy as prescribed assets and inflation targeting, amongst others, of equal frustration is monitoring the performance of its senior officials. Public disclosures required of parliamentarians, listed-company directors and retirement-fund trustees are apparently not required of them. Try to find where they declare their remuneration, interests and gifts; not to mention annual reports, accessible to stakeholders, on their respective activities.

Were it only otherwise, it could be better established whether Cosatu has the influence and credibility it purports. That’s for starters in taking up the Manuel challenge. Having launched its “Walking Through Open Doors” project, Cosatu is itself admitting to opportunities lost. As whisky drinkers have been advised: Keep walking.

Allan Greenblo,
Editorial Director