Issue: April/June 2010
Editorials

TRADE UNIONS 1

Captains courageous

What’s happened in the Ppwawu national provident fund is a shining example of member-elected trustees asserting their independence in the face of full-on pressures for extraneous intervention. Their behaviour is an inspiration.

One would have thought, or liked to have thought, that the High Court victory by the board of the Paper, Printing, Wood & Allied Workers’ Union (Ppwawu) national provident fund would have ended the matter; that attempts to get at the fund’s trustees by the Cosatu-affiliated Chemical, Energy, Paper, Printing, Wood & Allied Workers’ Union (Ceppwawu), of which the trustees were members, would be over; that there was acceptance of the trustees’ right and responsibility to exercise their independent discretion, in the fund’s best interest, irrespective of the union’s attempt for the trustees to do its bidding.

But the matter isn’t over; not by a long shot in the simmering acrimony over the union’s frustrated attempt to control the fund. For it’s part of a broader issue, of unions being unable to control pension funds, that sits uncomfortably amongst many prominent unionists. They’re reluctant to relinquish their claim to custodianship of members’ money, whether in union coffers or pension funds being pretty much one and the same.

That’s perhaps why, although more than two years have elapsed since Acting Justice Freund declared unlawful a Ceppwawu resolution that shop-steward trustees “be accountable to” and “take mandates from” union members who’d elected them (TT Sept-Oct ’07), the conflict continues to resonate. Is it perilous to defy union leadership?

Not only have there been twists and turns along the way but Phineas Masombuka, a Ceppwawu regional secretary who’d supplied the Ppwawu fund’s board with advice for its legal action, was fired from his union position. More than this, the union’s behaviour subsequent to the judgment appears to indicate an attitude that the principle of non-interference in fund affairs was not to be taken lying down.

The first step, prior to the judgment, was for Masombuka and the four shop-steward trustees to be expelled as union members for not having followed the union resolution. Unless they were union members, they couldn’t be shop stewards. So they lost their jobs.

Tshalalala and Masombuka

Tshalalala and Masombuka...no regrets

Then, straight after the judgment which declared the union resolution to be unlawful (from which it should have followed automatically that their expulsions from the union were unlawful), they applied to Ceppwawu for reinstatement. No, said the union. Their applications were premature, it contended, because the union was taking the judgment on appeal (later abandoned).

Masombuka, not a trustee of the fund but an employee of the union, attempted through arbitration in the CCMA to get back his union job. He was unsuccessful. Lacking the money for a court action, he didn’t appeal. Of the trustees, only one has since had his union membership reinstated.

Next, the union embarked on campaigns which looked suspiciously like attempts to discredit the trustees. It started with a memo from the Ceppwawu head office, asking that the regions circulate it to the plants for fund members to call for removal of the trustees.

“The memo was barely supported,” recalls Ppwawu fund principal officer Albert Tshabalala. “Members disagreed with the circular. They said that they had confidence in the trustees and considered that the board was doing a good job.”

Once that campaign had failed, Ceppwawu president Pasco Dyani – purporting to act in his capacity as a fund member – brought an application under s26 of the Pensions Funds Act by which the Registrar may intervene in a fund’s management. Submitted to the Financial Services Board, he asked the Registrar to dissolve the board of trustees and appoint a curator to run the fund.

He wanted the curator and Registrar then to investigate various charges he levelled against the fund. These related to alleged financial irregularities. He also claimed that the board was illegitimate because fund members had not properly elected it.

The FSB investigation was thorough, according to Tshabalala. It asked the board to respond, which it did. Then the FSB requested further information and documentation all the way back to 2000: minutes of meetings, including meetings of regional advisory committees, as well as financial records and bank statements.

With this information in hand, the FSB arranged a meeting with the board. But shortly before due date, says Tshabalala, the FSB called off the meeting as unnecessary. It was satisfied that the board had complied with the fund rules and the Act, and that the fund was properly managed. A written confirmation to this effect was sent by the FSB to the board.

After this defeat, the union elected new office bearers. They invited various fund trustees and Tshabalala, as principal officer, to discuss the fund’s relationship with the union. No, said Tshabalala. The union had to invite the whole board because he didn’t have a mandate to discuss fund issues with the union.

Instead, Tshabalala invited the union leadership to attend a fund board meeting. They got together in December 2008. Both parties raised concerns about their relationship and planned further meetings for the following year. None materialised.

Last year a fresh Ceppwawu campaign was launched, Tshabalana notes, encouraging members and participating employers to transfer out of the Ppwawu fund into the Chemical Industrial National Provident Fund. Still, he says, “members are refusing to transfer”.

Tshabalala remains the fund’s principal officer and Masombuka now sits as an independent trustee. Do they have regrets about the stand they’ve taken? “None at all,” they insist in unison. “It’s a matter of principle.”

They proudly point out that, when they went to court in 2007, they received petitions from members in all regions supporting their decision to defend the fund. More recently, late last year, members reaffirmed that their decision was correct. “That our fund members are now free to make choices and trustees are free to operate without reprisal from any quarter,” says Masombuka, “is a big relief.”

CAUSES OF CONFLICT

Two issues brought the dispute between the Ppwawau fund’s board and the Ceppwawu union leadership to a head:

  • The board fired the fund’s incumbent administrator and appointed another that the union leadership didn’t want;
  • The board amended the rules of the fund to be in line with Pension Funds Act so that fund members can elect the trustees. This undermined the union rule that, to be eligible for election as a trustee, the person had to be a shop steward. An effect of the rules amendment was that the union could no longer discipline trustees, in their capacity as shop stewards, for not taking union instructions.
 
SIDES OF THE COIN

Where members of a pension fund are members of the same union, why would that union want to control the fund? There are two arguments, the one contradicting the other.

The first, noble and arguable, is that the fund is an extension of the union. It’s set up by the union, for the benefit of union members, and run by trustees accountable to the union whose members elected them. That, at any rate, was the theory before the High Court judgment killed it.

The other, cynical and indefensible, is less savoury. It’s to do with a power-play over assets control, opening the way to practices that might not readily lend themselves to scrutiny in the interests of the fund and its members.