South Africa

Conflict of Interest, Inc: Mining unions’ leaders were representing their members while in corporations’ pay

By Greg Marinovich 24 April 2013

A Daily Maverick investigation has revealed a furtive conflict of interest, with mining houses footing the bill for top National Union of Mineworkers office bearers’ salaries. The hard-to-believe arrangement started in the late eighties as the means of protecting union leaders from the corporations, but it was retained over the years, creating a severe of conflict of interest. Unionists are being paid high salaries by the very people from whom they are supposed to protect their members. The 'arrangement' is just about to end, in spite of union leaders' unhappiness and an unpredictable labour and political backlash. By GREG MARINOVICH.

These revelations cast doubt on the integrity of previous negotiations, something workers seemed to have picked up on. Even as the NUM reels from a dramatic drop in membership following the Marikana massacre, the miners’ union faces a further embarrassing problem from an unexpected quarter. The mining houses having decided to terminate this “very uncomfortable arrangement”, and are planning to meet with NUM about it within two weeks.

The unions have yet to be officially notified, but Daily Maverick has learnt that the top officials have been alerted to the termination of this agreement by the mining houses that pay their salaries, “as a matter of courtesy”.

After decades of following this underhanded practice, the mining houses that make up the Chamber of Mines have decided to cease paying the salaries of prominent unionists, including the NUM president Senzeni Zokwana (paid by Anglo Gold Ashanti), deputy president Piet Mathosa (paid by the BHP Billiton), as well as one or two elected office bearers of both Solidarity and UASA. (Apart from being NUM president, Zokwana is the chairman of the SACP and the ANC NEC member.)

The chief executive of the Chamber of Mines, Bheki Sibiya, told the Daily Maverick: “Yes, indeed I want to confirm that the practice has continued for a while. It was initiated at the behest of NUM who felt we had to help them with capacity building. These were our employees.”

NUM’s Zokwana said that the DM’s call was the first he had heard of the arrangement being terminated, adding that “those agreements are ended by union and companies; it will have to be debated – if Anglo (Gold Ashanti) wish to do that, that will have to be negotiated. It will not be between Anglo (Gold Ashanti) and myself – it will be between AngloGold and the union.”

The chamber’s members felt that, in the interests of good governance and transparency, the “very uncomfortable” situation should be terminated. Apparently there will be a meeting between the affected parties within the next fortnight.

Archie Palane, a former NUM official who rose to prominence during his work on the platinum belt (not elected, and thus paid from union subscriptions) says that the practice had its genesis in 1987. “The full-time position was negotiated and agreed upon as an outcome of the 1987 strike where James Motlatsi was fired by Anglo (American).”

The NUM began to look at its options, and wondered if any of its active and militant leaders would survive within the industry. Palane says that, back then, there was a strategy of either firing effective unionists or of hiring them into a managerial role. “Then once there, they lose touch with the workers. That is why you would find union leaders would be moved into management and then management would find a way of getting rid of them because management don’t forget what you cost them, what chaos you caused them.”

Palane concludes, “So it was an NEC decision. We were not going to allow the leadership of the union to be intimidated and victimised by management… for being militant.”

Over time, this position was extended to national, regional and branch leaders.

Despite the pitfalls of conflicted interests, NUM pushed the mines to pay unionists’ salaries. At the lower end, full-time shaft or shop stewards received a few thousand rands extra per month to bring them to a Patterson C level pay grade – roughly R12,000 to R14,000 a month. In addition they received a company petrol card, company cell phone and a company vehicle. Then there were the other perks – bosberaads or company get-togethers, international excursions, etc. Obviously, these unionists did not do another underground shift; they were freed from the arduous labour and conditions that had encouraged them to join the union in the first place.

The arrangement with the mines that were their original employers was that should shop stewards not be re-elected, they would return to their old jobs. This was not something anyone wished to do. Palane explains how he watched union values be eroded: “You are a full-time shop steward and you have a lifestyle change, you start driving a car. The danger was when people began to see material gains, the shop stewards lost touch with the rank and file.” Palane explains that they would do anything to resist losing those positions. “It was,” Palane explains, “now more a cabal.”

The human resources folk at the mines understood this, and encouraged the union representatives to do further training so that they could find a job at the mine on a grade that allowed them to retain their elevated salaries.

While these privileges provoked some jealousies among miners, most accepted it was in their favour to have full-time shop stewards. But the element of such striving for personal gain rather than a concern with the needs of the union members led to deadly competition. Many of the deaths related to strikes in the platinum belt were as a direct result of different factions vying for the full-time shop steward positions.

The perceived lack of proper service delivered to the unions’ workers because of the split loyalties of their union representatives, was part of the mix of gripes that led to the non-union wildcat strikes at in the platinum belt in recent times, including Lonmin’s Marikana.

In fact, the chief negotiator for NUM during the Marikana strike at Lonmin that resulted in 45 deaths was Erick Gcilitshana. Gcilitshana is the NUM’s health and safety national secretary – a full-time position. His salary is one of those that is also said to be paid for by the mining house he was elected from – Lonmin. The mine workers stated clearly what they thought about that in their rejection of NUM – Lonmin now has a massive AMCU majority.

Zokwana defended the secondment practice: “I don’t think there is a conflict. The conflict would arise as soon as it overrides the organisation issues. The agreement is to ensure leaders are available at 24 hours to be available. The moment you are released on secondment you do not report to the employer but you report to the union, you are not under the control of the employer…

There is nothing wrong; what is wrong is when the seconded individual forgets the instance of his secondment. That judgement call is made by the members (at the three-yearly elections) when they decide if you are serving the interest of business or their interests.

The question is, is this person still relevant to lead us or not?”

The striking Lonmin miners were adamant that they did not want NUM to represent them, and on the day before the massacre, they refused to allow NUM president Zokwana to address them. They were clear that they saw a serious conflict of interest in the dominant union’s arrangement with the mines. Zokwana’s salary is paid for by AngloGold Ashanti, that of his deputy Piet Mathosa by BHP Billiton.

Both union and mining insiders have said that NUM president Zokwana’s salary was similar to that of the general secretary.

The position of general secretary of NUM is one that is actually paid for from the union’s own coffers, and the Mail & Guardian previously reported that to be R1.4 million per annum, including perks. In the storm after that sum was leaked last year, Baleni stated that his deputy earned just R1,000 less a month than him. The M&G also reported that Baleni earns an additional R400,000 a year for being on the board of the Development Bank of South Africa.

The mining industry kept the arrangement quiet, the salaries going off their books every month. The top unionists benefitting from the deal also kept their mouths shut.

One mining industry insider said “the arrangement was embarrassing for all of us.”

The sweetheart deal with NUM could not remain under wraps forever, especially as Joseph Mathunjwa, the founder of NUM’s main rival union, AMCU, had once been an elected NUM representative.

The Chamber’s Sibiya related that “at some stage Matunjwa became aware of the practice and requested it apply to him. It was applied to him. And then UASA requested it and it was applied to them.” Sibiya subsequently confirmed that Solidarity is also part of the arrangement. It would seem that there were only two from AMCU on ‘secondment’ –president Mathunjwa and deputy president Jimmy Gama, but both were terminated by BHP Billiton in September or October 2012, since AMCU no longer had enough members at the company to reach the required percentage.

Mathunjwa has a different version of events. He says the deal was proposed by BHP, and was a settlement for a complicated dismissal procedure that had to be reversed. BHP, he says, “said they would extend the same deal to me as they had with NUM.”

The salary was a Patterson D lower, which is essentially a supervisor’s salary, that Mathunjwa says gave him about R25,000 a month as a basic salary. The perks and expenses incurred in travelling to meetings called by management were often not paid, he said in an interview.

Mathunjwa claims the NUM deputy president who was also at BHP, Piet Mathosa, was paid a much higher grade – E – that is equivalent to a general manager’s salary. “Not all animals are equal,” he quipped, alluding to the George Orwell classic, Animal Farm.

Solidarity and UASA only have one or two officials each benefitting from the deal, the Chamber of Mines said.

Last year, in radio debate during the Marikana strike, a NUM representative had quite cynically accused Mathunjwa of being paid by the Chamber of Mines, which the Chamber of Mines denied, not knowing that one of their members was in fact paying the AMCU president’s salary. The accusation was made even though NUM was well aware of just how many of its elected officials were on mining house secondment salaries.

In 2011, the Chamber of Mines, perhaps invigorated by a new breed of chief executive among the mining houses, began a process of, as Sibiya puts it, “putting South Africa first and dealing with the legacy of the past. And we saw this as one of a broad range of legacies.” Among these was the practice of the mines keeping union officials on their books and paying them vast salaries, when once those unionists had laboured underground for a few thousand rands.

Sibiya told Daily Maverick:

We were worried about perceived conflict of interest, that it may potentially be problematic, and we started the process of termination.”

Sibiya related that “when top NUM officials were told that the practice was to be terminated, they said, ‘Do you know what the financial implications [for] us will be?’ We said yes.”

A mining insider familiar with the arrangement confided: “NUM is going to be pissed off with us, because this is a historic thing; they won’t be happy. (But) it can’t be business as usual – things have changed with this Marikana thing.”

He further added that the NUM national office was said to employ about 300 people, and for the union to have to carry such a burden alone would prove difficult. The mining houses also pay the regional and branch NUM unionists. These were not insignificant amounts of money in a constrained economic period. Other sources put the number of NUM head office people on secondment at far less – some 40 people, a number that many within the mining industry still find appallingly high.

There was obviously a perception that this might curry favour with the union-elected officials, all of which, in turn, might work in the corporations’ favour. While two mining insiders denied this, mineworkers on the ground have a different opinion. During the Marikana strike, and its aftermath, mineworkers who were NUM members referred to their then-union as the National Union of Management.

The former NUM office bearer, Archie Palane, said that the practice was so controversial that the iconic British trade unionist Arthur Scargill scathingly attacked the South African miners’ representatives for accepting such a potentially compromising deal. Scargill’s criticisms were ignored.

Palane said NUM decided that their president’s salary should be at more than or at the same level as that of their secretary general. “It was seen that we cannot top up the president’s or deputy president’s salaries by subscriptions, it should be negotiated (with the mines).” Palane laughed when he related that “[i]f you go in there and the employer shivers; he gives more…”

The mining forum insists that they never gained an advantageous effect from the deal.

The individual mines have been tasked with informing their employees who are full time unionists that the arrangement is to be terminated. Those affected by the termination of the arrangement will be at national, regional and branch level. The shop stewards at the mines who are on the arrangement will be unaffected, and will continue to get the increased salary and perks as they are considered vital to the smooth running of the mines.

In a recent rally in Rustenburg, NUM acknowledged that they had lost 34,000 members to AMCU. A mining analyst who follows these events closely says the figure is closer to 80,000. If true, this pushes NUM from being the most powerful union within COSATU to the number four position, altering the balance of power within the federation.

Since NUM president Senzeni Zokwana is also a member of the ANC NEC, as well as the chairman of the SACP, there is likely to be massive political fallout from these revelations, as it exposes the most severe conflict of interest cloaked under the rhetoric of union militancy.

As the mining industry braces for the wage negotiation season this winter, it remains unclear what effect this massive change in the rules of the game will have on workers and the mines. It is also unclear if the NUM leadership will try to rally their members to protect their salaries. DM


AngloGold Ashanti’s spokesperson Alan Fine pointed out that while NUM president Senzeni Zokwana was indeed on their payroll, and that they had carried his entire salary until 2006, a decision was taken for all the companies within the Chamber of Mines to share the costs, on a pro rata basis, of both the president and the deputy president of NUM, as those positions served all members. The regional and branch executives are paid directly by the mines who originally employed them.

Photo: Underground at E & F shaft at Impala Platunum mine, near Rustenburg, April 2008. The Bafokeng nation – said to be the richest tribe on earth –  gets most of its royalties from platiunum, and they have diversified into other investments under the guidance of their king. Photo Greg Marinovich. (Greg Marinovich).


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