Chris Makhaye

The National Union of Metalworkers of South Africa (NUMSA) raised eyebrows during its 9th congress last week by saying it had rescued its investment division, which appeared to have been stolen by its founding executives.

The NUMSA Investment Company (NIC) travails came to expose the dangers faced by South Africa’s trade unions in venturing into business. In addition to posing existential contradictions, trade union investment ventures have tended to disproportionately benefit a few individuals, compared to the primary ambition of advancing the interests of workers.

NUMSA said the NIC was on the brink of collapse and liquidation. It was being sued by a number of banks and lending companies for a breach of payment on loans that the company had guaranteed would be paid.

The NIC faced legal action on allegations of misappropriated dividends by African Harvest Strategic Investment for R45m, Nedbank (R40m), First National Bank (R5m) PSG for R3m and the PIC for R86m.

This gloomy outlook in 2008 spelt danger to the company that carries the investment of thousands of metalworkers who grind under difficult conditions to make ends meet.

Now all of that has changed and, according to the latest reports, the company is on sound financial footing and is making inroads in the tough financial sector, medical and legal aid brokering and long and short term insurance.

The company now owns or has large chunks of competitive entities like Doves Funerals and Insurance, Union Life Insurance, Independent Crematorium, Brevity Management Serviceus, Unlimited InternetPlay, Polyflora, Anchor Alliance and NUMSA Financial Services.

All these achievements have been gained under the leadership of NIC group CEO Khandani Msibi, who took over the company in December 2008.

Before his ascendancy, the company was led Tony Kgobe and his deputy John Tarpey. The two have since been accused by NUMSA of maladministration, corruption, fraud and abuse of authority to benefit themselves.

They were accused of using the NIC to secure personal loans, thus making the union investment arm liable for millions of rands in unpaid loans. The union alleges that the pair tried stripping the assets of NIC by reverse, listing them onto the JSE listed company Decillion, leaving NIC with huge debts.

The NIC management, with the full support of NUMSA’s board of directors, placed a case with the National Prosecuting Authority to charge Kgobe and Tarpey for fraud and corruption, covering union assets worth more than R150m.

Msibi said the NIC had appointed a forensic firm which had found a host of maladministration irregularities under Kgobe and Tarpey and they had handed these to the NPA to take action.

“It has been four years now and the NPA has been sending us from pillar to post about this case,” he said.

Upon taking over the helm, Msibi said management’s first port of call was to reverse the attempt to steal the assets through Decillion and turn the business around. He said the attempt was made behind the back of the NUMSA board.

“It has been a long, grinding road but I am proud to say we have turned around the corner. From where we stand, things are looking good,” Msibi said.

“We also put an end to a number of bad cooperate governance practices and implemented measures that put the company on the road to recovery.”

He said the company has secured six licences in the financial sector and is making significant inroads in various spheres of investment.