AMCU calls for more whistle-blowers to come forward in Samancor Chrome case
JOHANNESBURG (miningweekly.com) – The Association of Mineworkers and Construction Union (AMCU) on Wednesday called on more whistle-blowers to come forward and provide it with reliable information to further strengthen its legal case against miner Samancor Chrome.
The union, together with its partners, law firm Richard Spoor Inc and the Alternative Information and Development Centre (AIDC), have lodged a case of alleged fraud and profit shifting against the miner at the Gauteng High Court.
AMCU on Wednesday said that it expects Samancor to announce by next week how it intends to proceed.
AIDC economist Dr Dick Forslund explained that the court application had been lodged after a whistle-blower approached AMCU, and provided it with more than 1 000 documents, which was “very rare to see for a private company”.
AMCU president Joseph Mathunjwa said whistle-blowers with reliable information could potentially be rewarded with R100 000, depending on certain conditions.
The union alleges that there were “suspicious low returns” on the employee stock ownership plan at Samancor Chrome.
Following investigations, Mathunjwa told media that some of the alleged key figures that “stand out” include $125-million transferred to a bank account in London, in April 2007, owned by a British Virgin Island (BVI) company, to the benefit of three directors.
Additionally, the union alleged that sales commissions of about 9% were charged with “no meaningful service provided”, again to the benefit of the BVI company and three directors and allegedly later to new owners of Samancor Chrome in 2009 and then in 2013.
Forslund also noted that Samchrome, an entity controlled by Samancor Chrome's majority shareholders, had allegedly charged a fee to market Samancor's chrome but did not have any employees or even a phone bill.
According to the union’s attorney, Richard Spoor, of Richard Spoor Inc, this “is a novel application” seeking the court’s leave for AMCU to act in the public interest.
The union will also, during trial, ask for the appointment of new directors at Samancor Chrome and compensation for the affected employees, said Spoor.
Mathunjwa reiterated the union’s stance against profit shifting, which he said in some cases could be legal, but was “nonetheless detrimental to workers and to South Africa”.
According to the union’s leader, profit shifting is a way to avoid paying workers their fair share of profits and to avoid paying taxes to uplift host communities.
He also questioned the rationale behind the Competition Tribunal allowing details of the ownership of companies to be redacted. “Why shouldn't South Africans know who ultimately owns companies operating in South Africa?”
He added that profit shifting was popularly seen as a means of tax avoidance but highlighted that “it is perhaps more significant as a way of taking profits away from the wage bargaining table”.
According to the AIDC’s Dominic Brown, AMCU's litigation against Samancor directors is a “game changer”, but he lamented that this was “just the tip of the iceberg of illicit financial flows” and profit shifting in South Africa.
SAMANCHOR CHROME’S RESPONSE
Meanwhile, in a separate statement on Wednesday, Samancor Chrome confirmed that it was aware of the allegations made by AMCU pertaining to historical transactions, despite the application “not having been served on Samancor”.
In this respect, Samancor Chrome said the company, its board and its recognised unions decided to commission an independent investigation into AMCU’s allegations, of which most date back more than ten years.
AMCU is not a recognised union with Samancor Chrome.
Additionally, Samancor Chrome said it had taken legal advice on AMCU’s allegations, stating that “the matter will be dealt with through the appropriate forum at a suitable time and court processes will be followed”.
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