Ann Crotty
22 August 2008
Trade unions should have the right to trigger a liquidity and insolvency test, which could lead to a business rescue or liquidation, when a company failed to pay employment-related statutory or contractual deductions such as medical aid, retirement, income tax or unemployment insurance fund contributions, South African trade union federation Cosatu said this week.
In its submission to the portfolio committee of the trade and industry department's hearings on the Companies Bill, Cosatu called for unions to be allowed to appoint a supervisor to represent workers' interest in the event of a business rescue or liquidation process, "or that a joint supervisor be appointed in consultation with trade unions".
The federation said it was unacceptable that large retail companies such as Edcon and Pepkor, which are unlisted but employed tens of thousands of workers, were not required to publish audited financial statements or disclose directors' remuneration.
Cosatu cautioned that there was a tendency to overemphasise the role of auditing firms as a mechanism to promote good corporate governance, which resulted in "insufficient pre-emptive measures being put into place to counter the very real possibility of their so-called independence being compromised".
Prakashnee Govender, the parliamentary office co-ordinator, said that it had become established practice for many failing companies to fraudulently withhold relevant contractual and statutory contributions as a mechanism to increase their cash flow.
The trade union federation's submission called for the bill to provide trade unions with the right to inspect company records, "especially when engaging with a business rescue process".
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