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NEASA Requests DOL To Inquire Into The Affairs Of The MEIBC

Jul 27, 2016






The following is the content of a request sent by NEASA to the Registrar of Labour Relations regarding the current unsustainable situation within the Metal and Engineering Industries Bargaining Council (MEIBC).


The Registrar of Labour Relations

Department of Labour


Dear Sir




Over the past few years, the MEIBC experienced a severe downturn in its ability to meet its financial obligations. Many factors contributed to this situation, but financial mismanagement may well be the most prominent.


It has become clear that the MEIBC, for a while now, no longer has the ability to cover its expenses. This is evident from the fact that the MEIBC suffered a deficit of R23 000 000 for the financial period ending 28 February 2015 and a further R14 000 000 for the period ending 28 February 2016.


Upon investigation into the affairs of the MEIBC, a number of discrepancies have become apparent:


The balance sheet of the MEIBC as at 29 February 2016, shows total liabilities of R49 000 000. However, the total cash held by the MEIBC at that date only amounts to R41 200 000. By implication, this would mean that the MEIBC utilised R7 800 000 of trust money, which belongs to the Industry. It therefore indicates that the MEIBC is factually insolvent, as its liabilities exceed its assets.


The MEIBC is unable to meet its liabilities as they arise. This is evident from a reply by the General Secretary dated 11 July 2016, in respect of a claim to pay monies due to NEASA and other parties. This money has in fact been used by the MEIBC. This contention is further supported by a letter received from the financial manager, wherein he, on a number of occasions, admitted that the MEIBC is insolvent. Furthermore, he also provided a list of creditors which the MEIBC had not been able to pay.


This inability to pay creditors led to the recent suspension of the dispute resolution function of the MEIBC for a period. This inability by the MEIBC to pay its debts as they arise is indicative of the fact that the MEIBC is also commercially insolvent and can no longer be viewed as a going concern.


The MEIBC has been cross-subsidising its funds for years. This has been admitted by the financial manager. In terms of the Registration and Administration Expenses Agreement of the MEIBC, employers and employees contribute specified amounts toward the administration costs of the MEIBC and a separate amount for purposes of the dispute resolution service. These contributions are earmarked for those specific purposes, and the MEIBC is not permitted to use these contributions for purposes other than those specified in the Agreement. Any surplus in any fund may only be invested as envisaged in section 53(5) of the Labour Relations Act. It would appear that the MEIBC cross-subsidised to such an extent that the dispute resolution function of the MEIBC was suspended.


In respect of the Collective Bargaining Levies unlawfully collected post expiry of the CBL Agreement in December 2012, the MEIBC has a liability of approximately R43 800 000 as at end February 2016. The MEIBC has been very reluctant to repay these monies and unlawfully utilised the interest on these monies. The continuing collection of Collective Bargaining Levies are increasing the liability of the MEIBC by approximately R420 000 every month.


It seems as though the MEIBC paid performance bonuses to certain employees in 2015; that was after staff were informed that no money was available for the payment of bonuses.


We are in possession of a letter addressed to NEASA, apparently sent by MEIBC employees, wherein a number of very serious concerns regarding the financials and management of the MEIBC are raised.


The 2017 budget, with the proposed 18% increase in both admin- and dispute levies, was recently presented to the management committee of the MEIBC as a break-even budget and subsequently rejected by all employer bodies to the MEIBC. The reason for the employers’ rejection of this budget was that, on a closer analysis, this budget seemed to be somewhat disingenuous. The budget presented indicated that on the dispute levy side, without an increase, a surplus of R3 995 000 was envisaged. With the proposed 18% increase on the dispute levy, this surplus would have increased to R6 386 000. This, viewed in isolation, would negate any necessity to increase the Dispute Resolution Levy.


The Administration Levy, however, revealed a different situation altogether. In terms of this item, a deficit of R13 503 000 was predicted if no increase is introduced. This deficit decreases to R8 540 000 if the proposed increase was introduced. The budget is then seemingly balanced to break even by utilising the R6 300 000 surplus on the Dispute Levy and approximately R2 500 000 of interest earned on trust money, which belongs to the Industry.


Under these circumstances, the MEIBC, with its current declining income levels and mismanagement of funds, is incapable of meeting its current and future obligations.


NEASA cannot support an institution which trades from a factually and commercially insolvent position as this constitutes reckless trading.


We therefore request that the Registrar of Labour Relations, on an urgent basis, probe the affairs of the MEIBC in terms of section 54 of the Labour Relations Act, and takes all necessary action to resolve this unsustainable situation.



Gerhard Papenfus


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