SAMA faces winding-up application over R370m dispute with its union

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The SA Medical Association may be liquidated following an ongoing dispute with its trade union the SA Medical Association Trade Union, if a court application by the the union administrator is granted, reports Eyewitness News.

According to a recently filed court application by the union’s administrator Gerhard Vosloo, he wants SAMA to wind up as it allegedly owes the union R370m in membership fees.

He said that the association failed to pay that money despite several demands, and therefore it should be considered insolvent.

SAMA, meanwhile, argued that the monthly membership fees it received belonged to it as a professional body for doctors.

Eyewitness News reports that the Labour Registrar placed the union under administration in October last year following several contraventions of the Labour Relations Act.

This led to a legal battle between SAMA, a non-profit professional association, and the trade union administrator. The union represents about 7,500 public sector doctors.

In another report, Eyewitness News writes that Labour Registrar Lehlohonolo Molefe wrote in an affidavit there was sufficient evidence that SAMA had been operating and benefiting financially from its registration of Samatu.

Molefe, who applied to the court to have the union placed under administration late last year, states in his affidavit that SAMA had over the years acquired assets, received funds from National Treasury for membership fees and shop fees from the Public Service Coordinating Bargaining Council – in the name of the trade union – but the money was used for the association’s benefit. Some of the assets acquired by SAMA throughout the years include more than five profit-making subsidiaries.

The trade union’s administrator Gerhard Vosloo states in his application for SAMA to be wound up that the directors of the association have since the registration of the trade union “unconscionably abused the corporate personality of the trade union by using it to unlawfully divert and misappropriate funds – which by law only the trade union was entitled to.”

Given the many court challenges SAMA has launched to stop the administrator from accessing records relating to the union’s affairs, Vosloo concludes that the barrage of litigation is meant to avoid its legal obligations towards the trade union.

He cites a recent letter written by SAMA directors to the Labour Registrar requesting that the trade union’s name be changed back to its former name – the Medical Association of South Africa – which was changed to Samatu 18 years ago, as a scheme to continue operating as a trade union amidst the administration process.

SAMA argued that the employed doctors’ R453 monthly contributions were not union fees but rather membership fees to the association.

A statement from Cosatu on 22 September reads:
The South African Medical Association Trade Union (Samatu) calls for the administrator to leave no stone unturned to find the workers money that was misappropriated by the South African Medical Association (SAMA). The South African Medical Association Trade Union is the largest union representing doctors in South Africa, providing labour related services to doctors employed in both the private and public health sectors.

Since the registration of Samatu in 1996, the affairs of the Trade Union had been mismanaged by SAMA NPC (non-profit company), which is a voluntary professional medical association with their own membership. By their own admission they estimated the total combined membership at 16,000 of which Samatu represents 55%. However, SAMA NPC still denies the existence of Samatu and continues to feed misleading information to the membership while it was benefiting financially from the income stream of public service doctors.

During the period 1996-2020 SAMA NPC managed Samatu as a “division” without complying with the Labour Relations Act 66 of 1995 as prescribed. Only registered Trade Unions may exercise organisational rights as per Sections 11 to 15 of the LRA 66 OF 1995 and have access to Persal subscription deductions including contributions from the Public Service Coordinating Bargaining Council (PSCBC).

Sama NPC unlawfully accessed the Persal system since 1996 presenting themselves as a complying trade union. It is obvious that the benefits were greater than the transparency.

The LRA is very clear regarding the management and the affairs of trade unions. As a result of regulatory concerns regarding the independence and non-compliance of Samatu whilst being mismanaged by SAMA NPC, Samatu was placed under administration in October 2019. This was done to ensure that it complies with all the statutory and constitutional requirements as prescribed in the LRA.

This was a corrective and progressive decision agreed to by both Sama NPC and Samatu to secure the interests of employed doctors and establish the legally required independence of the trade union.

On the 27th of February 2020, the Labour Court considered qualified administrators to manage the affairs of Samatu. Gerhard Vosloo was appointed as the administrator of Samatu and given the responsibility to execute the judicial mandate as reflected in the “Terms of Reference” annexed in the Labour Court judgment of the 10th of October 2019 as agreed to by SAMA NPC and Samatu.

After his appointment the administrator engaged with SAMA NPC on various occasions to find an amicable transition into independence of Samatu. SAMA NPC refused to cooperate, particularly when it was required to present its financial records for scrutiny by an independent forensic auditor whose appointment was as a result of the court order.

The Court judgments below will assist in explaining the matters that may be of concern and not ventilated before:
· 10th of October 2019 Labour Court application for Administration
· 27th of February 2020 Labour Court appointment of the Administrator.
· 18th of June 2020 Labour Court Judgment in favour of SAMATU. Read
· 25th of June 2020 Labour Court Judgment dismissing the appeal in favour of SAMATU (Awaiting SAMA NPC’s desperate petition for leave to appeal in the Labour Appeal Court)
· 17th of July 2020 High Court Judgment struck SAMA NPC application with scathing remarks by the Judge.

For the record it is worth noting that SAMA NPC has never kept separate bank accounts and financial records on behalf of Samatu as required by the LRA.

Herewith an analysis of the unlawful collections made by SAMA NPC for their own account on behalf of Samatu which is in the process of being recovered from Sama NPC.
· Public service subscriptions through Persal R291m (1997-2020) *
· SANDF subscriptions through Persal R4m (1999-2020) *
· PSCBC bargaining council contributions R12m (2005-2019) *
· National Health Laboratories South Africa (Under investigation)

*The above exclude accrued interest of approximately R300m for the periods (Prescribed interest calculated by the appointed actuary)

As result of SAMA NPC’s obstructive behaviour in not providing the administrator with the required information as instructed by the court orders, it became impossible for the administrator to execute his judicial mandate.

After exhausting all legal remedies, the administrator had no other option but to apply for the winding up of SAMA NPC.


Full Eyewitness News report on liquidation threat to SAMA Full Eyewitness News report on Labour Registrar’s affidavit regarding SAMA Issued by Cosatu

See also:

From MedicalBrief archives: Doctors’ union placed under administration

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