An Afrikaans teachers’ union is facing scrutiny over a potential conflict of interest in its relationships with providers and its reluctance to make its financial statements public. An audit also found some irregularities concerning the payment of bonuses.
Chris Klopper, the chief executive of the Suid-Afrikaanse Onderwysersunie (SAOU), or South African Teachers’ Union, successfully applied for an order from the Pretoria magistrates’ court in March 2018 to stop businessperson Michael Pashut from “harassing” him. Pashut then approached the North Gauteng High Court in Pretoria to overturn the order, which it did.
The dispute began almost two years ago, after Klopper terminated a sponsorship arrangement between the SAOU and Pashut’s vehicle supply business, Minibuses Wanted.
On 5 February 2018, Klopper sent a letter to all union members stating that Finsa, a car finance and loan company, was the only dealer with which the SAOU had a formal relationship. Finsa provides financing for SAOU members to rent or purchase vehicles used by schools. Klopper is one of its directors.
In his letter urging school principals to use Finsa, Klopper warned that if principals bought vehicles from other providers, they ran the risk of “disciplinary hearings and financial mismanagement” accusations as “dubious practices” had been found when schools bought from other companies. According to Klopper, these included discrepancies between the book value and the purchase price of vehicles.
“Some of the dealers entertain principals on expensive excursions, give expensive gifts and even pay certain expenses,” Klopper said in the letter. This may be unlawful if principals did not declare the incentives to school governing bodies.
After the letter was sent, Pashut began to investigate the relationship between the SAOU and Finsa. Finsa is a private company with shares owned by the South African Education Foundation (SAEF). The SAEF is a separate company that owns Finsa, another company and all SAOU offices and property. It is run by Klopper, who is paid a salary by the foundation. The Citizen newspaper reported earlier this year that Klopper earns R1.6 million a year from the SAOU and R1.9 million a year from the SAEF.
‘Unfit’ for the position
According to an SAOU member who did not wish to be named, just before the 1994 elections the then Transvaal Teachers’ Union set up the SAEF and transferred all its property to the foundation to protect it from the swart gevaar or “black peril” – the new ANC government. The Transvaal Teachers’ Union later become the SAOU.
According to the Tshwane magistrates’ court judgment, 300 pages of emails were exchanged between Pashut and Klopper. In one email, Pashut refers to Klopper as “irrational, immoral, greedy and arrogant and unfit to hold the position at SAOU”.
This led Klopper to accuse Pashut of breaching the Protection from Harassment Act. But in the judgment that overturned the ruling, Judge Lettie Molopa-Sethosa and Judge Frances Snyman said Klopper had withheld material facts from the magistrate who had granted the court order.
The judges pointed out that the court should have been informed that Klopper had been one of three directors of Finsa since 2004 and that the other two directors, Edward Fourie and Louis Swanepoel, are also SAOU managers.
When Pashut began investigating the link between the SAOU and Finsa, some SAOU members formed a group called Bekommerde Lede van die SAOU (Concerned Members of the SAOU), publicly backing Pashut’s investigation. A member of the forum, who did not want to be named citing fears of retaliation, said it wanted to be provided with the union’s bank statements as it suspected financial irregularities, specifically with regards to payments from the union to external providers.
Molopa-Sethosa and Snyman said Klopper should have disclosed to the magistrate that union members had asked Pashut to “address issues of good governance and transparency” with the SAOU. “The fact that Pashut questions the impartiality of Klopper and Swanepoel holding office in both the SAOU and Finsa is a material fact that should have been disclosed to the court,” the judges added.
Pashut said he was pleased with the judgment and would continue to back the concerned members in their quest to see the union’s bank statements.
“This started as a commercial dispute but it is now zero to do with any commercial aspect. Klopper withheld critical information about his interest in Finsa purposely to get an order to stop me making the union members aware of what Klopper was doing with their finances,” said Pashut. “The intent was not to stop harassment – as there was none – but rather to take out a gagging order against me.”
Klopper, SAOU president Louis Swanepoel and SAOU vice-president Eddie Fourie told Pashut before the dispute that “Finsa was of critical importance to the SAOU and that [Pashut’s] company offering schools better rates through alternative finance houses would not be tolerated”.
“I made it very clear that I could not support Finsa as their product was inferior to other offerings,” Pashut said. Finsa offers a 23% interest rate.
Pashut said SAOU members made up only 15% of his client base but, nevertheless, he viewed the email sent by Klopper to SAOU members encouraging the use of Finsa as “a cheap shot to try and harm my business and my reputation while trying to drive business to Finsa”.
Exonerated from wrongdoing
SAOU spokesperson and attorney Louw Erasmus said: “The SAOU believes that the judgment is wrong in law and has already instructed its legal team to lodge an appeal.
“Mr Klopper was appointed as one of the directors by the shareholders of SAEF. Mr Klopper has no interest in Finsa and never had. All dividends declared by Finsa goes to the only shareholder, SAEF.”
He referred to a November 2018 audit that the SAOU commissioned former judge Ferdi Hartzenberg to conduct. It exonerated the SAOU of any financial wrongdoing. But it also points to areas where it could improve its financial practices.
Hartzenberg said there was “no basis” for the SAOU to be paying performance bonuses to people who did not work for the union, and that the union’s president should receive “fixed remuneration” rather than a performance bonus. He added that it was not best practice for the spouse of the deputy director of the SAEF to be employed as an assistant accountant to the SAOU – especially as the “spouse has no formal training in accounting”.
Erasmus said all the points raised by Hartzenberg had “been addressed/implemented as far as it was practically possible”, but did not want to say exactly which changes the union had made.
Application for information
In 2017, Sunridge Primary principal Mauritz de Vries, the former convenor of the concerned members’ forum, applied for the SAOU’s financial records under the Promotion of Access to Information Act. Last month, the Port Elizabeth high court ruled against him, disagreeing that as a public body the SAOU was compelled to provide records. The court suggested that De Vries apply for the information under the clause for private bodies.
“Every entity connected to the SAOU is audited yearly,” said Erasmus. “Clean and unqualified audits were received in respect of every entity! Why would the SAOU now furnish the ‘concerned members’ with bank statements containing confidential information regarding payments to third parties where no cogent reason could be advanced by them ever?” Erasmus said, adding that Pashut was running a smear campaign against the union’s leaders, backed by a group made up of only 0.27% of the total membership.
Sithuthukile Mkhize, attorney in the rule of law programme at Wits University’s Centre for Applied Legal Studies, said that even though the act does allow people to apply for records from private bodies, it might be difficult for concerned members to gain access to the SAOU’s bank statements.
“Gathering information is often the first step in trying to protect human rights and hold powerful entities accountable for their actions,” said Mkhize, adding that making an application for information was not as simple as it seemed. The number of applications decreased by 50% last year, with only 12% seeking information held by private bodies.
“PAIA [Promotion of Access to Information Act] requests to private bodies are rarely made. The additional burden of having to prove that one requires the information in order to exercise a right makes it even more difficult for people to obtain information from private bodies, and this, in turn, opens up space for litigation if parties are not satisfied with the internal processes within PAIA,” Mkhize said.
The concerned members forum is now contemplating making a new act application for the SAOU’s bank statements.