Minister Patel appoints union allies to ICD board

According to reports, COSATU General Secretary, Zwelinzima Vavi, and Chief Executive of the South African Clothing and Textile Workers' Union's (SACTWU's) investment group, John Copelyn, have been appointed to the board of the Industrial Development Corporation (IDC).

The IDC is primarily responsible for channelling state financial support towards industrial projects with the aim to create incentives for job-creating projects.

Minister of Economic Development, Ebrahim Patel, not only has the power to appoint members of the IDC board, but he also has close ties to COSATU due to his tenure as General Secretary of SACTWU.

It therefore appears that Minister Patel is using his powers to fill the IDC board with his political allies.

I will therefore today be writing to Minister Patel to ask that he publicly explains why these two appointments are appropriate, given his apparent conflict of interest.

There are two key problems with the appointment of Mr Vavi and Mr Copelyn:

It is unclear what qualifies them to serve on the board: 

Minister Patel is mandated by the Industrial Development Corporation Act to appoint up to 8 of the IDC's 15 board members on the basis of their ability and experience. Section 6(4) of the Industrial Development Corporation Act explicitly states that: "The Minister shall choose all directors appointed by him or her for their ability and experience in business or administration, and their suitability otherwise for appointment as directors." Mr Vavi's experience as a unionist certainly does not provide him with experience in business or administration. While Mr Copelyn might have more credentials as a financial manager, the recent revelations about SACTWU's investment arm losing R100 million in clothing workers' pension funds should automatically disqualify him.

These appointments could jeopardize corporate governance at the IDC:

The board is supposed to hold the IDC, and the Minister in his handling of the IDC, to account. If the board is stacked with Minister Patel's union allies, it may well compromise the board's ability to conduct proper oversight.

The bottom line is that the IDC is a vital player in our government's job creation strategy. If it is not able to function properly due to a politically compromised board, the creation of thousands of jobs in industrial sectors could be threatened.

Statement issued by Kobus Marais MP, DA Shadow Minister of Economic Development, December 8 2011

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