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Johannesburg - The investment arm of the Foundation for African Business and Consumer Services (Fabcos), Fabvest Investments, is under financial strain and has closed three of its seven chambers.
The closure of Fabcos Construction, Fabcos Apparel and Fabcos Koöperasie meant that some of the staff members had to be retrenched.
The financial woes have also had an impact on the planned construction of the Fabcos head office and academy in Gauteng.
The building was meant to have been constructed last November in Midrand, but the process has yet to take off because the money budgeted has allegedly been used up.
In 2004, Fabcos was running at a deficit of R900m.
However, the deficit was squashed in 2007 when Fabcos sold the milling and food distributing company, Premier Foods, and other assets.
Ducksy Mkhondo, the former Fabcos secretary-general and Limpopo chairperson, said that immediately after Premier Foods was sold, Fabcos bought 12 Mercedes Benz C200s – three for members of the Fabcos board and nine for provincial chairpersons. The provincial chairpersons were each given monthly allowances of R16 500 and salaries of R22 000, he said.
Fabcos pays its president, Mxolisi Zwane, a R300 000 monthly salary.
Fabcos also supplied private security personnel for Zwane at a cost of R6 000 a month.
It was not clear how much Fabcos paid for Zwane's chauffeur.
Zwane has defended his salary, saying it is market related.
"Fabcos recruited me from Premier Foods while I was the executive chairperson, and I have 15 years experience as an attorney," he said.
Zwane said he was supplied with security guards following discontent from some people after he won the Fabcos national elections in 2007.
He said claims that the leadership was involved in fruitless and wasteful expenditure were baseless.
"Mkhondo is disgruntled because his provincial leadership in Limpopo was disbanded after he failed to account for membership fees. We are busy with a forensic audit on this matter," said Zwane.
Allen Campbell, Fabcos chief operations officer, said the audit had found that Mkhondo misused membership funds.
Mkhondo has repudiated the allegations.
Zwane denies that some of Fabcos chambers have folded and that the retrenchments are a result of the body being under financial strain.
His denial comes after three independent sources this week confirmed to City Press that the chambers had been closed.
"Our balance sheet looks healthy and in the past six months we have had to let go of personnel who are not adding value to our organisation," said Zwane. He did not provide the organisation's financial results.
Campbell added that the construction of the Midrand head office had not started because the municipality had failed to do an environmental impact assessment.
Sources, who preferred to remain anonymous, alleged that the Fabcos leadership would ocassionally withdraw funds from Fabvest Investments, but failed to account for the money.
A source said Fabcos acquired two dairy farms in Krugersdorp and Nelspruit, and Kloppenheimer Estates, a lodge in Machadodorp, Mpumalanga.
"Despite these entities not adding value to Fabcos, the leadership continues to pour millions of rands in operational costs into these organisations while they don't have a turnaround strategy," said the source.
The claims of fruitless expenditure come at a time when questions are being raised about Fabcos' ability to pay a R50m tax bill the chamber has deferred to next year.
Zwane said Fabcos auditors had sent queries to the SA Revenue Service about the tax bill.
- City Press
The closure of Fabcos Construction, Fabcos Apparel and Fabcos Koöperasie meant that some of the staff members had to be retrenched.
The financial woes have also had an impact on the planned construction of the Fabcos head office and academy in Gauteng.
The building was meant to have been constructed last November in Midrand, but the process has yet to take off because the money budgeted has allegedly been used up.
In 2004, Fabcos was running at a deficit of R900m.
However, the deficit was squashed in 2007 when Fabcos sold the milling and food distributing company, Premier Foods, and other assets.
Ducksy Mkhondo, the former Fabcos secretary-general and Limpopo chairperson, said that immediately after Premier Foods was sold, Fabcos bought 12 Mercedes Benz C200s – three for members of the Fabcos board and nine for provincial chairpersons. The provincial chairpersons were each given monthly allowances of R16 500 and salaries of R22 000, he said.
Fabcos pays its president, Mxolisi Zwane, a R300 000 monthly salary.
Fabcos also supplied private security personnel for Zwane at a cost of R6 000 a month.
It was not clear how much Fabcos paid for Zwane's chauffeur.
Zwane has defended his salary, saying it is market related.
"Fabcos recruited me from Premier Foods while I was the executive chairperson, and I have 15 years experience as an attorney," he said.
Zwane said he was supplied with security guards following discontent from some people after he won the Fabcos national elections in 2007.
He said claims that the leadership was involved in fruitless and wasteful expenditure were baseless.
"Mkhondo is disgruntled because his provincial leadership in Limpopo was disbanded after he failed to account for membership fees. We are busy with a forensic audit on this matter," said Zwane.
Allen Campbell, Fabcos chief operations officer, said the audit had found that Mkhondo misused membership funds.
Mkhondo has repudiated the allegations.
Zwane denies that some of Fabcos chambers have folded and that the retrenchments are a result of the body being under financial strain.
His denial comes after three independent sources this week confirmed to City Press that the chambers had been closed.
"Our balance sheet looks healthy and in the past six months we have had to let go of personnel who are not adding value to our organisation," said Zwane. He did not provide the organisation's financial results.
Campbell added that the construction of the Midrand head office had not started because the municipality had failed to do an environmental impact assessment.
Sources, who preferred to remain anonymous, alleged that the Fabcos leadership would ocassionally withdraw funds from Fabvest Investments, but failed to account for the money.
A source said Fabcos acquired two dairy farms in Krugersdorp and Nelspruit, and Kloppenheimer Estates, a lodge in Machadodorp, Mpumalanga.
"Despite these entities not adding value to Fabcos, the leadership continues to pour millions of rands in operational costs into these organisations while they don't have a turnaround strategy," said the source.
The claims of fruitless expenditure come at a time when questions are being raised about Fabcos' ability to pay a R50m tax bill the chamber has deferred to next year.
Zwane said Fabcos auditors had sent queries to the SA Revenue Service about the tax bill.
- City Press
