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Shopsteward Volume 26 No. 2

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Media Centre  |  COSATU Press Statements

DEMUTUALISATION

COSATU Press Statement - 8 September 1998

COSATU has noted with dismay the decision today of the National Council of Provinces to pass through legislation allowing Old Mutual and Sanlam to go ahead with their demutualisation plans. We regret this hasty action on the basis that we are currently engaged with both the ANC and the companies concerned on this issue.

We will nonetheless continue to oppose the demutualisation programme and will engage in a programme of mass action to stop the process. We believe that all South Africans, particularly the policy holders, need to be told of the implications of the proposed demutualisation and listing on the broader question of transforming the South African economy.

We call on both SANLAM and Old Mutual not to continue to use policy holder money to campaign for demutualisation. To an extent that they continue on this route, we call on them to make an equal amount available for a campaign against demutualisation. These should appear side by side - be it in advertisements or letters to policy holders.

We also do not believe that management is neutral on this matter. In fact it is fair of us to ask of them to explain what and how they stand to gain from demutualisation. This stems from the fact in other countries management have used such schemes to enrich themselves.

In addition, we will continue to raise the following issues:

  • including enhancement of control of the mutual companies by the present policyholders. In the event that voting will take place we believe that such voting should reflect the strength of group funds as well. The current situation in which one policy holder have the same vote as a fund which represent more policy holders.
  • The need for an express commitment by the two to the development of South Africa and Southern Africa as part of their vision rather than the one currently being followed by Old Mutual - seeking listings abroad.
  • The need for future business plans to be driven by a strong social agenda for Southern Africa

The above process must be influenced by our agenda for the transformation of the South African and Southern African economies.

COSATU is not persuaded by the deluge of pro-demutualisation propaganda which, at some cost, has been circulated by the management of the Mutuals, in order to convince policyholders to vote in favour of demutualisation. We remain convinced that the proposed restructuring will have a negative impact for a number of reasons.

Most significantly it will further entrench the power of the existing management and weaken the potential for policy holders to assert influence over a significant portion of the country's retirement resources.

Taking a different approach to demutualisation, by the process of remutualisation, would not preclude shorter term developmental and job creating measures such as those to be financed through the envisaged Umsobomvu Trust. In fact we believe that it possible to address the questions raised by the two companies - globalisation and the unlocking of the reserves through a new legislation without going the route of demutualisation.

We still hope that there can be a solution to the issue. Obviously if there is none, we will have no choice but to take to the streets.

Issued by Kim Jurgensen COSATU Communications Officer On behalf of COSATU

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