12th April 2012

Question over Union’s Finances Remain

Affco today said the company would continue to seek answers on behalf of its employees from the Meat Workers and Related Unions over its failure to properly report where workers’ union fees are going.

The company had asked the SFO to look at the matter and understands the SFO has said that issues of regulatory compliance are matters for the Registrar of Incorporated Societies to consider. The company has also referred the matter to the Registrar and to the New Zealand Institute of Chartered Accountants (NZICA).

Affco said the issue remains that the Union is not in compliance with its statutory reporting requirements as required under the Employment Relations Act and the Incorporated Societies Act.

The legal requirements are:

• A union must be an Incorporated Society under the ERA.
• An incorporated Society must report its full revenue and expenditure under the Incorporated Societies Act.

From the Union’s published financial statements only a fraction of its total income has been declared. Affco workers contribute over $500,000 to the union each year, paying $5.95 each per week. Affco workers represent less than 10% of the 23,000 members the Union says it has and yet it only declares revenue of just over $700,000 per annum.

Affco forwards the majority of Union fees collected from employees to the Union bank account held under the name “NZ Meatworkers and related Trade Union INC”. By electronically tracing payments made, Affco’s bankers have confirmed the Union bank account is held under this name.

However, whether the payments are made to branches or the national union’s bank account is largely irrelevant. That is because under section 14(1)(b) of the Employment Relations Act 2000 (“ERA”) in order to qualify for the status and rights attributed to a “union” under the Act (including the legally enforceable right of a union to require an employer to deduct union fees from a consenting employee’s salary and pay them to the Union), a society must be registered under the Incorporated Societies Act 1908 (“Inc Soc Act”).

The Union has no branches that are separately registered under the Incorporated Societies Act. Therefore, if union fees are received by the branches it could only be because branches were acting under the auspices of the Union.

Further, section 55 of the Employment Relations Act 2000 also makes it clear that such fees are paid to the Union, not a branch, since the Affco collective agreement is with the New Zealand Meat Workers and Related Trades Union Incorporated (not its branches). Therefore, if subscription fees were paid in to a branch bank account that branch must be receiving the fees as agent for the Union.

As a society registered under the Incorporated Societies Act the Union must provide to the Registrar a statement of the income and expenditure of the Union during the last financial year (section 23(1)). The Union fails to meet this obligation because significant income and expenditure of the Union is not contained in the statement that is delivered to the Registrar.

Aside from the technical rules being breached by the Union, the central issue is that it appears the Union has gone to great lengths to deliberately structure its affairs to conceal the majority of its revenue, expenditure and assets.

ENDS

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