S.Africa union replaces sacked Mbeki ally

JOHANNESBURG (Reuters) - South Africa's COSATU labor union said on Wednesday it had appointed a new leader after sacking his predecessor, an ally of President Thabo Mbeki, earlier this year over his handling of a donation.

The dismissal of Willy Madisha in February was another blow to Mbeki after he lost the leadership of the ruling African National Congress in December to Jacob Zuma, who enjoys the backing of labor unions.

"Following the decision to remove Willy Madisha as president of COSATU ... the CEC (executive committee) unanimously elected Sidumo Dlamini ... to serve as president ... until the 10th national congress that will be held in September 2009," COSATU said in a statement.

Dlamini was deputy president of COSATU.

Zuma's assumption of the ANC leadership leaves him well placed to become national president when Mbeki's term expires next year. South Africa's constitution bars Mbeki from seeking another term in office.

Investors fear COSATU's support for Zuma will give it leverage to press for a move away from Mbeki's policies, which are credited by many for helping spur economic growth.

In an indirect swipe at Mbeki, COSATA said the government must take some of the blame for xenophobic attacks on foreigners which have killed 56 people, because of its failure to help resolve an economic and political crisis in neighboring Zimbabwe. Millions of Zimbabweans have fled to South Africa.

(Reporting by Phakamisa Ndzamela; Editing by Elizabeth Piper)