News / South Africa

Alex Japho Matlala
3 minute read
27 Jun 2018
6:20 am

Hawks probing VBS investments after DA lays charges

Alex Japho Matlala

The big question is why some municipalities invested with the bank after a strict instruction from National Treasury not to do so.

Kevin Mileham, left, and Tshwane mayor Solly Msimanga.

The Hawks are hovering above municipal managers and chief financial officers in Gauteng, North West and Limpopo who invested funds to the tune of R1.5 billion with VBS Mutual Bank.

The officials include four municipal managers and 14 chief finance officers in municipalities in the three provinces. This is after the Democratic Alliance (DA) laid charges against them at various police stations.

Speaking to The Citizen yesterday, Hawks spokesperson Brigadier Hangwani Mulaudzi said: “Yes, we can confirm that the Hawks have been approached with such an enquiry and that it is currently receiving the attention it deserves.”

Yesterday, Kevin Mileham, the DA’s shadow minister for cooperative governance and traditional affairs, said the cases were opened last week.

“These managers knew that it was illegal and criminal to invest in a mutual bank instead of a commercial bank,” said Mileham.

“Municipal managers are learned people. They are people who understand the Municipal Finance Management Act better than anyone in local government.

“Therefore, the DA is sure that they knew it was a criminal offence to invest in the bank.

“They must just face the music, while government plans on how to recoup the money lost in the investments.”

The municipalities that invested in VBS Mutual Bank include Fetakgomo Local Municipality, which invested R210 million; Lepelle-Nkumpi – R151 million; LIM 345 – R122 million; Elias Motsoaledi – R20 million; Ephraim Mogale – R82 million; Dr JS Moroka – R10 million; Madibeng – R50 million; Dr Ruth Segomotsi Mompati – R100 million; Merafong City – R50 million; West Rand District – R48 million; Makhado – R61 million; Mahikeng – R83 million; Vhembe District Municipality – R311 million; and Greater Giyani – R158 million.

The Citizen has been contacted by officials in the Giyani, Makhado and Vhembe local municipalities, who claim their municipalities are struggling to pay service providers.

These claims were refuted by Giyani municipal spokesperson Steven Mabunda, who said his municipality was coping well, despite having invested almost 60% of its annual operational budget with the bank.

Mileham said his party was baffled that by February this year, about six months after National Treasury had instructed municipalities not to deposit funds or invest with VBS Mutual Bank, some municipalities were still opening accounts with the lender.

The DA has since written to Cooperative Governance and Traditional Affairs Minister Zweli Mkhize, requesting that he takes action against managers of municipalities who made the investments.

Last week, municipal managers from municipalities involved were summoned to Pretoria, where Mkhize ordered them to formulate a turnaround strategy within 30 days, that would salvage their municipalities from collapse.

Kenny Mathiba, spokesperson for Limpopo Premier Stan Mathabatha, said their provincial treasury had already begun forensic audits. Mathiba said the probe started last week and would last for six months.

“All we want to know is why these managers invested with the bank against the instruction of the National Treasury not to do so. It is a known fact that municipalities in Limpopo do not invest with mutual banks.”

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