On Now
Weekdays 12:00 - 15:00
At Lunch Pulane
NEXT: 15:00 - 18:00 The Joyride with Nico, Nikki, Kayla and JayBee
Listen Live Streams

Local News

#VBSMutualBank: Investment all in vain for NW municipalities

───   LUCKY NKUYANE 14:18 Tue, 13 Nov 2018

#VBSMutualBank: Investment all in vain for NW municipalities  | News Article

The liquidation of the controversial VBS Bank will have far-reaching implications for four of the municipalities that illegally invested R314 million with the bank.


This is according to North West University political analyst, Andre Duvenhage. He was reacting to the liquidation of this bank by the North Pretoria High Court after an application by the South African Reserve Bank. The Mahikeng Local Municipality had initially filed its application in the High Court in Limpopo asking for the repayment of an R83 million investment by its suspended municipal manager, Thabo Mokwena. Duvenhage says attempts by the municipalities to retrieve or recover money invested will fail and this will be against the interest of residents and workers in these municipalities. Duvenhage adds that, following judgment, municipalities will suffer financially as these investments were in vain.

"Well, it means that these municipalities will lose their money and that there will be a cash problem within these municipalities. People will lose their money. The municipalities, who are already in trouble - and the majority of them in the North West are in trouble - cannot even pay for the functionality of their institutions, never mind the vested interest of their workers, like pension funds etcetera,” Duvenhage says.

The municipality earlier changed its application after it turned out the operational jurisdiction of VBS was in Sandton and the court to hear the matter was based in Pretoria.

Duvenhage says even if there was a court decision it still would not mean that the municipality will be able to recover its money.

He says his take on the matter is he thinks the money has been paid in expenses to various political parties such the African National Congress (ANC), Economic Freedom Fighters (EFF) and the South African Communist Party (SACP). Duvenhage says this was definitely not a sound and viable way to invest because the bank was unknown and the results would be negative, as it panned out to be.

The Seleka Xabanisa forensic report commissioned by premier Job Mokgoro revealed that the four municipalities’ investments with the bank were contrary to the Municipal Financial Management Act (MFMA) as VBS Mutual Bank was not registered as a bank in terms of the Banks Act.

The investigators found that the Madibeng Local Municipality invested R31 million of their conditional grant; the Dr Ruth Segomotsi Mompati district municipality invested R150 million - of which R100 million was from the regional infrastructure grant (RIG), R25 million from the equitable share-free basic services and R25 million was from the building fund.

The Moretele Local Municipality invested R50 million from the 2017/18 water services infrastructure grant.


OFM News

@ 2024 OFM - All rights reserved Disclaimer | Privacy Policy | We Use Cookies - OFM is a division of Central Media Group (PTY) LTD.