At least 20 municipalities across the country, including four in the North West, allegedly deposited a total amount of R3.7 billion with the bank. According to the Hawks National Spokesperson, Hangwani Mulaudzi, a simultaneous search and seizure operation was conducted at ten premises in Gauteng and Limpopo respectively. He says following this, four suspects were arrested, three are expected to hand themselves over today, while the eighth suspect will be arrested after completing coronavirus quarantine requirements. They will all face 47 counts of various criminal offences. Municipalities in the North West made headlines after illegally investing R314 million of taxpayers’ money with the now defunct bank. 

Mulaudzi further says the suspects face several (5 patterns of) racketeering activities in contravention of the prevention of organised crime Act 121 of 1998, (POCA), twelve (12) counts of theft, seven (7) counts of fraud, fifteen (15) counts of corruption in contravention of the Prevention and Combatting of Corrupt Activities Act 12 of 2004, and seven (7) counts of money laundering (POCA). 

The Chief Executive Officer of the Prudential Authority of the South African Reserve Bank (SARB) revealed the matter after opening a criminal case. This followed the liquidity problems within the VBS Bank which were placed under curatorship on 11 March 2018 in terms of the South African Banks Act, Act 94 of 1990. A report released by the SARB in October found evidence of wide-scale looting, fraud and corruption.

"Our investigation revealed that twenty (20) municipalities deposited an amount of R3,7 billion of which R2,2 billion was paid back; leaving an amount of R1. 5 billion in VBS.

"These suspects are expected to appear at Palmridge Regional Court on Thursday 18 June 2020," he adds.

Meanwhile,  a report by the Seleka Xabanisa forensic investigation, which was commissioned by North West premier 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 from the building fund.

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

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