ARCHIVE

VBS Bank scandal: 15 municipalities are still at risk – Kevin Mileham

DA MP says Vhembe District Municipality has R311m exposure, Giyani R158m, Mahikeng R83m

Treasury tells Parliament that 15 municipalities are still at risk to VBS Bank scandal

26 April 2018

In a presentation to Parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs yesterday, National Treasury revealed that 15 municipalities are still exposed to the VBS Mutual Bank scandal. These include some of the worst run and most financially unstable municipalities in the country.

It has become increasingly clear that VBS was being run as a pyramid scheme, whereby short term deposits from municipalities were utilised to fund long term loans. The bank seemed to have particularly targeted financially distressed municipalities, with weak internal controls and poor municipal governance to attract their deposits.

The Vhembe District Municipality, for example, is exposed to the amount of R311 million, or 34.57% of their annual operating revenue. The Greater Giyani Local Municipality is exposed to the amount of R158 million, or 52.27% of their annual operating revenue. A full list is available here.

Current forensic investigations indicate that VBS was using lawyers to "facilitate" municipal deposits, in contravention of Section 7(3) of the Municipal Financial Management Act.

The DA will be seeking to determine who these lawyers were, and what the nature and purpose of such commissions was. Given that the deposits were themselves illegal, we will be exploring options to have these lawyers disbarred for promoting an illegal activity.

The DA will also be writing to the Chairperson of the Portfolio Committee Cooperative Governance and Traditional Affairs to request that each of the affected municipalities are invited to Parliament to report on what contingency plans they have in place to fund their activities, and what disciplinary action or other consequences they have initiated against municipal officials and public representatives involved in this matter.

It is unconscionable that these municipalities have played fast and loose with municipal funds, intended for service delivery and the upliftment of residents.

Municipality

Province

Main Towns

Exposure 21/02/2018

Annual operating revenue

% Annual revenue

VHEMBE DISTRICT MUNICIPALITY

Limpopo

Musina, Thohoyandou, Makhado

311,514,197

901,224,000

34.57%

FETAKGOMO-GREATER TUBATSE LOCAL MUNICIPALITY

Limpopo

Apie

210,649,850

547,939,000

38.44%

GREATER GIYANI MUNICIPALITY

Limpopo

Giyani

158,170,963

302,601,000

52.27%

LEPELLE-NKUMPI LOCAL MUNICIPALITY

Limpopo

Lebowakgomo

151,599,668

480,491,000

31.55%

LIM 345 LOCAL MUNICIPALITY

Limpopo

Makhado-Thulamela

122,410,521

344,636,000

35.52%

DR RUTH SEGOMOTSO MOMPATI DISTRICT MUNICIPALITY

North West

Vryburg

100,000,000

332,155,000

30.11%

MAFIKENG LOCAL MUNICIPALITY

North West

Mahikeng

83,440,312

754,130,000

11.06%

EPHRAIM MOGALE LOCAL MUNICIPALITY

Limpopo

Marble Hall

82,846,973

241,628,545

34.29%

MORETELE LOCAL MUNICIPALITY

North West

Makapanstad

70,447,439

391,859,000

17.98%

MAKHADO MUNICIPALITY

Limpopo

Makhado (Local)

61,712,340

803,254,000

7.68%

MADIBENG LOCAL MUNICIPALITY

North West

Brits

50,677,674

1,688,185,000

3.00%

MERAFONG MUNICIPALITY

Gauteng

Carletonville (Local)

50,011,653

1,287,607,000

3.88%

WEST RAND DISTRICT MUNICIPALITY

Gauteng

Carletonville (District)

46,340,154

520,071,000

8.91%

ELIAS MOTSOALEDI LOCAL MUNICIPALITY

Limpopo

Groblersdal

20,302,088

392,023,000

5.18%

DR JS MOROKA MUNICIPALITY

Mpumalanga

Siyabuswa

10,118,219

550,345,000

1.84%

Grand Total

 

 

1,530,242,051

9,538,148,545

16,04%

 


Issued by 
Kevin MilehamDA Shadow Minister of Cooperative Governance and Traditional Affairs, 26 April 2018