DA calls for disciplinary action to be taken against officials implicated in VBS scandal

24 July 2018

The DA in Limpopo has today written to the MEC for Treasury, Rob Tooley, and the MEC for Cooperative Governance, Human Settlements and Traditional Affairs (COGHSTA) Jerry Ndou calling on them to institute disciplinary measures against treasury staff and mayors implicated in authorizing investment with VBS mutual bank.

Deposits made by the affected municipalities contravened section 7(3) (b) of the Municipal Financial Management Act (MFMA) which states that a municipality may not open a bank account with an institution not registered as a bank in terms of the Banks Act 94 of 1990.

In a reply to a DA National Assembly question as of 16 March 2018 the following municipalities still had money invested in the bank:

Makhado Local Municipality - R 61,6 million

Greater Giyani Local Municipality - R159 ,2 million

Collins Chabane Local Municipality-R121,8 million

Vhembe District Municipality- R300 million

Ephraim Mogale Local Municipality- R83, 4 million

Tubatse Fetakgomo Local Municipality- R 240,6 million

Lepelle Nkumpi Local Municipality - R153,3 million

The mayors of the affected municipalities were negligent in their duties as Section 52 of the MFMA that states that a mayor of a municipality must provide political guidance over fiscal and financial affairs of the municipality, monitor, and to the extent provided for in the act, oversee the exercise of responsibilities assigned to the accounting officer and chief financial officer.

In addition, the deposits also violated the Municipal Investment Regulations which regulates the instruments within which municipalities are allowed to invest municipal funds.

The Provincial Treasury displayed a lackadaisical approach bordering on incompetence by letting municipalities in the province invest with VBS mutual bank from as far back as 2014 despite treasury regulations which prohibited them from doing so.

It is curious why the Provincial Treasury failed to recognize the red flags over these illegal deposits when the law says it must be furnished with section 71 reports every month by municipalities.

The mayors for these municipalities and the provincial treasury failed to execute their executive role and to monitor and intervene before public money was wrongfully invested against treasury regulations in VBS mutual bank.

The DA is of the view that the inability of the provincial treasury to fulfill its fiduciary role and the failure of mayors of affected municipalities to intervene or act against investment of public money into VBS is tantamount to financial misconduct and therefore must be investigated in terms of Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.

The DA will continue to hold political office bearers and government employees accountable to ensure we protect the money meant to improve the lives of the people of Limpopo.

Issued by Jacques Smalle, DA Provincial Leader, 24 July 2018