Municipalities Recover Fraction Of Money Lost In VBS Scandal. Some of the municipalities that illegally invested millions of rand in public funds with VBS Mutual Bank have revealed that they have only received a fraction of their money from the curators.
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The process of winding up the estate of the defunct bank entered another phase after successful payments to 550 creditors who include 13 municipalities.
The Fetakgomo Tubatse local municipality in Limpopo, which invested more than R230m of public funds confirmed that it had received R16m from the curators.
Municipal spokesperson Thabiso Mokoena said since the irregular VBS investment came to light, the mayor had been recalled and employees implicated, including the former municipal manager and CFO, resigned. The investment resulted in the loss of more than R230m of public funds.
“The provincial government intervened in the matter and our mayor was recalled for that. Secondly, the officials who were involved, most left the employ of the municipality. At the moment we don’t have anyone who was involved in VBS still working for the municipality.
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“Two of the implicated officials were arrested and appeared in court,” he said.
This week residents of Maapea Mpheti village in the municipality protested about the slow pace of electrification in their area and the council’s failure to supply water.
Ephraim Mogale local municipality in Limpopo, which invested R80m in VBS, has received only R6.5m, according municipal manager Thabitha Matladi.
Matladi said the municipality wrote a letter of demand to its former municipal manager Monica Mathabela and CFO Khabo Ramosibi, demanding that they each pay back R40m or face legal action.
“We opened cases and it was quite intense. There were steps that were taken when the matter came out. People were suspended, the municipal manager was suspended,” Matladi said.
In May 2020, angry residents protested in the streets complaining about the failure of Elias Motsoaledi and Ephraim Mogale local municipalities to provide water in the area.
Anoosh Rooplal, curator of VBS Mutual Bank, said R110m out of the total of R159m had been paid in the first quarter of the year to the 13 municipalities that illegally invested in the bank. The remainder had been paid to service providers and corporate clients of the bank.
Liquidators are now pinning their hopes on getting the rest of the money from the legal process which has already begun, with assets of the alleged kingpins in the looting of R2bn from the bank placed in preservation.
“Obviously the liquidation process is still going on. We are hoping to collect more money to be in a position to make a possible estate distribution in the future again. It has been difficult following the money because of the fraud and so many parties involved. A lot of the money was stolen and sent to other parties. There is a lot of effort that is being put on tracking where the money went, that is why the criminal process is important to us as well because we are hoping that the Asset Forfeiture Unit can get some of the money,” Rooplal said.
Loans taken from VBS remain active and people have to pay them back.
Mahikeng local municipality, which irregularly invested more than R89m, said its former municipal manager Thabo Mokoena was the only person dismissed in 2020 in relation to the matter.
Municipal spokesperson Johnny Nkoane said the municipality had laid criminal charges against Mokoena.
The West Rand district municipality said to date the liquidator had transferred to it more than R5m out of the R380m it invested in the bank. The municipality said the identification of culprits was “sub judice”.
Makhado local municipality spokesperson Louis Bobodi said: “The matter is still under investigation by the Hawks, and the municipality is co-operating with the investigations.”
The municipality irregularly invested R155m with VBS from 2016 to 2017.
VBS, which gave former president Jacob Zuma a loan to pay back public money for his Nkandla home renovations, was placed under curatorship in March 2018. A damning report into the failure of the bank revealed how its architects and accomplices stole almost R2bn from its coffers. The report drafted by investigators appointed by the Reserve Bank suggested that criminal charges be brought against those responsible.
In October 2020, former VBS CFO Phillip Truter pleaded guilty to charges of fraud, corruption, money laundering and racketeering. He was sentenced to 10 years’ imprisonment, with three years suspended.
Fourteen other people accused of looting VBS are expected to go on trial in the Pretoria high court later this year. They face charges of racketeering, corruption, fraud, theft and money laundering.
