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Tuesday, December 5, 2023

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Former municipal manager who unlawfully invested R80 million in VBS, not eligible for R1.29 million payout

Picture: African News Agency (ANA) Archives

Picture: African News Agency (ANA) Archives

Published Jun 23, 2023


Pretoria - The Labour Court rule against a former municipal manager who unlawfully invested R80 million with the liquidated Venda Building Society (VBS) Mutual Bank and wanted a payout of R1.29m following her dismissal.

Monica Mathebula was the municipal manager at Ephraim Mogale Municipality in the Sekhukhune District in Limpopo.

In 2017, Mathebula invested R80 million in the liquidated bank VBS. This was against the Municipal Finance Management Act (MFMA) and the National Treasury’s Municipal Investment Regulations.

In 2019, following the collapse of VBS, the municipality charged Mathebula with misconduct relating to the contravention of the MFMA and investment regulations.

Subsequently, a disciplinary hearing was held where Mathebula pleaded guilty to most of the charges levelled against her.

The municipality submitted that the misconduct was serious and warranted dismissal as it constituted a failure to comply with or contravene the MFMA, as a result, the misconduct caused severe damages to the municipality.

The municipality further added that her contract provided that if she was found guilty of serious misconduct, her employment would be terminated.

In response, Mathebula argued that she had a clean disciplinary record and that discipline should be corrective and not punitive.

Hlongwane, who acted as chairperson during the hearing, issued a ruling finding that there was not sufficient evidence to demonstrate that Mathebula was grossly negligent. Her misconduct was so serious that it warranted dismissal.

Instead, he found that she was misled and said the provincial Treasury could have done more to ensure that municipalities were aware that they were not permitted to invest with VBS.

Hlongwane said Mathebula pleaded guilty and showed remorse and therefore, she should not dismissed, but be suspended without pay for a period of three months.

The municipality subsequently filed an application to review and set aside the disciplinary outcome. It sought an order for the sanction to be substituted for the dismissal sanction.

However, instead of pursuing the review application, the municipality eventually entered into a settlement agreement with Mathebula agreeing to pay her a full salary for a year at a cost of R1.29m.

In October 2020, she signed the agreement and resigned in November. Her December salary was paid and then after that she received nothing.

She approached the Labour Court for an order to make the settlement agreement a court order.

The municipality filed an application for an order declaring that the settlement agreement entered into by the parties is unlawful and that it be set aside.

The municipality submitted that after the settlement agreement was signed, it realised that it was ill-advised by its legal representatives to enter into such an agreement in respect of the review application.

The municipality said it did not make sense to use taxpayers’ money to compensate Mathebula who had unlawfully invested R80m which had not been recovered.

However, Judge J Prinsloo said that ill advice does not render the settlement agreement unlawful.

She then turned her attention to Mathebula’s application and found that it would be contrary to public policy if she ruled in her favour as her conduct resulted in a huge financial loss of taxpayers’ money.

“Enforcing the settlement agreement would constitute wasteful and irregular expenses on the part of the municipality and will certainly send a wrong message. It is after all public funds, and in municipalities those funds should rather be used to render critical services to ratepayers,” she said.