Screengrab of the VBS Mutual Bank website
Screengrab of the VBS Mutual Bank website

Cogta committee continues Limpopo visits as municipalities struggle with VBS aftermath

By Staff Reporter Time of article published Oct 14, 2019

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Johannesburg - Parliament's portfolio committee on cooperative governance and traditional affairs will this week continue probing the dire state of municipalities that invested in VBS bank.

The committee began its hearings and visits to some of the municipalities on Friday. Limpopo had the highest number of municipalities that invested in the now-defunct VBS Mutual bank.

The bank, which was established years ago as a building society mutual bank, made headlines last year when a report compiled by Advocate Terry Motau, and commissioned by the SA Reserve Bank, found that deposits worth billions were looted by politicians and owners of the bank.

Many of the victims have not been able to recoup the monies they had entrusted with the bank. Some of those victims had been pensioners and family societies which banked with VBS for years.

The largest amounts lost belong to municipalities that deposited with the bank. There were a total of 15 municipalities that deposited their funds with VBS. This was even after warnings from National Treasury that it was illegal for municipalities to bank with mutual banks.

A total of 11 Limpopo municipalities lost over R1.2 billion. The biggest casualty was Vhembe district municipality which deposited over R300 million with VBS, according to a Treasury report to Parliament.

Other municipalities included Fetakgomo-Greater Tubatse local municipality which had R210 million and Greater Giyani municipality which deposited close to R160 million.

Treasury had explained that for some municipalities these deposits represented a great share of its operating revenue. There are now concerns that those municipalities will be unable to deliver crucial services because of a lack of funds.

Parliament's Cogta committee's visit to the Limpopo municipalities is focused on understanding the impact of the loss of revenue for residents and whether officials involved in these illegal deposits have been dealt with.

A report to be released by the Limpopo provincial government this week is also expected to break-down the numbers on the financial loss.

Meanwhile, DA MP Haniff Hoosen said the DA would write to Finance Minister Tito Mboweni and request that Treasury's Municipality Recovery Service Unit (MFRS) be used to assist municipalities that were struggling financially.


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