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

VBS: Cogta committee laments impact suspensions have on Limpopo municipalities

By Staff Reporter Time of article published Oct 16, 2019

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Cape Town - Parliament's Portfolio Committee on Cooperative Governance and Traditional Affairs (Cogta) has lamented the continued financial impact the lengthy suspension of municipal officials linked to investments made to VBS Bank has on several Limpopo municipalities.


This is despite the fact that a forensic investigation undertaken by the Limpopo Cogta department and various municipal councils found that these officials, mainly municipal managers and chief financial officers, committed financial misconduct in terms of section 171 (2), (3) and 173 (1)(a)(iii) of the Municipal Finance Management Act. In Elias Motsoaledi Local Municipality, the committee claimed that the municipality spent over R 900 000 to date paying its suspended municipal manager.

"This amount includes the acting allowance that the current acting manager is being paid to act in the position. What is even more worrying is that the disciplinary process has been postponed indefinitely since 30 April 2019, with no clear timeline for the resumption of the process.

“What is particularly regrettable is that the R900 000 is not inclusive of the legal fees the municipality continued to pay to deal with the case of the municipal manager. Many municipalities have long completed the disciplinary process with the municipal manager and chief financial officer, but there is seemingly no commitment from the leadership of Elias Motsoaledi to deal with the matter expeditiously. This matter smells of malicious compliance," the committee said in a statement.

 Despite this, the committee said it welcomed the commitment to deal with the matter within the next 30 days and stop what it considers fruitless and wasteful expenditure, "which might lead to a regression in audit opinion in the current financial year".    Speaking of Fetakgomo Tubatse Local Municipality, the committee said it considered it unacceptable that some of the R230 million lost through VBS as investment is inclusive of R80m funding for the Integrated National Electrification Programme (INEP), which directly impacted on the ability of the municipality to roll out an electrification programme. This undermines the project of improving the lives of the people. The committee further expressed concern by the lack of stability at senior management level within the municipality. 

"The committee is of the view that going through seven municipal managers since 2016 is unsustainable and contributes to the weakening of governance within the municipality. Furthermore, the vacancy rate of almost 50% directly impacts on the ability of the municipality to service the people of Fetakgomo Tubatse," it said.  The committee concluded by saying that it was unacceptable that, as a result of VBS investments, municipalities continue to struggle to pay service providers on time, with some paying suppliers after 150 days. 

"Small and medium enterprises are the lifeblood of the economy and must be protected at all times. This includes ensuring that they are paid on time for services rendered. "The committee will today [Wednesday] engage with the Lepelle-Nkumbi, Mogalakwena and Thabazimbi municipalities before making its recommendations," the committee said.


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