The specter of the troubled VBS Mutual Bank continues to loom over the Makhado Local Municipality (MLM), but this time it’s not about the losses incurred; rather, it’s about unexpected gains. Councillors are demanding a comprehensive investigation after municipal officials reportedly neglected to report nearly R12 million deposited into the municipality’s account by the bank’s liquidator.
In December of the previous year, Mr. Anoosh Rooplal, the liquidator for VBS, indicated that another distribution would occur for verified creditors, including municipalities that had funds invested in the now-defunct institution. MLM was set to receive R11,668,601.
The municipality had made an unlawful investment of R155 million in VBS Bank, and upon liquidation, the remaining balance was R62.73 million. In February 2022, liquidators disbursed R4,391,409 to MLM as part of the initial payout to creditors. According to the 2023/24 annual financial statements, MLM still awaited R58,264,578.
Despite the public announcement from the VBS liquidator regarding the payouts, MLM councillors contend they were not notified. Some assert they only became aware of this during a council meeting on May 29 of this year when the issue was raised informally and not through official communication.
When asked about the situation, Mayor Dorcus Mboyi reportedly claimed ignorance regarding VBS-related funds. Reports indicate that the municipality’s finance portfolio committee was never briefed, and the payments were not documented in any monthly reports, adjustment budgets, or formally acknowledged under the Municipal Finance Management Act (MFMA).
As of now, there has been no satisfactory explanation regarding the allocation of these funds, whether the money has been expended or is held in reserve, or if any conditions are attached to the VBS dividends.
Earlier this year, in an interview with SABC, Basikopo Makamu, the MEC for Co-operative Governance in Limpopo, cautioned municipalities about the importance of utilizing recovered funds for vital service delivery.
The council has since decided that a detailed report must be presented at the next meeting, scheduled for July 24. This report is expected to provide comprehensive information regarding the funds, including their utilization, the account into which they were deposited, the rationale behind the failure to report, and measures to avert similar governance issues in the future.
Additionally, there are demands for an urgent investigation by the National Treasury and Limpopo’s MEC for COGHSTA. Despite multiple attempts to contact them, Mayor Mboyi, Municipal Manager Kent Nemaname, and Municipal Communications Manager Mpho Rathando could not be reached for comments.
