DA calls on Treasury’s Municipal Finance Recovery Service Unit to directly intervene in Limpopo’s ‘VBS municipalities’

13 October 2019

The Democratic Alliance (DA) will write to the Finance Minister, Tito Mboweni, to activate National Treasury’s Municipal Finance Recovery Service unit (MFRS) to directly intervene in Limpopo municipalities that illegally invested ratepayers money in VBS, to stave off a looming financial collapse.

More than a year ago, details emerged in a forensic report commissioned by the Reserve Bank, that senior ANC officials were paid to use their political influence over dozens of municipalities to invest in what was termed a “pyramid scheme” by the investigators.

To date, not a single person who raided municpal coffers has been arrested or sent to jail.

Following last week’s oversight by Parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) to the affected municipalities, it became clear that they were struggling to meet their financial obligations, service delivery had come to a complete standstill and they had degenerated into a state of crisis.

On several occasions in the past, my DA colleagues in the Limpopo legislature have asked the Provincial government to take active steps to hold those responsible to account but to no avail. The Provincial government has made no effort, either to institute criminal proceedings against those who benefited from the VBS sleaze or to contain the impending financial collapse of the municipalities which threatens to affect innocent residents.

It is for this reason that the DA is asking Treasury’s MFRS to intervene under 139 of the amended Local Government Municipal Finance Act. The additional paragraphs in the amended section, approved by Parliament in 2003, empowers the MFRS to pursue mandatory intervention:

- if a municipality is in serious financial difficulties;

- if the province does not intervene when a municipality meets the criteria.

Most importantly, the MFRS develops a financial recovery plan which the municipality must implement, failure to which it will be dissolved.

It can never be acceptable that R1,2 billion that was meant for basic infrastructure projects like water and sanitation was brazenly stolen from municipalities where residents are still being forced to use open spaces as ablution facilities.

The looming financial disaster in the ‘VBS municipalities’ is a national crisis that requires an urgent response. The DA is confident that Treasury’s MFRS will not delay in instituting financial recovery plans that will stop financial collapse and restore service delivery.

Issued by Haniff Hoosen, DA Shadow Minister of Cooperative Governance and Traditional Affairs, 13 October 2019