Gauteng government must explain VBS Bank’s squandering of municipal funds
25 June 2018
The Gauteng government will have to explain to the public why the West Rand District Municipality (Randfontein, Westonaria) and the Merafong City Municipality (Carletonville, Fochville) invested amounts of R50 million each, that is a total of R100 million, in VBS Mutual Bank.
Over the weekend, a dooming report about VBS that was recently put under curatorship by the Reserve Bank because it did not comply with the necessary liquidity requirements was released by the media.
According to media reports, the bank’s collapse paralysed numerous municipalities after municipal funds amounting to R1,5 billion was lost.
The FF Plus wants to know why the Merafong and West Rand Municipalities invested their funds in VBS and what exactly the objectives were with these investments. The provincial government must have put a stop to the transactions.
The amount of R100 million should have been used to improve service delivery and infrastructure in the two struggling municipalities rather than losing it due to poor investment decisions that most probably resulted in the money being used to finance the luxurious lifestyles of the VBS management.
The Gauteng government is already in a financial pinch with the Department of Health that has a looming budget deficit and the Emfuleni Municipality (Evaton, Sebokeng, Vaal Oewer, Vanderbijlpark, Vereeniging) that was placed under administration.
Gauteng will have to urgently allocate more funds to Emfuleni and the Department of Health. The FF Plus cannot see how the province will be able to make this amount of money available to the Merafong and West Rand Municipalities to bail them out as well.
The FF Plus insists that the two municipalities must disclose the minutes of the council meetings where the decisions were taken to invest in VBS. If the decisions to make the investments were not approved by the councils, but was taken by the respective mayors, then steps will be taken against the mayors as well as the chief financial officers of the respective councils – they will be reported for committing fraud.
It is lamentable that tax payers’ money is squandered without any accountability. The time has come to report the guilty parties and bring them before the court.
Issued by Philip van Staden, FF Plus MPL: Gauteng Legislature, 25 June 2018
