Recouping the VBS millions
Others have submitted as yet unproven claims while some may not have had enough time to prepare affidavits
More than a year after the VBS Mutual Bank scandal broke, only three municipalities that had unlawfully deposited money with the bank are stepping forward in the hope to recoup some of it. /
More than a year after the VBS Mutual Bank scandal broke, only three municipalities that had unlawfully deposited money with the bank are stepping forward in the hope to recoup some of it.
They are the West Rand municipality in Gauteng, and Madibeng and Mahikeng municipalities in the North West. A number of others have submitted as yet unproven claims.
VBS collapsed in 2018, leaving municipalities who had deposited more than R1.5bn with it, in contravention of regulations, facing enormous losses. A damning report released in October 2018 by investigators led by advocate Terry Motau detailed looting at VBS of nearly R2bn, and highlighted the roles of political players from the ANC and the EFF.
The bank is now undergoing a liquidation process.
Only two of 16 the municipalities that invested with VBS from 2016 to 2018 managed to withdraw their funds before the bank was placed under curatorship in March 2018. The remaining 14 lost their investments and have disclosed impairments, according to audit outcomes released earlier in 2019.
Most of the municipalities that have lost their investments are in Limpopo. Municipalities in the North West and Gauteng have also been affected.
While there has been political consequences such as dismissals and disciplinary charges for some mayors and municipal managers, getting the money back is another issue altogether.
The Municipal Investment Regulations bar municipalities from making investments with mutual banks, which are institutions that are owned by the people who invest in it. The regulations, published in 2005, stipulate that all investments must be made with primary regard for the safety of the investment.
The money invested in VBS was intended for matters such as service delivery in those municipalities.
The bank ’ s liquidator Anoosh Rooplal told Business Day that only the West Rand municipality in Gauteng, as well as Madibeng and Mahikeng municipalities in the North West, have proven their claims. A number of other municipalities have submitted claims that have not yet been proven, he said.
The reason for some municipalities not submitting claims probably was that they had insufficient time to prepare the proof-of-claim affidavits and related documents, Rooplal said. This was after a notice was gazetted for a creditors meeting called by the master of the high court in March.
“That is why, in my view, so few of them have at this stage lodged claims, but I amsure that will change when the second meeting of creditors is held.”
Only four claimants attended the first meeting and of these, three were the municipalities that had proven their claims. That meeting was continued in August. The second creditors meeting is expected to be called later in 2019.
Rooplal said he could convene another special creditors meeting later in which they could prove further claims.
The Moretele municipality in the North West had submitted a claim of R50m to the master of the high court in August, two days before the continuation of the first creditors meeting, according to documents provided by the municipality to Business Day.
The Merafong municipality in Gauteng confirmed it had not submitted a claim at the March meeting, but did so later, and attended the August meeting.
Freddy Tshivhengwa, municipal manager of the Makhado municipality in Limpopo said it wants its money back and will submit a claim for about R60m.
Isaac Nukeri, communications manager at the Collins Chabane municipality, said it wants to get a deposit of about R122m back. The municipality has attended subsequent meetings, Nukeri said.
Meshack Kgwale, acting municipal manager of the Elias Motsoaledi municipality in Limpopo, said it recouped the entire amount it had invested, as well as most of the interest on the account in 2018.
Business Day was unable to get comment from the rest of the municipalities, as they did not respond to questions or could not be reached.
ONLY THE WEST RAND MUNICIPALITY IN GAUTENG, AS WELL AS MADIBENG AND MAHIKENG IN NORTH WEST, HAVE PROVEN THEIR CLAIMS