‘Zuma’ bank costs municipalities

RESERVE BANK: PROBABILITY OF SALVAGING IT ‘LOW’

Local entities that invested big ‘will lose their money’, says Sarb deputy.

Municipalities are likely to lose significant amounts of money which they invested in the Venda-based mutual bank, VBS – that granted former president Jacob Zuma a mortgage to repay the R7.8 million taxpayer money spent on Nkandla – and the possibility of salvaging the bank has dropped significantly since it was placed under curatorship, MPs heard yesterday.

Briefing parliament’s standing committee on finance, South African Reserve Bank (Sarb) deputy governor Kuben Naidoo said the annual financial statements of VBS were found to be inaccurate and the possibility of fake deposits uncovered. A forensic probe is being conducted to check whether any fraud was committed.

“Following two months of curatorship and preliminary investigations, the probability of salvaging the bank is lower,” Naidoo said.

Naidoo said while Sarb would guarantee deposits for R50 000 and less, several municipalities, which deposited huge amounts of money in the bank in contravention of the Municipal Finance Management Act, would lose on their “investment”.

Naidoo said even in an optimistic scenario, it would take around seven to 10 years to recover all the money owed to depositors. He said the law prevented Sarb from making VBS an unsecured loan.

Meanwhile, the DA’s shadow minister of cooperative governance and traditional affairs, Kevin Mileham, yesterday laid charges of fraud against the officials in the West Rand District Municipality, who allegedly made illegal deposits.

“With the liquidity crisis at VBS,

the municipalities are now at risk of losing their combined R1.5 billion in deposits.” – ANA & Citizen reporter