Prop­erty om­bud ser­vice asked in PE to ex­plain ‘fi­nan­cial ir­reg­u­lar­i­ties’

The Herald (South Africa) - - Front Page - Shaun Gill­ham gill­hams@ti­soblack­

A sec­tional ti­tle reg­u­la­tor was put on the spot by an­gry prop­erty man­agers and own­ers in Port El­iz­a­beth, who de­manded to know why and how R80m of their levy money had be­come en­tan­gled in the VBS Bank scan­dal.

More than 120 peo­ple – in­clud­ing rep­re­sen­ta­tives of body cor­po­rates – gath­ered on Wed­nes­day to fire ques­tions at se­nior ex­ec­u­tives of the Com­mu­nity Schemes Om­bud Ser­vice (CSOS) over the VBS in­vest­ment, which re­sulted in the sus­pen­sion of two top ex­ec­u­tives and the launch of an in­ves­ti­ga­tion.

The om­bud ser­vice, which was es­tab­lished two years ago, over­sees shared liv­ing schemes rang­ing from town­house com­plexes to blocks of flats.

It is a sched­ule 3A pub­lic en­tity which falls un­der the hu­man set­tle­ments de­part­ment and was es­tab­lished through a gov­ern­ment grant with the aim of be­ing self-suf­fi­cient by the col­lec­tion of 2% of scheme levies.

Two months ago, the reg­u­la­tor sus­pended its act­ing chief om­bud, ad­vo­cate Seeng Letele, and chief fi­nan­cial of­fi­cer, Themba Mabuya, fol­low­ing al­le­ga­tions of gross neg­li­gence, dis­hon­esty and dere­lic­tion of duty with re­gard to the in­vest­ment in VBS.

The sus­pen­sions were also linked to their fail­ure to pro­vide rel­e­vant in­for­ma­tion to the board of the om­bud ser­vice on the in­vest­ment of sur­plus funds.

The money in­vested and held by the om­bud ser­vice is con­sid­ered pub­lic funds.

The sus­pen­sions saw new act­ing chief om­bud Ndi­vhuo Rab­uli and non-ex­ec­u­tive board mem­ber and chair of the CSOS au­dit com­mit­tee, Tau­rean Holmes, hav­ing to face a packed con­ven­tion hall at the Sum­mer­strand Ho­tel for a road­show in­tended to up­date stake­hold­ers on de­vel­op­ments.

Faced with re­peated ques­tions on how the VBS sce­nario had come about and whether the om­bud ser­vice had ben­e­fited through in­ter­est pay­ments or oth­er­wise, the se­nior ex­ec­u­tives said they would not com­ment “and give their own opin­ions”, urg­ing peo­ple to rather wait for the in­ves­ti­ga­tion re­port.

Rab­uli as­sured stake­hold­ers that mech­a­nisms had been put in place to en­sure “this does not hap­pen again”.

Ad­mit­ting that the CSOS was on the back foot, Holmes told The Her­ald that fol­low­ing due process and keep­ing stake­hold­ers up to date was key to re­gain­ing con­fi­dence and trust.

“The CSOS has its own in­vest­ment process,” he said.

“We hold our own peo­ple ac­count­able.

“The [in­ves­ti­ga­tion] re­port is close to be­ing com­pleted and we would like to close this process as soon as pos­si­ble.”

Holmes said part of the in­ves­ti­ga­tion in­volved the ad­min­is­tra­tive pro­cesses which re­sulted in the VBS in­vest­ment.

“It could have been any bank.

“The CSOS did not only place funds in VBS and in Absa, but in other banks as well.

“Af­ter this emerged, we im­me­di­ately re­called our money from VBS,” he said.

A ques­tion which arose – and at­tracted ap­plause – was on how much rev­enue was needed by the om­bud ser­vice, af­ter it re­vealed that it had, to date, regis­tered about 33,000 com­mu­nity schemes around the coun­try and was seek­ing to reg­is­ter a fur­ther 57,000.

This prompted one per­son to say that based on the num­ber of schemes regis­tered, the body was draw­ing rev­enue of about R13m a month.

“Based on the reg­is­tra­tion of an­other 57,000 schemes, the CSOS will be re­ceiv­ing about R22m a month – what are you go­ing to be do­ing with all of this money, which is pub­lic money?” the woman said.

An­other woman asked: “What is the long-term plan? If you are get­ting all of this money, will you re­duce the levies payable?”

Holmes said the om­bud ser­vice planned over the next three years to use the rev­enue to ex­pand, in­crease its ca­pac­ity, open more of­fices and ef­fect train­ing and up­skilling.

“But, yes, the idea would be to con­sider re­duc­ing [costs to schemes].

“We do not want to make more money than we need.

“We do not want to be an in­vest­ment en­tity,” he said.

De­spite the clear con­cern about the om­bud ser­vice’s in­vest­ment strate­gies, there were lighter mo­ments dur­ing the two-hour event when it re­vealed some of the more un­usual as­pects of its reg­u­la­tory work.

“There is also this is­sue of dagga. You will all know that its use was re­cently le­galised,” Rab­uli said.

“What if some­one wants to plant dagga in your com­mu­nity scheme? We have to ad­dress all of these things,” she said to loud chuck­les.

‘Af­ter this emerged, we im­me­di­ately re­called our money from VBS’ Tau­rean Holmes


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