'Widespread issues' at municipality that deposited R245m into VBS bank

19 October 2018 - 07:00 By Ernest Mabuza
DA spokesman in the municipality Lethabile Kgwedi said as a consequence of the deposits made into VBS‚ the municipality was facing service provision challenges.
DA spokesman in the municipality Lethabile Kgwedi said as a consequence of the deposits made into VBS‚ the municipality was facing service provision challenges.
Image: BusinessLIVE

The provision of services at Fetakgomo Tubatse Municipality in Limpopo has deteriorated as a result of illegal investments in the VBS Mutual Bank over the years‚ the DA charged on Thursday.

The DA has now called on the mayor to resign and for the municipal manager to be suspended.

The municipality allegedly illegally invested R245.1-million in the bank‚ in contravention of the Municipal Finance Management Act‚ which does not allow municipalities to bank with a mutual bank‚ the DA said.

Since it was not able to recover the money it deposited into VBS‚ it has been facing a number of problems‚ including a shortage of water. It was also affected by cash shortages to pay for services and planned infrastructure projects‚ such as roads.

DA spokesman in the municipality Lethabile Kgwedi said on Thursday as a result of the deposits made into VBS since 2015‚ the municipality was facing service provision challenges.

“As councillors‚ we received a communiqué recently that we are not allowed to claim for travel costs until the end of November. This will affect the servicing of our constituencies‚” Kgwedi said.

He said the municipality had budgeted R60-million for capital projects and this figure had since been lowered.

“These projects are not going to be finished‚ including a sports complex in Ward 22. This is because money for this project has been deposited into the bank [VBS]‚” Kgwedi said.

He also cited an electrification project which was designed to electrify the villages in the municipalities.

“The project has not been realised.”

Kgwedi said the party proposed a motion in council on July 12‚ which was struck off the council programme. In that motion‚ the DA called for an investigation into the depositing of the municipality’s funds into VBS. It also called for the suspension of officials implicated and the laying of charges against those involved.

Kgwedi said the party had opened a criminal case at the Burgersfort Police Station against municipal officials who had deposited funds with VBS.

Economic Freedom Fighters (EFF) spokesman in the municipality councillor Joseph Makola said the municipality was technically bankrupt because its survival was not sustainable.

“The municipality now depends on overdrafts‚” he said.

Makola said the municipality’s financial situation had improved last month as the result of a recovery from the South African Revenue Service (Sars) and access to an overdraft facility with a commercial bank.

“A number of services are being compromised so far. Travel for officials and councillors has been halted. Service providers might not be paid this month‚” Makola said.

He said the EFF was calling for those who had deposited the municipality’s money with VBS‚ despite a directive from the National Treasury not to do so‚ to be charged.

“That money was for service delivery‚” he said.

Makola said that work on a regional cemetery that was supposed to be built for the villages had not begun.

However‚ Thabiso Mokwena‚ the communication head for the municipality‚ said all the infrastructure projects that were under way would go ahead as planned. He said these were funded from the Municipal Infrastructure Grant.

Mokwena added the municipality was not responsible for the provision of water in the municipality‚ but rather that this was the responsibility of the Sekhukhune District Municipality.

He said a communiqué was issued two weeks ago stating that the water service provider had indicated it was busy with the repair of a pipeline‚ which had affected the supply of water to the municipality.

Mokwena also denied that workers would not be paid.

He said that the deeply rural municipality would receive its next tranche of government grant payments in December - but said workers would be paid before then.