We did nothing wrong, says municipality over multi-million rand VBS investments
The West Rand District Municipality maintains that it did not flout any regulations by investing millions of rand with the looted VBS Mutual Bank.
In a statement issued on Friday, the municipality said its relationship with the bank dated back to February 2015 and, up until VBS was placed under curatorship three years later in March 2018, no institutions other than the Treasury raised a query about its investment.
The municipality said that an email from the Treasury in August 2017 on the matter was “neither an instruction nor a directive”; it was instead “vague and presented no basis in law why investments with VBS Mutual Bank were not permitted”.
“The email fails to further flag the purported deviation. Hence our continued belief that such have been and remain complaint with the Municipal Finance Management Act and its regulations,” the municipality said.
“On the date of the curatorship, the municipality held investments totalling R76m comprising conditional grants. These grants contain conditions that are specific to projects.”
A week after VBS was placed under curatorship, the municipality’s management met Treasury officials and requested clarification on the legality of the investments. The municipality said a similar request was put forward in a meeting with cooperative governance and traditional affairs minister Zweli Mkhize.
“In the absence of clarification on interpretation being provided by either National Treasury or [the cooperative governance and traditional affairs department], the municipality sought an external legal opinion on municipal investments. The external legal opinion by senior counsel confirmed that the municipal investments since 2015 to date were within the legal framework,” the municipality said.
“The municipality has not been provided with any other legal opinion from any other party that contradicts the one obtained by council … In the same light, we wish to state that the financial problems experienced by the municipality are not in any way as a result of the investment made with VBS Mutual Bank.”
The municipality’s financial woes came to the fore earlier this month when officials were held hostage in their offices because employees had not been paid. Times Select reported that the mayor, councillors, executives, managers and supervisors were also among those who did not get their salaries at the end of October.