VBS scandal: Mayor explains 'shady' R60m investment, blames former boss

2018-11-06 22:29
VBS Mutual Bank website. (Screengrab)

VBS Mutual Bank website. (Screengrab)

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Limpopo's Capricorn District Municipality Mayor John Mpe has detailed how the entity came to invest R60m into VBS Mutual Bank, blaming his predecessor, Gilbert Kganyago, who he said played a pivotal role in the move.

Mpe provided the timeline to the media in Polokwane on Tuesday to rectify the "deliberate distortions and calculated omissions" by SACP general secretary Solly Mapaila about the events that led to the VBS investment.

Kganyago is the provincial secretary of the SACP.

He has in the past vehemently denied his involvement in the VBS saga.

READ: ANC NEC refers VBS matter to NWC, reiterates support for state capture inquiry

But providing the details, Mpe, who became mayor only after the August 2016 municipal elections, said municipal documents showed that after Kganyago was inaugurated as mayor in 2014, a new phenomenon was introduced in which investment reports became a standing item on the mayoral committee's agenda.

At the time, the municipality had invested just over R301m with Nedbank, more than R150m with Investec and R300 668 with FNB.

At a meeting on November 26, 2015, the mayoral committee chaired by Kganyago took a resolution without the municipal council's approval to diversify the municipality's investment portfolio to empower black-owned institutions.

R20m of the first R60m was deposited into VBS on December 18, 2015, followed by R40m on December 23, 2015 – facilitated by then acting chief financial officer (CFO) Thomas Nephawe.

Deputy CFO given suspension notice

This was "appreciated" by the mayoral committee at its meeting on April 21, 2016.

According to Mpe, matters came to a head when Mariette Venter, who was then deputy CFO and succeeded Nephawe to the acting position, insisted on recalling the R60m investment to VBS.

"Part of her role was to re-look into investments and the R60m had to be withdrawn from VBS so that municipality could decide where to re-invest the money based on the audit committee report and investment policy of [the municipality]. This became a problem to the mayoral committee," Mpe said.

"On 11 July 2016, the acting CFO (Venter) received a notice of intention from the accounting officer to suspend her," Mpe said.

He said the council only became aware of the VBS saga when the South African Municipal Workers' Union wrote a letter expressing its concern following a notice to suspend Venter, and requesting a detailed report on the VBS investment.

The council speaker then wrote a letter to Kganyago, but was ignored, Mpe said.

R60m investment recovered

"The council was then notified about the VBS investments for the first time. It was then resolved that the acting CFO (Venter) be immediately recalled from the unlawful suspension, and that the matter should be investigated," Mpe said.

The current administration under Mpe has since recovered the R60m VBS investment with interest.

Mpe said it was not easy sailing to recover the money as VBS had argued that it was funding mayoral special projects.

"But there are no records showing the funding," he said.

Kganyago, who is now a member of the provincial legislature, could not be reached for comment on Tuesday.

However, he again denied his involvement in the VBS saga at an SACP provincial council meeting last month.

His explanation was accepted by the party.

Read more on:    vbs mutual bank  |  polokwane

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