Minister of Cooperative Governance and Traditional Affairs Zweli Mkhize says that the department had erroneously transferred an additional R60m to a municipality in the North West province, and had trouble recovering the funds.
The minister on Tuesday briefed the portfolio committee on cooperative governance and traditional affairs (Cogta) on the municipalities which had invested in VBS Mutual Bank.
He also unpacked the financial and service delivery performance of several municipalities and specifically brought up an "interesting story" from Mahikeng municipality in the North West.
"Cogta made a mistake at some point," the minister said.
The department had transferred "twice the amount" that was meant for the municipality. Instead of transferring R60m to the municipality, R120m was "erroneously" transferred to Mahikeng.
The minister said that the department had called the municipal manager to recover the money. But the municipal manager "decided to be arrogant" about the matter which created an issue, said Mkhize. City Press had previously reported about Cogta's struggle to recover the R60m in August.
The municipal manager asked for the request to be made in writing.
"The letter was sent in writing. When they appeared before me and I asked,'What is going on?', he argued the letter took too long to get to him. We had an argument about whether he was correct or not."
Mkhize said he asked how the municipal manager decided to invest the money in VBS – the municipal manager's response that keeping the money in the bank was costing the municipality a lot and so he decided to invest some of it.
Ultimately the municipal manager said that he could not be blamed alone as Cogta made the mistake.
'These things happen'
Mkhize told MPs that he had inquired from the department on how the mistake happened.
Administratively, the department explained that this could happen at one point or another, and in the event it does happen, there is a process that follows. Cogta then reaches out to the municipality to retrieve the money.
"Those in administration were not convinced it was a deliberate and malicious act," said Mkhize. "It was when the MM (municipal manager) decided to be arrogant about it that it became an issue."
Cogta appeared to have followed the correct processes - having reported the matter to Treasury. Treasury intervened and now the R60m is being treated as the municipality's own money.
"We are now saying it is your money, you have invested it wrongly, take responsibility for it," Mkhize said of the matter.
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