MPs seethe as no-one pays for municipality's VBS mess

VBS Mutual Bank
VBS Mutual Bank

Members of Parliament on Tuesday bemoaned the fact that no-one can be held accountable for the mismanagement of municipalities around the country, as those implicated had already resigned. 

The Standing Committee on Public Accounts (Scopa) grilled delegations from six municipalities from Limpopo Province which were found by the consolidated audit report of the Auditor General to be dysfunctional.

Vhembe District Municipality, which invested R300m in VBS Mutual Bank, had to admit to Scopa that no one has been disciplined, fired or arrested for the governance failures that allowed the ill-fated investment.

Vhembe District acting municipal manager Sylvia Ndou admitted to Scopa that although former manager Reuben Rambado and former CFO Nyiko Macava resigned over their involvement in the investment, they left the municipality on their own terms, and Rambado even received a payout. 

"The municipality reached a settlement agreement with the former municipal manager but no settlement agreement was reached with the CFO. The municipal manager reports directly to the mayor, so it was the former executive mayor who reached the agreement with them," said Ndou.

Ndou said the Special Investigating Unit was investigating past mismanagement. The investigations were conducted by an outside investigator and the Limpopo Provincial Treasury. But Scopa chair Mkhuleko Hlengwa was not satisfied.

"This is a municipality that has disclaimer audit opinions for years and in the face of irregular expenditure and mismanagement, no one is disciplined," Hlengwa said, incredulously.

Mogalakwena Local Municipality faced auditing challenges including that their financial statements had over R600m worth of errors and the fact that the municipality had money in the bank but could not pay service providers including Eskom.

Mogalakwena mayor Andrina Matsemela said, until recently, the municipality didn't have enough skills to prepare thorough financial statements for the Auditor General.

"We must acknowledge and put a disclaimer upfront and accept that was a poor financial statement. Unfortunately, the municipality did not have a CFO at the time. There have since been some strides, including an audit action plan," said Matsemela.

Thabazimbi Local Municipality in Limpopo Province obtained qualified audit opinions every financial year between 2013-14 and 2017-18. The municipality owed Eskom R236m in October last year, but this amount was reduced to R192m as of July 31, 2019 thanks to a payment agreement.

Thabazimbi municipal manager Tsatsi Ramagaga told Scopa that the municipality appointed a debt collector to reduce the municipality’s debt book, allowing the council to collect an additional R2.5m more on a monthly basis.

Officials from the Mopani District Municipality were slammed for racking up R24m in consulting fees as well as R196m in irregular expenditure. It also spent an estimated R2m on boreholes which eventually collapsed and dried.

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