Parliament, Thursday, 18 March 2021 – The Portfolio Committee on Cooperative and Traditional Affairs had conducted an oversight visit to Ephraim Mogale, Fetakgomo-Tubatse and Elias Motsoaledi local municipalities in October 2019 as part of its effort to extract consequence management in respect of all those municipalities that had illegally invested funds in the VBS Mutual Bank during the 2017/18 financial year.
The Ephraim Mogale Local Municipality had written to the off R84 million of the investment, while Fetakgomo-Tubatse registered an impairment amounting to R243 million. Both these affected service delivery negatively and caused much community unrest. Elias Motsoaledi Local Municipality managed to withdraw its investment before the bank collapsed, but lost R48 000 in interest.
The Chairperson of the committee, Ms Faith Muthambi, said: “We continue to emphasise these investment losses because communities continue to suffer consequences on service delivery as a result of the VBS investments.”
The committee had an engagement with the Sekhukune District Municipality and local municipalities under its jurisdiction on the state of the district and its local municipalities. The municipalities are: Ephraim Mogale, Elias Motswaledi, Fetakgomo-Greater Tubatse, and Makhudu-thamaga.
The committee notes that none of the municipalities in the district received disclaimed or adverse audit opinions in respect of the 2017/18 and 2018/19 financial years. But at the same time, the committee is concerned that only Makhuduthamaga Local Municipality improved to a better audit outcome in 2018/19. “We commend the municipality for achieving this outcome without using consultants,” said Ms Muthambi.
The Sekhukhune District Municipality, Ephraim Mogale and Elias Motsoaledi local municipalities on the other hand, regressed from unqualified audits in 2017/18 to qualified audits in the 2018/19 financial years. The Elias Motsoaledi Local Municipality regressed notwithstanding hiring consultants at a cost of R11 million, to assist with the preparation of annual financial statements and asset management-related challenges.
In its engagement with the municipalities, the committee wanted answers particularly on the failure to implement the Auditor-General’s recommendations to turn their state of financial administration around. The committee asked the leaders of Makhuduthamanga Local Municipality to provide a written report on the failure of the municipality to investigate an unauthorised expenditure for a R50 million contract to a service provider who didn’t have a credible profile.
Ms Muthambi said: “This deepened culture of municipal officials of spending municipal financial resources with impunity, with no consequences, must be stopped.” The committee heard that the Fetakgomo-Greater Tubatse Local Municipality lost R243 million for service delivery that included electrification projects in the VBS investments. The committee called for civil claims to recover the money that was used by corrupt means as the Limpopo Department of Treasury recommended to the Elias Motsoaledi Local Municipality that the lost money should be recouped from the responsible officials.
The MEC for Cooperative Governance, Human Settlements and Traditional Affairs told the committee that all the alleged VBS investment-related corruption were handed to law enforcement agencies.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, MS FAITH MUTHAMBI.
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