Ex-West Rand municipality execs arrested over VBS bank corruption

Three municipal executives, two former and one current, have been arrested in connection with corruption and maladministration at VBS Mutual Bank.

In a statement on Monday, Hawks spokesperson Colonel Katlego Mogale said a former municipal manager and a former manager for income and expenditure at West Rand District Municipality, along with a former chief financial officer (CFO) of the municipality – now  current acting municipal manager at the Merafong Local Municipality – were arrested on Monday at several locations within Gauteng.

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They are due to appear in the Pretoria Specialised Commercial Crimes Court on Tuesday.

The three were arrested over various contraventions of the Municipal Finance Management Act (MFMA), where municipalities invested public funds into VBS Mutual Bank. The Act doesn’t allow for municipal funds to be deposited or invested into a mutual bank.

“During the arrests, a search and seizure operation was also conducted in order to confiscate IT equipment which could contain pertinent documentation and/or articles relating to the investigation.

“A total number of 20 municipalities deposited an amount of R3.7 billion [amount repaid totals R2.2 billion whilst the amount lost/unpaid amounts to R1.5 billion]. Some of the lost funds amounting to R67 million were allegedly paid as brokerage commissions to entities and/or individuals to attract more deposits mainly from municipalities.

“This nationwide investigation has revealed that VBS employees, municipal executives and other officials received gratifications for the investments made,” Mogale said.

Two weeks ago, an explosive expose by Daily Maverick detailed the alleged signing of a contract by Brian Shivambu, in which he admits to owing VBS holding company Vele Investments R4.5 million, following the payments he now admits were gratuitous.

Brian is Economic Freedom Fighters (EFF) deputy president Floyd Shivambu’s younger brother.

According to the report, the contract was signed on 23 March 2020 and was effectively an admission by Brian that he was paid by VBS for no apparent reason.

His lawyers apparently insisted on a secrecy clause as part of the agreement.

Additional reporting by Thapelo Lekabe