Former CFO gets 5-year sentence and R150k fine in VBS scandal

The court sentenced the former chief financial officer (CFO) of Collins Chabane Municipality to five years’ imprisonment for his role in the collapse of VBS Mutual Bank.

The Pretoria High Court found Eadie Makamu guilty of contravening Section 173(1) of the Municipal Finance Management Act, 2003 (MFMA) on Wednesday.

The court imposed a five-year prison sentence on Makamu. It imposed a condition: it suspended the sentence as long as Makamu does not commit a comparable crime within that time.

Five-year sentence

Additionally, the court ordered Makamu to pay R150 000 to the VBS Liquidator. The VBS Liquidator will distribute the money to those who lost their money due to the bank’s failure.

The Directorate for Priority Crime Investigation (Hawks) said of this amount, R60 000 must be paid on Wednesday. Makamu will settle the balance in five monthly instalments of R18 000 each.

The former CFO’s conviction stems from the municipality’s illegal investment of R120 million with VBS Mutual Bank.

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Hawks spokesperson Colonel Katlego Mogale revealed that the unit never recovered these funds, leaving R123 984 685 outstanding to the municipality.

“Investigations revealed that some of the funds were used to pay brokerage commissions to individuals and entities in a scheme designed to attract more deposits from municipalities,” Mogale said.

Makamu was arrested on 5 May 2022 and has been appearing in court alongside his co-accused, Charlotte Ngobeni. Ngobeni will face trial alone from 20 to 22 January 2025.

Holding those responsible for VBS collapse accountable

The Hawks welcomed the conviction and said it marks another step in holding those responsible for the bank’s collapse accountable.

The recovery of funds through payments to the VBS Liquidator provides a measure of relief to victims. These include municipalities and individual investors who suffered significant losses.

“The efforts by the investigation team and prosecution team continue to bear fruit. We are able to show that 35 arrests were affected since the start of the investigation and six convictions secured,” the national head of the Hawks, Lieutenant General Dr Godfrey Lebeya, said.

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