The DA has laid a criminal charge at the Randfontein Police Station against the West Rand District Municipality (WRDM). Municipal funds were allegedly deposited into a VBS Mutual Bank account.
Kevin Mileham, the DA Shadow Minister of Cooperative and Traditional Affairs, who was flanked by DA Gauteng Shadow Minister for Finance, Adriana Randall, DA Gauteng MPLs Ina Cillers and Clr Dennis Henry Pretorius, laid the fraud charge on Wednesday, 30 May.
After opening the case at the police station, Mileham said, “The police will issue a case number in due course and the matter will then be investigated by the Commercial Branch”.
Read the initial article here: ‘Illegal deposit’ claims surface against municipality
Mileham said even though this may be a lengthy process, he is glad that the first first step has been taken.
The DA said this matter was brought to light two years ago, when it was discovered that the WRDM was among 14 municipalities in South Africa that illegally deposited funds into VBS Mutual Bank. The DA said this was in violation of section 7(3) of the Municipal Financial Management Act (MFMA) 56 of 2003.
“It is illegal for municipalities to deposit money into a mutual bank. Only commercial banks should be used. We have also found out that the WRDM was among the municipalities that were in violation of this Act. Subsequent to that, National Treasury issued an instruction to municipalities to withdraw all the funds from VBS.”
However, said Mileham, in August 2017 there was an increase in deposits with VBS. This has caused a huge financial loss, as municipalities are now unable to withdraw their funds from VBS due to its liquidity crisis.
Mileham said officials of the municipality must be held to account as they were reckless and negligent with municipal funds.
“In the case of the WRDM, about R76 million was deposited into a VBS account and it is unlikely that they will ever get this money back. Municipalities’ deposits into VBS accounts currently stand at R1,5 billion, he said.
Pretorius said this huge loss will most likely be felt by ordinary citizens, who will be deprived of services. He said there were also signs that the municipality is trying to protect its officials against prosecution. Pretorius said the mayor has defended himself by saying the municipality never received any letter instructing it to withdraw its funds from VBS.
Randall said, “We were disappointed that the Gauteng MEC for Finance, Barbara Creecy denied responsibility in terms of intervention, whether or not section 154 of the Constitution applies. We were very disappointed that she initially said she was not really thinking of the consequences, and left it to the DA to lay criminal charges. We would have expected her to act immediately and not shy away from her responsibilities.”
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