VBS liquidation huge blow for munis

The eminent liquidation of VBS Mutual Bank (VBS) will probably see seven municipalities in the province losing millions that were destined for service delivery, while Limpopo politicians and municipal officials that were allegedly involved in the illegal depositing of more than R1,1 billion with the bank or allegedly received commissions, are still occupying their positions.
In a media release by the South African Reserve Bank, it was confirmed that the Prudential Authority (PA), formerly the Registrar of Banks, filed an application for the liquidation of VBS in the Gauteng Local Division of the High Court on Monday. “The Prudential Authority is of the view that curatorship must now be terminated and VBS must be placed in final winding-up. This is as a result of the fact that VBS is hopelessly insolvent and massive frauds have been perpetrated against it. As a result there is no prospect of entering into any resolution plan in respect of VBS. The PA believes that the final winding-up of VBS is in the best interests of all parties. This will then allow a liquidator to utilise the machinery provided for in insolvency legislation and the Companies Act to effect recoveries, and to follow the recommendations of the investigator who investigated the affairs of VBS and who has prepared a report into VBS,” the statement reads. The matter is placed on the court roll for 13 November.
Following calls for the removal of political office bearers that were implicated in the ‘Big Bank Heist’ report as well as officials at Limpopo municipalities that were allegedly involved in making deposits of more than R1,1 billion with VBS, a Democratic Alliance (DA) motion to suspend Makhado Mayor, Mildred Sinyosi and Municipal Manager, Johannes Kandwendo was not carried during a special meeting of council in Louis Trichardt on Tuesday after African National Congress (ANC) councillors voted against the motion. Despite calls for her resignation, Vhembe District Executive Mayor, Florence Radzilani, who is implicated in the ‘Big Bank Heist’ report, is still in her position and also that of Provincial Chairperson of the South African Local Government Association (Salga).
After VBS was placed under curatorship in March, MEC for Provincial Treasury, Rob Tooley then revealed that Collins Chabane, Ephraim Mogale and Fetakgomo Tubatse municipalities had invested R122 410 520, R83 428 490 and
R210 649 836 at VBS Mutual Bank during the 2017/18 financial year, while Greater Giyani, Lepelle Nkumpi and Makhado municipalities invested
R156 971 444, R163 321 224 and R63 296 159 respectively. Vhembe District Municipality invested R316 385 541. Although some funds may be recovered during the liquidation process, it is most probable that the municipalities will lose all or most of their investments at VBS. The South African Reserve Bank, however, guaranteed the investments of small non-corporate investors to a maximum of R100 000.

Story: BARRY VILJOEN
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