Gauteng municipalities invested millions in VBS Mutual Bank

The offices of Vele Investments, majority shareholder of VBS Bank on Grayston Drive, Sandton. Reserve Bank on Monday conducted a mid-morning search and seizure operation as part of its ongoing probe into the bank which was placed under curatorship in March.
The offices of Vele Investments, majority shareholder of VBS Bank on Grayston Drive, Sandton. Reserve Bank on Monday conducted a mid-morning search and seizure operation as part of its ongoing probe into the bank which was placed under curatorship in March.
Image: Kyle Cowan

The Gauteng treasury plans to investigate investments made with VBS Mutual Bank by the West Rand District Municipality and Merafong Local Municipality.

This was revealed by the provincial treasury on Tuesday when it said the two municipalities invested millions of rand in the controversial bank.

The treasury said it would implement a forensic investigation into the circumstances surrounding the investments.

“The aim is to determine whether these investments breached the Municipal Finance Management Act and whether any official should be charged with misconduct as a result of these investments.

This decision follows confirmation from the municipalities involved that they do not have the capacity to comply with an instruction from National Treasury made at a meeting on March 22 this year to investigate and report on the circumstances surrounding their investments‚” the provincial treasury said.

It added that the terms of reference of the investigation included amounts invested in the bank since 2014‚ how such decisions were reached‚ which officials signed off on the decisions‚ and whether any official received any commission or other incentive for facilitating the investment.

The Investigation would also look into what reports if any were submitted to other levels of government detailing these investments‚ and what remedial action was taken after National Treasury informed municipalities in August last year that mutual banks did not meet investment requirements.

Currently‚ Gauteng treasury said‚ the West Rand District Municipality had R81-million and the Merafong Local Municipality R50-million invested with VBS Mutual Bank.

VBS Mutual Bank was placed under curatorship in March due to what the Reserve Bank said was a “severe liquidity crisis”.

As a result‚ these municipalities cannot access invested funds for their intended purpose.

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