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The Cooperative Governance and Traditional Affairs Minister Zweli Mkhize said that the outcome of forensic investigations into municipalities which invested in VBS Mutual Bank means government can now launch disciplinary proceedings and criminal complaints against those implicated.
Mkhize, who was briefing the portfolio committee on Cooperative Governance and Traditional Affairs (Cogta) on Tuesday on the status of municipalities which have invested in VBS Mutual Bank, said they also planned to combine the respective Cogta departments at provincial governments and municipalities in a lawsuit to recover the money.
The next steps, however, depend on the outcome of the forensic reports.
Mkhize highlighted that the functioning of the affected municipalities have since been constrained but bailouts would not be provided. Government would, however, provide support to improve their internal controls.
There are currently forensic investigations underway in Limpopo, North West and Gauteng and they, should be able to help government "pinpoint individuals" implicated. Investigations in Limpopo are expected to be finalised within three months, the report from the North West investigation was finalised on October 18, and the Cogta department is still waiting for confirmation on the timelines of the Gauteng investigations.
"The report from the Reserve Bank has indicated the very crude abuse of finances which were destined for poor communities. It creates an impression we are not only dealing with the situation where investments were taken to the Mutual Bank which was illegal and unprocedural, but also, inside the institution was a systematic, structured, fraudulent process siphoning money out of municipalities, out of the bank."
The Reserve Bank report alone cannot reflect what has taken place within municipalities, which is why the audit reports are also necessary as these additional investigations would "detect the genesis" of decisions by municipalities to invest money in VBS, he said.
"Acting in haste is tricky unless we have a properly scientifically researched report. In other words, something we can take to court," said Mkhize.
He stressed that the audit reports were necessary to give government the ability to move, but the processes have not yet been concluded.
"This report on our side, will be specific to find out what actually happened and who is responsible," said Mkhize. It is possible that more mayors, councilors, chief financial officers and MECs could have been involved.
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