Share

Some municipalities struggling to deliver services after VBS losses, AG warns

Fourteen municipalities that deposited R1.6bn in the ill-fated VBS Mutual Bank were unlikely to ever recover their money, Auditor General Kimi Makwetu warned in his general report into local government audit outcomes. The losses are impacting the ability of some of these municipalities to deliver services.

Sixteen municipalities deposited money into VBS in contravention of municipal investment regulations. Two - Dr Kenneth Kaunda District Municipality in the North West and JS Moroka Local Municipality in Mpumalanga - managed to withdraw their funds in time.

VBS was placed under curatorship by the South African Reserve Bank in March last year and the North Gauteng High Court in Pretoria ordered that the mutual bank could be liquidated in November last year.

In his report, Makwetu said the potential R1.6bn loss in investments made with VBS Mutual Bank exposed a weakened financial position of the affected municipalities and could have varying levels of impact on service delivery where it relates to infrastructure and maintenance projects.

Makwetu said eight Limpopo municipalities deposited R1.2bn with VBS, affecting these municipalities' ability to deliver on infrastructure and maintenance projects in the 2017-18 year and potentially the following year.

"This also further contributed to the poor financial state of municipalities within the province, with more than half of them reporting a deficit, as their expenses exceeded their income," wrote Makwetu.

"The financial losses arising from the investments gave rise to difficulties in paying for operational expenses and affected municipalities’ ability to start or complete projects, thus affecting service delivery," he wrote.

In October the VBS liquidators announced that they would meet creditors of the ill-fated bank on Friday in Polokwane.

While liquidators said recover of funds was unlikely for municipalities, claims were accepted from Mahikeng Local Municipality, Madibeng Local Municipality and West Rand District Municipality.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.02
-0.6%
Rand - Pound
24.01
-0.5%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.40
+0.4%
Palladium
998.40
-0.3%
Gold
2,210.05
+0.7%
Silver
24.65
+0.0%
Brent Crude
86.09
-0.2%
Top 40
68,079
+0.6%
All Share
74,269
+0.5%
Resource 10
56,875
+2.2%
Industrial 25
103,593
+0.3%
Financial 15
16,463
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders