Public Protector calls for implementation of VBS report

Public Protector Adv. Busisiwe Mkhwebane has expressed concern that Council Speakers in eight Limpopo municipalities, which lost hundreds of millions of rand following unlawful investments of public funds meant for service delivery with the VBS Mutual Bank, appear to be dragging their feet to act against officials and councillors implicated in the scandal.

Adv. Mkhwebane met Provincial Speaker of the Legislature Hon. Rosemary Molapo, Premier Stan Mathabatha, several Members of the Executive Council and senior government officials at the legislature in Lebowakgomo on Wednesday as part of her office’s nationwide stakeholder roadshow. She also held talks with the Provincial House of Traditional Leaders.

Last June, Adv. Mkhwebane directed Council Speakers of Makhado, Vhembe, Collins Chabane, Elias Motsoaledi, Greater Giyani, Ephraim Mogale, Tubatse Fetakgomo and Lepelle-Nkumpi municipalities to ensure that any outstanding recommendations made in Adv. Terry Motau SC’s September 2018 forensic report titled "The Great Bank Heist", including those of disciplinary action against officials and councillors, are considered by the Councils for implementation.

She also directed the Speakers to take appropriate steps to ensure that the Audit Committees of the respective municipalities are properly constituted with competent members, who possess the necessary skills, qualifications and experience. They were further urged to see to it that quarterly reports are submitted to the Provincial MECs responsible for local government and the Provincial Treasuries of the on the implementation of the remedial action apportioned to Municipal Managers.

This related to the directive that Municipal Managers must ensure, among other things, that officials responsible for and dealing with municipal investments are trained on the relevant provisions of the Municipal Finance Manager Act (MFMA), Municipal Infrastructure Regulations (MIR) and policies of the respective municipalities, which regulates investments.

In addition, provincial Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA) MECs had to submit regular reports to the Director-General of the National Treasury with their comments where appropriate on the implementation of the remedial action. This, too, is outstanding.

The directives followed findings that the municipalities in question, along with six others in Gauteng and the North West, collectively poured resources in the amount of over R3.1billion into the VBS Mutual Bank in violation of Regulation 6 of the MIR, which permits municipalities to make deposits only into banks registered under the Banks Act and to the exclusion of financial institutions registered in terms of the Mutual Banks Act. Between them, the 14 municipalities lost over R1.6billion of their investments.

The Public Protector’s investigation, which was launched on own-initiative following widespread news reports late 2018 that several municipalities had unlawfully invested large amounts of public funds meant for service delivery with the mutual bank, resulting in the misuse of the resources, showed that Vhembe District Municipality was the biggest loser, with R300million of more than R1billion in invested was lost. It was followed closely by other Limpopo municipalities such as Fetakgomo Tubatse, Greater Giyani and Lepelle-Nkumpi which lost more than R230million, R153million and R150million respectively.

“Municipal Manager were to have submitted implementation plans to us within 60 days from the date of this report, 28 June 2021, indicating how the remedial action was to be implemented. Sadly, we have not heard from the affected municipalities,” Adv. Mkhwebane explained, adding that without a court order setting aside the report, the remedial action was to have been complied with within the prescribed period to avoid contempt of the Public Protector.

The VBS Mutual Bank report is not the only one whose remedial action remains unimplemented. Directives contained in another report following an own-initiative systemic investigation on alleged tensions between some traditional authorities and the local sphere of government, across the country, posing a threat to the provision of quality of public service delivery to local communities are also yet to be acted upon.

Along with his counterparts in six other provinces, provincial CoGHSTA MEC Basikopo Makamu was urged to put measures in place to support and strengthen traditional councils so they can fulfil their functions. Such measures included helping traditional authorities to enter into service delivery agreements with municipalities in accordance with the Traditional Leadership Governance Framework Act 41 of 2003 (TLGFA). The TLGFA has since been repealed wholly and replaced by the Traditional and Khoi-San Leadership Act, 2019, which came into effect on 1 April 2021.

MEC Makamu was further urged to put in place measures to promote partnerships between municipalities and traditional councils in line with the TLGFA and the Intergovernmental Relations Framework Act.

This followed findings that provincial departments of CoGHSTA failed to promote partnerships between district municipalities and Kingship or Queenship Councils in contravention of the TLGFA. The departments were also found to have failed to provide information to traditional leaders and councils on their assigned roles and functions and on the Provincial Gazette which regulates their participation in proceedings of a municipal council and prescribes their role in the affairs of a municipality. They were further found to have failed to provide traditional leaders and councils with information on their funding, resourcing and remuneration.

Adv. Mkhwebane appealed to Hon. Molapo to invoke section 114 of the Constitution, in terms of which a provincial legislature must provide for mechanisms to ensure that all provincial executive organs of state are accountable to it and to maintain oversight of the exercise of provincial executive authority including the implementation of legislation.

She told the house that her office was eager to appear before the relevant portfolio committee to take members through the report with a view to paving the way for the relevant authorities to be hauled before the committee to answer for their failure to implement the remedial action. This was critical in the light a new crop of councillors having just been sworn-in, Adv. Mkhwebane said, adding that it was critical that the mistakes of the previous administrations are not repeated.

Following the meeting with Hon. Molapo, Premier Mathabatha, his executive, senior officials and a separate engagement with the House of Traditional Leaders, Adv. Mkhwebane inspected sewage spillage problems in Extension 76 in Polokwane, where residents build rooms for rental in their backyards over the municipal sanitation pipe network. It is suspected that the trend is a result of failure by the Polokwane Local Municipality to enforce by-laws. The matter is under investigation.

During the roadshow, the Public Protector engages parties interested in the office’s work in fulfilment of the office’s constitutional mandate to investigate, report on and remedy any alleged or suspected improper conduct in all state affairs and to be accessible to all persons and communities. Limpopo aside, the roadshow has already been to the Free State, Northern Cape, KwaZulu-Natal, North West and the Western Cape. Gauteng, Mpumalanga and the Eastern Cape are next.