Municipal funds invested in VBS could've improved service delivery - Mkhwebane

About 15 municipalities in Limpopo, Gauteng and North West deposited about R1,6 billion with the bank, suffering substantial losses after the bank failed.

VBS Mutual Bank in Thohoyandou. Picture: Sethembiso Zulu/Eyewitness News

CAPE TOWN - Money invested by municipalities in the now defunct VBS Mutual Bank could have been used to improve service delivery to communities, Public Protector Busisiwe Mkhwebane said.

About 15 municipalities in Limpopo, Gauteng and North West deposited about R1,6 billion with the bank, suffering substantial losses after the bank failed.

On Wednesday, Mkhwebane released the reports of a number of investigations concluded by her office.

She said the 15 local municipalities in Limpopo, the North West and Gauteng acted irregularly when they deposited money with VBS Mutual Bank.

The deposits were made in breach of the Municipal Finance Management Act and in defiance of National Treasury instructions not to do so.

“The funds lost could have been used to improve service delivery to the municipalities. The conduct of the municipalities concerned was accordingly improper as envisaged by the Constitution and constituted maladministration in terms of the Public Protector Act,” she said.

Mkhwebane laid down steps for remedial action, including the training of officials and regular compliance audits.

“The Limpopo, North West and Gauteng MECs responsible for local government must submit regular reports to the director general of the National Treasury with their comments, where appropriate, on the implementation of the remedial action above.”

Download the Eyewitness News app to your iOS or Android device.