Mkhize denies urging municipalities to invest in VBS

Sunday, July 1, 2018

Cooperative Governance and Traditional Affairs (CoGTA) Minister Zweli Mkhize has denied claims made by United Democratic Movement leader Bantu Holomisa that he urged municipalities to invest money in VBS Mutual Bank.

“I want to specifically state and categorically deny that I ever engaged either the PIC [Public Investment Corporation] or any municipality to support VBS Mutual Bank.

“The insinuation that when I engaged with business it was with the unscrupulous intention of doing them a favour or using undue influence for them to secure work, contracts or deals with government departments, municipalities or State-owned entities is false, unfounded and demeaning,” said Mkhize.

Holomisa alleges that Mkhize urged municipalities to invest in VBS during his tenure as Treasurer General of the ANC. He made the claim during a television interview with Tim Modise on eNCA.

“I can confirm that I was once invited to VBS offices where they introduced themselves and their business to me without seeking a single favour from me.

“In fact at the time, I commended them for playing a role in the realization of a black bank in South Africa. If any other funds were exchanged with VBS in the name of the ANC while I was still the TG of the organisation, I am quite keen for this to be disclosed in full so we can expose such scams publicly,” said Mkhize.

In March, VBS Mutual Bank was put under curatorship due to concerns over its liquidity and required reserves were raised late in 2017.

A total of 14 municipalities invested funds in VBS Mutual Bank as part of short-term investments. As a collective, the municipalities invested an amount of R1.5 billion. The municipalities are in the North West, Limpopo and Gauteng.

Government has since instituted an investigation into VBS with the South African Reserve Bank, the Auditor-General as well as the SA Police Service looking into the matter.

“I have assigned senior CoGTA officials to work with the Auditor-General and National Treasury, and to regularly meet with the SA Reserve Bank and share information to ensure the success of the investigations.

“We are determined to get to the bottom of this because the loss of R1.5 billion of municipal funds is a serious loss that negatively impacts on service delivery,” said Mkhize.

The Minister reiterated that plans are afoot to stabilise the affected municipalities.

During a meeting with mayors and municipalities, the following was agreed to as actions to be taken:

  • Provincial CoGTA departments and the affected municipalities would work on recovery plans to augment possible service delivery disruptions due to possible loss of investment.
  • Municipalities would fully disclose the VBS investment on their financial books and also inform their communities about the measures in place to mitigate service delivery challenges.
  • All involved municipalities would report to CoGTA on actions taken against officials who have transgressed the law.

“This is a serious matter, which does not require mischief and grandstanding. If the UDM leader has information on the VBS matter, he should assist the government agencies that are investigating,” said Mkhize. –