VBS Mutual bank customers at long queues outside the bank, demanding their money in Thohoyandou, Limpopo. Picture: ANTONIO MUCHAVE/SOWETAN
VBS Mutual bank customers at long queues outside the bank, demanding their money in Thohoyandou, Limpopo. Picture: ANTONIO MUCHAVE/SOWETAN

The poor will be the most affected by the VBS Mutual Bank scandal. This is what Municipal IQ — which specialises in local government data — concluded after a forensic report, The Great Bank Heist, was published on Wednesday.

The report‚ compiled by advocate Terry Motau and Werksmans Attorneys‚ goes into detail about how the bank heist allegedly occurred and lists a number of former executives of VBS and its largest shareholder‚ Vele Investments‚ who were the alleged perpetrators and beneficiaries of the crime.

Municipal IQ economist Karen Heese said some municipalities will face financial problems because they have more than 60% of their operating budgets tied up in VBS Mutual Bank. These include the Collins Chabane‚ Dr Ruth Segomotsi Mompati‚ Greater Giyani and Lepelle-Nkumpi municipalities.

“None of these municipalities are in wealthy localities and many residents depend on them for indigent support. Ultimately‚ it is the poorest of the poor who will pick up the tab for the shameless corruption in these municipalities‚” said Heese.

The report also recommends that individuals that assisted in inducing municipalities to deposit money with VBS — “whether the maker of the bribes or as the recipient of the bribes” — be criminally prosecuted. 

Municipal IQ director Kevin Allan said: “It is a grave concern that these municipalities had been warned by National Treasury that such investments were not allowed by the Municipal Finance Management Act (MFMA)‚ but they still proceeded to place much-needed municipal income into VBS‚ often it seems for a corrupt personal pay-off.”

Using the report‚ Municipal IQ found the amount remaining in VBS from municipal deposits totaled R1.229bn.

Here is a breakdown by municipality. These are not the only municipalities that invested in VBS Mutual‚ but constitute those with an outstanding balance as of the end of April this year:

  • Fetakgomo Greater Tubatse Municipality: R245.1m
  • Greater Giyani Municipality: R161.6m
  • Lepelle-Nkumpi Local Municipality LIM355: R154.9m
  • Collins Chabane Local Municipality: R122.4m
  • Dr Ruth Segomotsi Mompati Municipality: R101m
  • Mafikeng/Mahikeng Local Municipality: R84.9m
  • Ephraim Mogale Local Municipality: R84.7m
  • West Rand District Municipality: R77.3m
  • Makhado Local Municipality: R62.7m
  • Moretele Local Municipality: R51.5m
  • Merafong Local Municipality: R51m
  • Madibeng Local Municipality NW372: R31.4m
  • Elias Motsoaledi Local Municipality: R55,986
  • Vhembe District Municipality: R2‚977