VBS Mutual Bank.
VBS Mutual Bank.

Owners of sectional title properties and managers of community schemes have been urged to continue paying their levies to the Community Schemes Ombud Service (CSOS) following the suspension of two executives for investing R80m  of its surplus funds with failed the VBS Mutual Bank.

Acting chief ombud Ndivhuo Rabuli assured a roadshow meeting in Cape Town this week that her office is not in financial distress and will continue to deliver services.

A damning report by advocate Terry Motau and Werksmans Attorneys, released in October, detailed looting at VBS bank of nearly R2bn and identified political players from the ANC and the EFF who benefited from the scam.

Following rumours that community schemes around the country are choosing not to pay the obligatory fee — which is calculated as a percentage of levies to the ombud’s office for its funding —  ostensibly because the office is failing its mandate, Rabuli urged schemes and homeowners’ associations to pay their levies. “It is legally correct to do so,” she said.

She said her office is engaging with all its stakeholders to communicate its position, to instill confidence in the current CSOS management and its plan of action, to encourage compliance and payment of levies, and to mitigate the damage caused by the VBS investment and recent media reporting on it.

Human settlements minister Nomaindia  Mfeketo has ordered an independent forensic investigation into the unauthorised investment of R80m of the office’s surplus funds.

The investigation, involving former acting chief ombud Seeng Letele and CFO Themba Mabuya, is under way and is expected to be completed by the end of November. The pair have been  on suspension with full pay since early September amid allegations of gross negligence, dishonesty and dereliction of duty regarding the VBS investment.

Rabuli said she is also awaiting the final report of the curator of VBS bank to determine whether the R80m, plus about R1m interest on it, will be recouped.

The ombud’s office came into operation about two years ago with the aim of resolving disputes in shared living arrangements such as sectional title, share block and homeowner associations, as well as regulating the conduct of parties within community schemes and ensuring  their good governance.

The financial position of the ombud’s office was audited by the auditor-general, who issued an adverse opinion stemming from it not having an adequate system to record and reconcile levy payment transactions and because of the irregular investment.

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