No jail time for former municipal manager who made unlawful VBS investment

Former Thulamela municipality manager Hlengani Emmanuel Maluleke has been sentenced to five years in jail, suspended for the same period, for his role in the approval of an unlawful investment of municipal funds in VBS Mutual Bank. 

The state entered into a plea and sentence agreement with Maluleke in the Polokwane specialised commercial crimes court on Monday, where he pleaded guilty to contravening the Municipal Finance Management Act (MFMA). 

Maluleke was out on R30,000 bail after he was arrested by the Hawks in February 2022 for his role in the approval of an unlawful investment of R30m in VBS because it was not a bank as defined in the Banks Act.

In June 2020 eight people associated with VBS and the bank's auditor, KPMG, were charged by the National Prosecuting Authority (NPA) on 47 counts of theft, fraud, corruption and contraventions of the Prevention of Organised Crime Act. VBS chair Tshifhiwa Matodzi, CEO Andile Ramavhunga and CFO Philip Truter were among those arrested and charged.

The MFMA does not allow municipalities to bank with a mutual bank. 

NPA spokesperson Mashudu Malabi-Dzhangi said the municipality did not suffer any loss or prejudice. “The R30m investment matured and yielded interest amounting to R735,542.50. The investment and the interest were paid back to the municipality.”  

Investigations revealed the CFO did not recommend that the money be invested with VBS. He recommended Standard Bank.

However, on December 23 2016, Maluleke overruled the recommendation and authorised the opening of an interest-bearing three-month fixed deposit account in the name of Thulamela municipality “as a result of political pressure”.  

“By so doing, the accused did not take reasonable steps to ensure the resources of the municipality were used effectively, efficiently and economically and acted in a grossly negligent way in contravention of MFMA,” she said. 

In aggravation of sentence, prosecutor Hein van der Merwe said the conduct of Maluleke and other municipalities that invested in this unlawful way resulted in much public outcry because of losses suffered by innocent clients, including municipalities from impoverished areas.  

Limpopo director of public prosecutions Ivy Thenga welcomed the conviction and sentence and said this would send a warning to public officials about contravening the legislative frameworks governing their conduct.  

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