A year after the release of Adv. Terry Motau's report, "The Great Bank Heist" which dissected the criminal looting of VBS Mutual Bank - no arrests have been made. Victims of a financial conspiracy are afraid to speak out about the implications of losing their life savings. The parliamentary delegation also uncovered details of golden handshakes awarded to implicated municipal officials who resigned. It was also clarified by the ANC's provincial structures that disgraced Mayors were still considered eligible to serve as councillors. Illustration: KAREN MOOLMAN
A year after the release of Adv. Terry Motau's report, "The Great Bank Heist" which dissected the criminal looting of VBS Mutual Bank - no arrests have been made. Victims of a financial conspiracy are afraid to speak out about the implications of losing their life savings. The parliamentary delegation also uncovered details of golden handshakes awarded to implicated municipal officials who resigned. It was also clarified by the ANC's provincial structures that disgraced Mayors were still considered eligible to serve as councillors. Illustration: KAREN MOOLMAN

There is growing and quite understandable incredulity that a year after the release of advocate Terry Motau’s report, entitled “The Great Bank Heist”, which dissected the outrageous and criminal looting of VBS Mutual Bank, no arrests have been made, never mind prosecutions commenced.

The Hawks are reportedly planning arrests imminently, after having to conduct their own investigation into the large-scale fraud, in which 16 poor municipalities were ensnared.

Aside from the issues of justice and redress, lethargy in addressing VBS’s criminality matters to local government because of the message it sends to public and elected officials. So far, criminality has been rewarded, and even in the glare of public exposure flourished in instances where implicated officials have been awarded golden handshakes.

One of the most disheartening recent reports was the failure of affected community members to attend a parliamentary committee’s hearing at the Vhembe district council chambers in Thohoyandou, due to concerns that they might be killed after their testimony.

What then are the lessons learnt from VBS? Keep quiet or risk your life.

This is clearly an outrageous situation for a democratic state — where victims of a financial conspiracy are afraid to speak out about the implications of losing their life savings. But it is also understandable after two outspoken SA Municipal Workers’ Union (Samwu) leaders who were municipal employees, Ronald Mani and Tshililo Timson Musetsho, were threatened and subsequently killed earlier this year.

The parliamentary delegation also uncovered details of golden handshakes awarded to implicated municipal officials who resigned after the VBS scandal broke, escaping censure and disciplinary consequences — including former Vhembe municipal manager Reuben Rambado, who allegedly received R1m. Again, this is clearly unacceptable and countered a provincial government directive for municipalities not to settle with implicated officials.

With the national gaze on VBS last year, the ANC axed implicated politicians from their municipal posts, but the graft-busting position was undermined when it emerged that seven mayors were deemed suitable for deployment after undergoing “robust political induction and rehabilitation”, according to ANC Limpopo provincial secretary Soviet Lekganyane. It was also clarified by the ANC’s provincial structures that disgraced mayors were still considered eligible to serve as councillors, with provincial spokesperson Donald Selamolela affirming their ANC membership.

As is all too often the case, national messaging was undermined by regional leadership interests. At a more micro level, mayors can find themselves unable to institute leadership decisions if they go against those of more senior party cadres despite being subordinates in municipal structures.

It is worth recalling that the ANC deputy provincial chair in Limpopo, Florence Radzilani, who gained notoriety when as former Vhembe mayor she is alleged to have demanded a “Christmas” bonus of R300,000, was named in Motau’s report. Despite the VBS scandal, Radzilani was sworn in as a Limpopo legislature member earlier this year.

Selamolela’s position is revealing in presenting the argument that the ANC is not a “punitive” organisation and that it believes in rehabilitating errant cadres. Analysed, this superficially compassionate view translates into a lack of consequences for institutional or service delivery malfeasance — a theme that is confirmed year in and year out by the auditor-general’s assessments of local government. In effect, party comes before performance.

It would also be wrong to suggest Selamolela’s views are unique or without precedence. Errant officials and elected officials have frequently been removed from one municipality only to be redeployed to another municipality, or at times a provincial position.

Rambado (mentioned earlier as the beneficiary of a golden handshake from Vhembe district) is but one example of a municipal official who entered the fray with baggage. In his case, he is alleged to have been paid R830,000 in 2004 to resign from Makhado municipality, where he had been suspended for mismanagement.

Another recent case is former Maluti-a-Phofung mayor Vusimusi Tshabalala, who was accused of corruption in the embattled municipality only to be redeployed as the ANC chief whip in the Free State legislature in May.

Other Free State politicians, MECs Mathabo Leeto and Benny Malakoane, face the uncertain prospect of the National Prosecuting Authority (NPA) reinstating charges of corruption, fraud and racketeering emanating from their tenure as mayor and municipal manager of Mathjabeng, respectively. These are but a sample of such instances of redeployment.  

From an institutional and policy perspective, what incentives are created by a “nonpunitive” culture? It is not one — presumably as intended — of rehabilitation to focus on public service, but rather in effect condoning corruption by promoting perverse incentives, despite periodic attempts at a national level to “professionalise” local government. These have gone as far as legislating a Municipal Systems Amendment Act, but the political will to ensure the most suitable, non-partisan candidate be appointed to key municipal posts has been wanting.

Clearly, serving political parties before constituencies and the public at large is imperative for political survival, even if criminality is evident. This will be forgiven, even rewarded, as VBS has taught us.

What then are the lessons learnt from VBS? Keep quiet or risk your life. Contrive or comply with corruption and get rewarded, or at worst redeployed. Also, party structures are the ultimate arbiters of careers, not municipal or even provincial disciplinary protocols or procedures.

The institutional problem with politicians being protected for party loyalty or seniority lies in that not only are the right people not necessarily appointed to the right job, but that it perverts the focus from service delivery to party objectives and repels non-partisan professionals from the sector. Which professional would wish to work in a partisan environment where policy decisions and programme directives are determined and dictated by opaque party structures outside municipal institutions? To this extent, capacity issues in local government are as much a symptom as a cause of dysfunction.

Against this malaise, the ANC’s district-based programme, Khawuleza (to accelerate service delivery), has been presented as a way in which dysfunction can be addressed in local government, but the fundamental incentive issues illustrated by the VBS debacle will undermine any prospect of success if the focus on political parties and patronage is not corrected.

From an economic perspective, public choice theory, drawing on game theory, is pertinent in considering how officials cannot be assumed to consider public interest before their self-interest. Related to this is rent-seeking, a term South Africans are increasingly all too familiar with, which considers how market privilege encourages government and market agents to seek benefits from monopolistic opportunities.

Local government graft and inefficiency can only be addressed with consistent top-level political will and oversight, failing which the incentive for senior officials and elected officials is to focus on politics, overlooking or complying in rent-seeking and keeping service a distant second objective with little by way of recognition or reward.

• Heese is Municipal IQ’s economist and Allan its MD.