The conviction and sentencing of the former chief financial officer (CFO) of the Collins Chabane Municipality for his role in the VBS Bank looting scandal have reignited public calls for accountability for others implicated in the scheme.
Eadie Makamu was found guilty last Wednesday (27 November) of contravening Section 173(1) of the Municipal Finance Management Act, 2003 (MFMA). He appeared in the Pretoria High Court and received a five-year prison sentence, wholly suspended for five years on the condition that he is not convicted of a similar offence during this period. Additionally, he has been ordered to pay R150,000 to the VBS liquidator.
Makamu served as CFO of the municipality when it illegally invested R120 million with VBS Mutual Bank. These funds were never fully recovered. According to the Directorate for Priority Crime Investigations (Hawks), "Investigations revealed that some of the funds were used to pay brokerage commissions to individuals and entities in a scheme designed to attract more deposits from municipalities."
Makamu was arrested on 5 May 2022 and has been attending court alongside his co-accused, Ms Charlotte Ngobeni, who will now face trial alone from 3 to 20 March 2025. Ngobeni is the former MM of the municipality.
The National Head of the Hawks, Lt-Gen Godfrey Lebeya, praised the work of the investigation and prosecution teams. He noted that 35 arrests have been made since the investigation began, with six convictions secured.
However, questions remain about the accountability of other officials involved. The mayor at the time, Joyce Bila, appears to have avoided scrutiny from law-enforcement agencies. She previously denied authorizing the R120 million investment, stating that the responsibility had been delegated to the municipal manager (MM) and CFO, whom she had trusted to fulfil their duties. Bila was dismissed as mayor in December 2018.
Many residents believe that the mayors of all the municipalities that invested funds with VBS Bank should also face prosecution under the MFMA. The Act mandates that mayors oversee the financial management of their municipalities and ensure compliance with the MFMA's provisions. While they may not directly interfere with operational responsibilities assigned to municipal managers or other officials, they are tasked with providing guidance and monitoring compliance.
As for the two other local municipalities and one district municipality in Vhembe that also invested with VBS, the situation remains as follows:
Thulamela's skeletons
In October last year, the former municipal manager (MM) of Thulamela Municipality, Hlengani Emmanuel Maluleke, was sentenced for his role in the VBS debacle. Maluleke entered into a plea-and-sentence agreement with the State and received a five-year prison sentence, wholly suspended for five years on the condition that he is not convicted of a similar offence during this period.
Unlike most other municipalities that invested with VBS, Thulamela Municipality did not lose its money. The R30 million investment matured after three months and was repaid with interest amounting to R735,542.50.
What worked against Maluleke, however, was the fact that the municipality's CFO, Mr Munzhedzi Morgan Tshivule, had not recommended the investment with VBS. Acting under political pressure, Maluleke overruled the CFO's recommendation and authorised the investment.
Maluleke was arrested alongside the former mayor of Thulamela, Avhashoni Tshifhango. However, the State requested that their trials be separated, with Tshifhango facing prosecution for alleged corruption.
In October this year, Tshifhango again appeared in the Polokwane Special Commercial Crime Court, where it was alleged that he had received a bribe in the form of a Jeep Cherokee. The vehicle was purchased by a company, ROBVET, which acted as an intermediary to pay various questionable expenses on behalf of VBS. A former VBS official testified in court that over half a million rand was paid for the vehicle used by Tshifhango.
The case is set to continue from 24 to 28 February next year.
Vhembe went all in
The municipality that lost the most money - more than R350 million - following the collapse of VBS Bank was the Vhembe District Municipality (VDM). In total, VDM invested over a billion rand with the bank, despite being explicitly instructed by both the national and provincial treasury departments that such investments were illegal.
When VDM began investing with VBS in 2015, the position of municipal manager (MM) was vacant, and Mr M. Mothibi assumed the role, with Mr A. Thokwane as the CFO. Many of the investments during this period were signed off by Thokwane.
By May 2016, substantial amounts were being invested with VBS. During this time, Mr John Raphela served as acting CFO, while Mr Nare Ngoepe was the acting MM. Raphela repeatedly recommended the investments, and Ngoepe signed them off until the end of 2016. Notably, VDM was under administration during this period, and both officials had been seconded by the provincial government to manage the municipality.
In December 2016, Mr Thifhelimbilu Mufamadi took over as acting CFO, with Mr M. Mudau signing off on investments as acting MM. Two months later, Mr Nyiko Mchavi was appointed as the CFO, while Ngoepe served as acting MM.
In June 2017, Mr Reuben Rambado was officially appointed as MM at VDM. The following month, Rambado authorised a R60 million investment in VBS, based on a recommendation from CFO Mchavi. Just a week later, Mchavi approved an additional R100-million investment, with deputy CFO Mr Marutha signing off on the transaction. Both Rambado and Mchavi were later suspended in the wake of the allegations surrounding the investments.
During this period, the mayor of VDM was Ms Florence Radzilani. She eventually resigned in December 2018 under significant public and political pressure. However, she was later redeployed as the MEC for Transport and Community Safety in Limpopo Province, a position she continues to hold.
Makhado's mayor had a role to play
Makhado Municipality lost over R50 million when VBS Bank was liquidated. In Makhado's case, senior officials implicated in the scandal shifted blame onto politicians, claiming that the mayor had instructed them to make the investments in VBS. At the time of the initial investments, the mayor was the late David Mutavhatsindi.
In April 2016, when Makhado first invested with VBS, the MM was Mr Sakkie Mutshinyali, who denied any involvement or knowledge of the transactions. Subsequent investigations revealed that none of the investment forms had been signed by him. Instead, they were signed by the CFO, Ms Mikateko Palesa Makhubela, the Manager: Revenue, Mr N. Radzilani, and the Manager: Assets, Ms Lubisi. Mutshinyali was suspended in November 2016 after the new mayor, Shonisani Mildred Sinyosi, assumed office.
When Makhado invested R40 million with VBS in January 2017, the investment forms were again signed only by the CFO, Ms Makhubela. Several similar transactions were made without the MM's approval.
Mayor Sinyosi later informed investigators that she was aware of the legislation governing municipal investments and understood that policies regulating such investments had to be followed. She denied having discussed or approved any of the VBS investments.
Her claims, however, were contradicted by two municipal officials. Mr Johannes Kanwendo, the acting MM at the time of the investments, testified that he had received a direct instruction from the mayor to invest funds with VBS. Similarly, the municipality's Manager: Revenue, Mr Ruben Radzilani, stated during his interview that he was informed the investments were "a political issue" and that he was required to sign the documents.
Sinyosi resisted calls to step down and was only removed at the end of 2018 after the ANC's national leadership intervened with strict directives.
The municipality's CFO, Ms Makhubela, whose signature featured prominently in the transactions, was redeployed in 2018 to the Greater Tzaneen Municipality, where she assumed the same position as CFO.
The long arm of the law awaits
Limpopo Mirror has reliably learned that investigations into several other officials and political office bearers implicated in the VBS transactions are ongoing. The National Prosecuting Authority (NPA) is currently pursuing cases against three individuals linked to the Giyani Municipality. These include former MM Risimati Hitler Maluleke, acting CFO Nditshedzeni Mashau, and businessman Zwivhuya Goodness Tshishonga.
Officials from other Limpopo municipalities have also appeared in court, and their cases are progressing.
Regarding the Vhembe and Makhado municipalities, it has been indicated that arrests could potentially be made in 2025. The delay in prosecutions is attributed to an extremely high workload faced by investigators and prosecutors handling the cases.