By Silas Nduvheni and Anton van Zyl
The arrest and subsequent court appearance of the former mayor and the current municipal manager of the Thulamela Municipality on Tuesday have clearly caused an atmosphere of uncertainty in local political circles. The questions on many lips are "who will be next?" and "why Maluleke?"
Thulamela's former mayor, Avhashoni Tshifhango, and the municipal manager (MM), Mr Hlengani Emmanuel Maluleke, appeared in the Thohoyandou Magistrate's Court on charges of corruption and contravention of the Municipal Finance Management Act. The two were instrumental in the R30 million investment that the municipality made with the VBS Mutual Bank.
The two men were not asked to plead, and the case was postponed to 24 May. The postponement was made to allow further police investigation and for the National Prosecuting Authority (NPA) to hand over copies of the dockets to the legal representatives of the accused. Their case was also transferred to the Polokwane Commercial Specialised Court. Bail was set at R30 000.
Many people who have been following the VBS Bank debacle closely were surprised by the arrest of specifically Hlengani Maluleke. A forensic report commissioned in 2018 by the Limpopo government's treasury department fingered many senior politicians and officials. This report, as well as evidence that came out in disciplinary hearings, indicated that a lot of political pressure was exerted on officials to invest in the scandal-ridden bank.
Thulamela's investment in VBS is also slightly different from those of other municipalities as the only municipality that did not lose money in the process, and in fact gained a lot in interest. Prior to VBS Bank being "hi-jacked", this municipality also made short-term investments with the bank. The fact that this may have been in contravention of legislation was seemingly never pointed out.
On 23 December 2016, Thulamela invested R30 million with VBS at an interest rate of 9,15%. The decision to invest with VBS was not unanimous and was met with some resistance from officials, who were worried about the safety of the investment. What also became apparent later was that the acting CFO at the time, Ms Nembudani, was concerned about the legality of the investment and wrote to, among others, the SA Reserve Bank, asking for clarity.
Despite the CFO's refusal to recommend the investment at VBS, the municipal manager, Mr Hlengani Maluleke, approved it and the funds were transferred. The money was invested for a period of three months, after which the funds were paid back, with interest of just over R682 000.
Several months before this investment was made, VBS started to woo the municipality. In August 2016, VBS made a presentation to Thulamela that clearly indicates that pressure was mounting on the municipality to channel funds to the mutual bank. The mayor, Avhashoni Tshifhango, admitted that he knew the bank's chairperson, Tshifhiwa Matodzi, as they had studied together in 1997. He described the discussions as mere "conversations between friends".
In December 2016, the same month that Thulamela made the investment, Tshifhango obtained vehicle finance from VBS, which he used to purchase a Jeep Cherokee valued at R638 000. The vehicle was later returned, and the mayor did not appear to have any outstanding debt with the bank. Whether the money had been repaid or merely "wiped out" in a series of inter-account transfers is not clear.
The forensic report indicates that the VBS officials clearly had insider information about Thulamela's finances. Tshifhiwa Matodzi apparently knew that VBS was offering higher rates than the other banks when asked to supply quotes. VBS had also sent a quote to the municipality after the closing date specified for submissions of quotes, but this quote was nevertheless accepted.
Thulamela Municipality took some time to act against its mayor and MM, but eventually the pressure became too much. The mayor was sacked in June 2021, but the MM held on, refusing to resign. A disciplinary hearing was eventually held on 26 July, where Maluleke was charged with gross dishonesty, gross misconduct, or alternatively, gross negligence. Prior to the hearing's taking place, a plea agreement was concluded between the municipality and Maluleke. This would have entailed his receiving a mere warning.
Despite the plea agreement, in which Maluleke pleaded guilty to all seven charges, the hearing continued, with Maluleke opting to represent himself. As a mitigating factor, Maluleke was portrayed as having a clean record at the municipality and, under his leadership, Thulamela had received unqualified audit reports. He also indicated that he had approved the investment at VBS after political pressure had been exerted.
Maluleke's fate even featured in the Thohoyandou division of the High Court. Parties opposed to the slackness of the municipality approached the court to force them to take action. It is not certain what had happened to this case, but seemingly Maluleke is still the municipality's MM.
Thulamela local municipality's spokesperson, Mr Nndwamato Tshiila said on Wednesday that he cannot comment on the issue, since the matter is sub judice. He said the Thulamela Council must meet to discuss the matter. "We will inform the media in due course (of the outcome), soon after the Council members have met to discuss Mr Maluleke's fate," he said.
The public seem to be less sympathetic towards Thulamela's former mayor, but in political circles he still has a lot of clout. After being asked to step down as mayor, Tshifhango was redeployed as a councillor at the Vhembe District Municipality (VDM). After last year's local government elections, he was elected to be a member of the mayoral committee (MMC) and is responsible for corporate services.
VDM spokesperson Mr Moss Shibambu responded to questions this week, saying that councillors were deployed to the municipalities by their respective parties. According to their understanding, the ANC will have a caucus meeting, after which they will request the VDM to call a council meeting.
The secretary of the ANC in the Vhembe region, Mr Rudzani Ludere, said that Tshifhango would have to step down from his responsibilities as MMC for corporate services until his case was finalised. "He cannot be suspended as he has not yet been found guilty of the charges he is facing," he said.
The national spokesperson for the Directorate for Priority Crime Investigation (Hawks), Col Katlego Mogale, said the latest arrests followed after an intensive investigation into the dealings involving the VBS Mutual Bank. He said the investigations were at an advanced stage.
The national head of the Hawks, advocate Godfrey Lebea, confirmed this. "This is the beginning, and all the other cases are receiving the necessary attention," he said. Lebea said that, so far, at least 25 people had been arrested and were in the criminal justice system. They face more than 100 charges, and more suspects are expected to be arrested during the course of the investigation.