Who will be the next target in the VBS prosecution’s focus?

Date: 20 October 2023 By: Anton van Zyl

The sentencing of the former municipal manager (MM) of Thulamela Municipality last week for his involvement in the VBS Mutual Bank investment fraud has likely caused unease in certain circles. The question on many minds is, who will be the next focus of investigators and, more importantly, the team of prosecutors?

Hlengani Emmanuel Maluleke (53) appeared in the Polokwane Specialised Commercial Crimes Court on Monday. The former municipal manager entered into a plea-and-sentence agreement with the State and was sentenced to five years’ imprisonment, wholly suspended for five years, on the condition that he is not convicted of a similar offense during the suspension period.

Maluleke pleaded guilty to contravening the Municipal Finance Management Act (MFMA). He was arrested in February last year for his role in the approval of an unlawful investment at VBS Mutual Bank. VBS was not a bank as defined in the Banks Act, and the municipality was not allowed to make investments with such institutions.

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 paid back with interest of R735,542.50.

What worked against Maluleke is that the chief financial officer (CFO) had not recommended that the money should be invested with VBS. Under political pressure, Maluleke overruled the CFO’s recommendation and authorised the investment with VBS.

State advocate Hein van der Merwe told the court that this offense was prevalent in the jurisdiction. He added that Maluleke was not the only MM who had succumbed to political pressure and authorised unlawful investments with VBS. This conduct led to a significant public outcry because of the losses suffered by innocent clients, including municipalities from impoverished areas.

Director of Public Prosecutions Advocate Ivy Thenga welcomed the conviction and sentence, commending advocate Hein van der Merwe, regional prosecutor Hilke Meyer, and the investigative team led by Lieutenant-Colonel Anton White from the Hawks.

Maluleke was arrested alongside the former mayor of Thulamela, Avhashoni Tshifhango. However, the state requested that the trial be separated, and Tshifhango will appear in court on January 29 and 30 in 2024, facing one count of corruption.

Maluleke’s case has brought attention back to the many other municipal managers, CFOs, and politicians who were in charge when these illegal investments were made.

One of the municipalities that lost the most money at VBS (more than R350 million) is the Vhembe District Municipality (VDM). In total, the VDM invested over a billion rand with the bank, even after being instructed by national and provincial treasury departments that doing so was not legal. The mayor during this period was Ms Florence Radzilani, who only resigned in December 2018 after a lot of pressure was exerted. She currently serves as MEC for Transport and Community Safety in Limpopo Province.

When the VDM began investing with VBS in 2015, the position of MM was vacant, and Mr M. Mothibi took up the role, with Mr A Thokwane as the CFO. Many of the investments were signed off by Thokwane.

In May 2016, when significant amounts were invested with VBS, Mr J Raphela was the (acting?) CFO, and Mr N Ngoepe was the acting MM. Raphela consistently recommended the investments, with Ngoepe signing off, until the end of 2016. In December 2016, Mr T Mufamadi became the acting CFO, and Mr M Mudau signed off on investments as acting MM. Two months later, Mr Nyiko Mchavi was appointed as the CFO, with Ngoepe again acting as MM.

In June 2017, Mr Reuben Rambado was appointed as MM at VDM. This was not Rambado’s first stint as MM; he had previously been suspended in July 2004 at Makhado Municipality for allegations of mismanagement. He later received a golden handshake and was redeployed at the Department of Communications.

On 5 July 2017, Rambado authorised a R60-million investment in VBS, based on the recommendation of CFO Mchavi. A week later, Mchavi approved another R100-million investment, with deputy CFO Mr Marutha signing off on the deal.

Another municipality that suffered significant losses (over R50-million) is Makhado Municipality. Here again, senior officials involved blamed the politicians, stating that the mayor had instructed them to make the VBS investments. During the first investments, the mayor was the late David Mutavhatsindi.

In April 2016, when Makhado first invested with VBS, the MM was Sakkie Mutshinyali, who denied any knowledge of these investments. The investigations that followed later showed that none of the forms had been signed by him. The forms 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 that year when the new mayor, Shonisani Mildred Sinyosi, took office.

Mutshinyali believed that he was a deterrent for the dodgy plans of the politicians. He eventually received a “golden handshake” of roughly R3.3 million and was asked to leave.

When Makhado invested R40 million with VBS in January 2017, the application was again only signed by the CFO, Ms Makhubela. Several such investments were made without the approval of the MM.

The mayor during this period was Sinyosi, who later told investigators that she was aware of the relevant legislation and knew that the policies regulating investments needed to be in place. She denied that any of the investments had been discussed with her or that she had made any input in the investment decisions.

Her version of the truth was disputed by the testimony of two of the municipality’s officials. Mr Johannes Kanwendo, the acting MM during the time that the investments were made, said that he had received a direct instruction from the mayor that investments should be made with VBS. The Manager: Revenue at the municipality, Mr Ruben Radzilani, also said during his interview that he had been informed that investments “were a political issue” and that he had to sign the investment documents.

Sinyosi refused to relinquish power and was only removed at the end of 2018 when the ANC’s national body issued strict instructions.

The municipality’s CFO, Makhubela, whose hand was always present in the transactions, was “redeployed” in 2018 to the Greater Tzaneen Municipality, where she became CFO with an effective salary of around R1.5-million per year.

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Anton van Zyl

Anton van Zyl has been with the Zoutpansberger and Limpopo Mirror since 1990. He graduated from the Rand Afrikaans University (now University of Johannesburg) and obtained a BA Communications degree. He is a founder member of the Association of Independent Publishers.

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