AG Report: VBS Scandal Haunts Service Delivery In Limpopo’s Cash-strapped Municipalities

ROLIVHUWA SADIKI

INVESTING hundreds of millions of public funds into the VBS Mutual Bank has had an adverse impact on some Limpopo municipalities’ ability to deliver services in the 2018-2019 financial year.

The impact of the R1.2 billion loss following the liquidation of VBS Mutual Bank is still being felt by the municipalities concerned, where service delivery has been affected, said Auditor General (AG) advocate Kimi Makwetu in his Municipal Audit outcomes for the financial year 2018/2019. 

Makwetu also said conditional grants provided for infrastructure development and maintenance were not always used for their intended purposes or were poorly managed.

“The province further reported water losses of R341 million due to poor management and monitoring,” he said. 

During the previous financial year, eight municipalities in Limpopo namely Vhembe district, Fetakgomo Tubatse, Collins Chabane, Makhado, Lepelle-Nkumpi, Greater Giyani, Elias Motsoaledi and Ephraim Mogale suffered a bulk loss of 72% in investments with the now defunct VBS bank.

This resulted in a failure to complete major water projects in the province after the billions could not be recouped when the bank collapsed.

Makwetu announced that two of the errant municipalities, Vhembe district and Collins Chabane local municipalities managed to improve their audit opinions from disclaimers to qualified opinions.

The AG’s report revealed that Vhembe incurred a loss of R369 millions of own revenue invested in the bank.

“The adverse impact on the district’s ability to deliver services continued in the 2018-19 financial year as the district was unable to pay for repairs and maintenance of water pipes and boreholes due to the lack of funds, which resulted in water interruptions for citizens and escalated water losses,” Makwetu said.

Meanwhile, Makhado, Greater Giyani and Lepelle-Nkumpis’ opinions remained unchanged as qualified audit opinions.

Makhado lost R63 million of the equitable share invested resulting in