Despite the recovery of R617 million (misreported in various media as R670m) in looted funds at VBS Mutual Bank, many people who invested more than R100 000 of their savings in the bank have lost most of their money.
Anoosh Rooplal, the bank’s liquidator, announced last week that the recovered funds would be paid back to verified creditors, including municipalities that had invested in the now-defunct bank, trade creditors, and 458 retail depositors, who had more than R100 000 in their VBS accounts.
The VBS Mutual Bank Shareholders’ Forum secretary, Robert Livhoyi, said the payments have been disappointingly low.
“The first payment was R7 per R100, and the second was R20 per R100. Even though the members were unhappy, there was nothing they could do,” he said.
Livhoyi said people who had invested their entire savings in the bank were dissatisfied with the liquidator’s payout criteria.
“It has been a painful experience for them. Some have lost hope, and a few have passed on,” he said.
Spokesperson for the liquidator Louise Brugman said the 458 retail depositors are now classified as creditors. They will receive 25.6% of their funds from the first and second dividends, provided they have submitted valid claims to the liquidator.
“Ninety-eight percent of retail creditors who held less than R100 000 in their VBS accounts have been paid in full (up to R100 000) through the Department of Treasury, which provided a guarantee to the SARB,” she said.
“The liquidator’s team will continue to trace and recover the assets of the bank in anticipation of making an additional dividend payment to creditors in the future.”
Municipalities have lost 75% of their funds
Municipalities such as Vhembe District will receive about R80m of the R350m it invested. The Collins Chabane Municipality, which had invested just over R123m, will recover only R32m. Makhado Municipality will get back just R12.8m of its R50m.
Other Limpopo municipalities to get some of their money back include Fetakgomo Tubatse (R58m), Greater Giyani (R10m) and Lepelle Nkumpi (R39m).
On Tuesday, Limpopo Co-operative Governance MEC Basikopo Makamu said the provincial government would exercise oversight on how the funds are spent.
“First, municipalities are required to align the use of recovered funds with pre-approved service delivery priorities. These priorities include water infrastructure, electricity provision, and sanitation, as stipulated in their Integrated Development Plans,” he said.
Makamu said all expenditure will undergo rigorous auditing by the Auditor-General, which has already flagged past irregularities and will monitor compliance with the Municipal Finance Management Act (MFMA).
Also, quarterly public reports on fund allocation and project progress will be mandated.
To further prevent misuse, Makamu said the province has partnered with the Hawks and the National Prosecuting Authority to pursue criminal charges against officials implicated in financial misconduct, using recent convictions as a deterrent. Municipal managers and chief financial officers are also undergoing mandatory MFMA training to strengthen governance.
“The Limpopo Treasury will enforce conditional grant-like controls on the recovered funds. This approach draws from lessons learned during the VBS crisis, where lax oversight enabled irregular investments,” Makamu said.
This article was first published by GroundUp and is republished with permission in terms of a Creative Commons Attribution-NoDerivatives 4.0 International Licence.
