The Elias Motsoaledi local municipality has withdrawn its investment with VBS Mutual Bank after two of its senior employees were arrested this week.
The employees, mayor Julia Mathebe, 51, and 59-year-old municipal manager Minah Maredi were arrested in relation to a R190-million fraudulent deal with VBS Mutual Bank on Wednesday and subsequently appeared at the Pretoria Specialised Commercial Crimes Court.
They face multiple charges of corruption, money-laundering and contravention of the Municipal Finance Management Act and the Banks Act.
It is alleged that Maredi influenced an investment of millions of rands belonging to the municipality to VBS Bank between 2016 and 2018.
According Colonel Katlego Mogale, regional spokesperson for police, Mathebe benefited R300 000 from the investment.
Mogale said: “The arrest was as a result of an ongoing investigation into the VBS Mutual Bank investments that were conducted by municipalities in contravention of the Municipal Finance Management Act.
“The municipal manager is said to have been instrumental in investing R190-million municipal funds into the VBS Mutual Bank, wherein the mayor received over R300 000 in gratification, which included cash, accommodation and flight tickets. These were channeled through a company belonging to her children.”
After the municipality was advised by the Treasury to withdraw the investment, it confirmed that indeed an investment was made, however, it said no financial loss was suffered by the municipality. It further said that service delivery was not affected.
“The entire capital amount of R190-million that was invested was withdrawn. The total interest received by the municipality from VBS is R2.5-million. Only an amount of R48 247 relating to interest was not received and that amount is also disclosed under note 10 of the 2017/2018 annual financial statements,” the municipality said.
“To this end, the municipality confirms that no financial loss was experienced on this invested capital. Furthermore, no service delivery programmes or projects were negatively affected by this investment.”
Maredi and Mathebe have been released on R30 000 bail each and are expected to return to court on March 2 2023.
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