CDM Municipality
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Capricorn District Municipality Executive Mayor Cllr John Mpe has responded in a media briefing to speculations doing rounds on the institution’s illegal investment of R60 million in VBS. The briefing took place as a response to claims that Solly Mapaila (SACP) made on SABC Morning Live (05 November 2018), in which he made deliberate distortions and calculated omissions regarding the events and circumstances leading to the illegal VBS deposits. “We therefore feel that we need to outline this timeline of events from the time former Executive Mayor Gilbert Kganyago was sworn in, his role in the VBS investment and steps that were taken by the new council after his term to reverse the investment” said Executive Mayor Cllr Mpe.
1. Recall of the Executive Mayor
§ On the 02 June 2014, the former Executive Mayor Lawrence Mapoulo resigned as the Executive Mayor of CDM.
2. Executive Mayor in 2014 – 2016
§ On the 17 July 2014, CDM inaugurated the new Executive Mayor, Gilbert Kganyago who took oath in Council.
3. Investment Registers
§ CDM was already having investment registers being managed by CFO who has powers to invest funds in the banks that are giving good rates.
§ For the first time, under the leadership of Mr Kganyago, there was a Mayoral resolution that there should be a monthly report to the Mayoral Committee on investments. At that point in time CDM was investing with the following banks:
FNB : R300 668, 32
Nedbank : R301 412 241
ABSA : 0
Investec : R150 656 200
Standard bank : 0
§ Investments report became a standing item on the Mayoral Committee Agenda, with progress report received on monthly basis, until the end of term of office of Cllr Kganyago and his Mayoral Committee.
§ NB: The new Mayoral Committee, following the 2016 Local Government elections, discontinued the standard reporting on investments, which was introduced and followed only during the term of office of Cllr Kganyago.
4. Resolution for diversification of investments
§ On the 26th November 2015 the Mayoral Committee chaired by the then Executive Mayor resolved that the investment portfolio be diversified to empower the historically marginalised service providers. At that time CDM was still investing funds with the aforementioned commercial banks.
5. VBS appearance in the Mayoral report for the 1st time
§ The first deposit of the R60 million was done on 18 December 2015 for R20 million followed by R40million on 23rd December 2015. This was processed by the Acting CFO – Mr Thomas Nephawe.
§ On the minutes of the Mayoral Committee of the 21 January 2016 which was also chaired by the former Executive Mayor Kganyago, the investment register report made appearance for the first time with VBS Bank.
6. VBS investment appreciated
§ In the Mayoral meeting of the 21st April 2016, the Mayoral Committee appreciated CDM’s participation in supporting black banks. The report was duly considered with appreciation of the diversification of the municipality’s investments to contribute to the transformation of the financial sector by investing with the previously disadvantaged institutions.
§ NB: The only new financial institution that had been added on the old list was VBS.
7. Resolution that investment policy be reviewed
§ In June 2016 the Mayoral Committee resolved that the existing Investment Policy be amended to ensure diversification of investment to benefit the previously disadvantaged or emerging groups and institutions with the necessary mitigation for the concomitant risks and to create checks and balances for the CFO Powers regarding investments.
§ On or around June 2016 the Acting CFO, Ms Mariette Venter, insisted on recalling the investment from VBS. This happened probably because it was a financial year-end and CFO had to reconcile her financial books for the purposes of reporting to Auditor General and Audit Committee before the Council.
§ Part of her role was to re-look into investments and the R60 million had to be withdrawn from VBS so that municipality could decide where to re-invest the money based on the Audit Committee report and investment policy of CDM.
§ This became a problem to the mayoral Committee.
8. How the matter came to Council
§ On the 11 July 2016, the Acting CFO received a notice of intention to suspend her from the Accounting Officer (Acting Municipal Manager).
§ It should be noted that Section 57 managers are the appointees of the Council, meaning that it is only the Council that can suspend such managers, not the Accounting Officer.
§ In this instance, the Acting Municipal Manager is the one who issued a notice to suspend Ms Venter, which is against Council rules and Municipal Systems Act of 2000, which was irregular and procedurally flawed.
§ The South African Municipal Workers Union (SAMWU) was concerned with the matter and they wrote to the office of the Speaker that the suspension of the Acting CFO was irregular, requesting Council intervention.
§ SAMWU further requested to be furnished with the detailed report in relation to the investment that was done with VBS from December 2015 to June 2016.
§ The Speaker quickly wrote to the office of the Executive Mayor that the suspension of the Acting CFO would affect and or nullify the Council resolution taken on the 31st of May 2016 to appoint the Acting CFO for the period of 3 months.
§ The Speaker requested the Executive Mayor to intervene on the matter since this was against the law on the appointment of senior managers (Municipal Managers and Managers reporting directly to the Municipal Manager) and she requested the office to respond back to her office by the 18th July 2016 which was not done.
§ The Speaker then wrote a report to the Council on 20 July 2016 after having not received the response from office of the Executive Mayor.
§ The Council was then notified about the VBS investments for the first time.
§ It was then resolved that the Acting CFO be immediately recalled from the unlawful suspension, and that the matter should be investigated.
§ This was for the first time that the VBS matter was brought to the attention of the Council, as all along it was discussed and concluded at the Mayoral Committee level.
9. New Council taking over
§ The new Council under the leadership of Cllr John Mpe was only inaugurated on the 26th August 2016.
“When we took over as the new council we pursued the investigations initiated by the outgone Council and then preferred disciplinary proceedings against senior officials implicated in the investigations report. The disciplinary cases have since been concluded”, concluded Mpe.
