VBS creditors and affected municipalities to recoup some of their losses through liquidation process.
VBS creditors and affected municipalities to recoup some of their losses through liquidation process, image: EWN
(The Post News)- Municipalities that had invested in the now-defunct VBS Mutual Bank are among the confirmed creditors to whom the liquidators of the bank have successfully recovered R670 million. The recovery comes after numerous attempts to recover money from the bank that failed over six years ago.
Louise Brugman, spokesperson for the VBS liquidator’s office, confirmed that the repayment will include 13 municipalities that had made investments, as well as trade creditors and 458 retail depositors who held more than R100,000 in VBS accounts. Once all payments are completed, creditors will recover approximately 25.6% of their losses.
“Through the liquidator’s collection efforts, we have managed to recover R670 million, which will be paid to verified creditors,” Brugman stated. “This is a positive outcome given the circumstances. The 13 municipalities that submitted valid claims are set to receive about R400 million collectively.”
Among the municipalities that will benefit from the recovery, the Vhembe District Municipality, which had made the largest illegal investment of over R300 million, has so far received R80 million. Other municipalities, such as Fetakgomo Tubatse and Lepelle-Nkumpi, will receive R58 million and R39 million, respectively. R10 million will be recovered by the Greater Giyani Municipality.
Municipalities should prioritize using these monies for vital public services, stressed Limpopo’s MEC for Co-operative Governance, Basikopo Makamu. He advised municipalities like Vhembe to use the money they have recovered to provide services, especially for urgent problems like water projects.
In total, 14 municipalities across Limpopo, the North West, and Gauteng had invested over R1 billion in VBS, funds that were intended for service delivery. Of these, 13 have now begun receiving some of their funds. The Elias Motsoaledi Municipality had already withdrawn its investment by the time the bank collapsed.
The liquidators’ efforts have also included the collection of funds from VBS’s debtors, with over R2.3 billion still outstanding. “The liquidator’s team continues to work on tracing and recovering assets for creditors,” Brugman explained. “Though legal actions related to criminal activities surrounding VBS are not part of our mandate, we do support the ongoing criminal investigations.”
Retail depositors who held up to R100,000 in VBS accounts have already received full reimbursement thanks to a National Treasury guarantee. The “concurrent creditor” category includes those whose balances total more than R100,000. Many of them are anticipating a second payment, which is presently being processed.
One of the municipalities affected by the scandal, Collins Chabane Local Municipality, had invested R120 million in VBS. So far, the municipality has recovered R30 million, which Mayor Shadrack Maluleke confirmed has been allocated to service delivery projects. “We have directed the R30 million back into local projects that benefit our community,” Maluleke said.
VBS’s liquidation comes after the bank declared insolvent in 2018 following roughly R2 billion in looting. These continuous attempts to reimburse impacted creditors are a result of the bank’s later curatorship and liquidation. It is hoped that more payments will be made as the liquidators continue to recover unpaid cash in order to lessen the financial burden on municipalities and other creditors.
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