South Africa fires 7 mayors over banking scandal

Millions of rand lost after mayors invested in bank despite warnings

South Africa fires 7 mayors over banking scandal

South Africa’s ruling African National Congress (ANC) in Limpopo province decided to fire seven municipal mayors Tuesday for their involvement in a banking scandal that has cost the government millions of rand.

According to a recently released forensic report, 11 mayors reportedly invested 2.6 billion rand ($181 million) in the now-defunct VBS Mutual Bank, which is against local government financial regulations.

The report alleged that the owners of VBS offered kickbacks to municipal officials for investing public funds in the bank despite a warning from the reserve bank not to do so.

“We arrived at a painful decision that we should release the mayors,” ANC provincial secretary Soviet Lekganyane told reporters in a nationally televised briefing.

Last month, a high court in Pretoria ordered that VBS be liquidated after it was discovered that its owners had colluded with several politicians to siphon millions of rand out of the bank.

Speaking at the same media briefing, Limpopo Premier Stan Mathabatha said there must be criminal charges and civil claims instituted against those responsible for the losses.

He said the provincial leadership will ensure that the recommendations made by the forensic report are followed to the letter, including the arrest and prosecution of all officials involved. 

Five of the 11 municipal managers involved in the VBS saga managed to recoup the funds they invested in the bank, reducing the losses to just over 1 billion rand ($69 million).

One of the implicated mayors resigned shortly after the announcement and others are expected to follow suit.

South Africa has been marred by incidents of corruption over the past decade.