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In a significant development in the VBS Mutual Bank corruption scandal, the Pretoria High Court has convicted Eadie Makamu, the former Chief Financial Officer of Collins Chabane Municipality, of financial misconduct. This case is part of the broader investigation into the infamous collapse of VBS Mutual Bank, which has had far-reaching consequences across several South African municipalities.
On November 27, 2024, Mr. Makamu was found guilty of violating the Municipal Finance Management Act of 2003. This conviction centers around the unlawful investment of R120 million by the Collins Chabane Municipality in VBS Bank, funds that were siphoned off in what has emerged as a widespread looting spree affecting multiple municipalities.
The court handed down a five-year prison sentence, which was wholly suspended for five years on the condition that Mr. Makamu is not found guilty of a similar offense during the suspension period. This type of sentence is atypical in cases involving large-scale public sector corruption, suggesting an increased judicial emphasis on conditional punitive measures combined with restitution.
In terms of compensation, Mr. Makamu was ordered to pay R150,000 to the VBS Liquidator. This payment aims to contribute to the recuperation of some funds lost and is structured such that R60,000 was due immediately, and the remainder is to be completed in five monthly installments.
This case highlights not just the individual malfeasance of Mr. Makamu but also the broader network of corruption involving brokerage commissions paid to individuals and entities that facilitated the bank's inflated deposit figures from unwitting municipalities. As of the latest reports, Collins Chabane Municipality has an outstanding amount of R123,984,685 that was never recovered, indicating the scale of financial damage inflicted.
The former CFO's conviction is part of an extensive investigative effort by the Directorate for Priority Crime Investigation (Hawks), dedicated to unraveling the intricate web of deceit that led to one of South Africa's most significant corporate meltdowns. The National Head of the Hawks, Lt Gen (Dr/Adv) Godfrey Lebeya, noted that the ongoing efforts have resulted in 35 arrests and six convictions since the start of the investigation, signaling a robust crackdown on corruption associated with VBS Mutual Bank.
As the Hawks continue their rigorous pursuit of justice, the hope remains that these efforts will restore public confidence in the management of municipal funds and reaffirm the state's commitment to combating corruption at all levels of government. The case also serves as a stern warning to public officials about the severe repercussions of financial impropriety.