Johannes Mohlala, the former municipal manager of Fetakgomo-Tubatse Local Municipality, has been sentenced to a suspended five-year prison term for his role in illegally investing R230 million of public funds into the now-collapsed VBS Mutual Bank. The High Court in Pretoria handed down the sentence after Mohlala pleaded guilty to contravening the Municipal Finance Management Act (MFMA), which regulates the financial conduct of municipalities.
The 60-year-old Mohlala was also ordered to pay R100,000 to the VBS curator, as part of the restitution process. The court’s decision to suspend the prison sentence for five years means that Mohlala will avoid immediate jail time, provided he does not commit any further offenses within the period.
The case stems from a series of illicit investments made by Fetakgomo-Tubatse Local Municipality in VBS Mutual Bank, a bank that was later found to have been involved in a massive financial collapse. According to the Directorate for Priority Crime Investigation (Hawks), the municipality transferred R230 million to VBS in five separate installments between November 2016 and February 2018. These investments were made in direct violation of municipal finance regulations, which strictly prohibit municipalities from investing in mutual banks.
Colonel Katlego Mogale, spokesperson for the Hawks, confirmed that the investigation revealed the funds were invested unlawfully. “These investments were made in contravention of the MFMA, which prohibits municipalities from engaging in such high-risk investments,” Mogale said.
The case has taken further twists, with one of Mohlala’s co-accused, former chief financial officer Ratau, failing to appear in court for his scheduled hearing. The Pretoria High Court responded by issuing a warrant for Ratau’s arrest, and his bail will be reconsidered when the case returns to court on November 18. Ratau, along with Mohlala and another co-accused, was initially arrested in November 2021 as part of the investigation into the illegal VBS investments.
Another individual linked to the case, Keaobaka Remigious Kgatitsoe, was sentenced in July 2022. Kgatitsoe received a five-year sentence, which was wholly suspended for five years, after being convicted in connection with the same scandal. Kgatitsoe’s sentence was handed down in the Pretoria Specialised Commercial Crimes Court.
The investigation into the VBS-related corruption charges against the three accused began after the discovery of the illegal investments made by the Fetakgomo-Tubatse Municipality. In November 2021, Mohlala, Ratau, and Kgatitsoe were arrested and charged with multiple offenses, including contravening the Municipal Finance Management Act, corruption, and money laundering.
The case is part of a broader crackdown on the VBS scandal, which saw numerous public officials and individuals implicated in the illegal siphoning of funds from the now-defunct VBS Bank. The bank’s collapse in 2018 sparked one of the largest banking scandals in South Africa’s recent history, with millions of rands lost by municipal investors and ordinary depositors.
The sentencing of Mohlala is part of ongoing efforts to hold those responsible for the VBS scandal accountable. The investigation into the illegal investments continues, with authorities committed to pursuing all those involved in the fraud and corruption surrounding the bank’s collapse.
