/ 10 August 2018

Mfeketo wrestles with ombud services

Human Settlements Minister Nomaindia Mfeketo
Human Settlements Minister Nomaindia Mfeketo (David Harrison)

Human Settlements Minister Nomaindia Mfeketo has become embroiled in a tussle with the board of the Community Schemes Ombud Services (CSOS) over its “investment” of R80-million with the embattled VBS Mutual Bank.

Last month, Mfeketo suspended chief ombud Seeng Letele because of the payment, which was done without the required permission of the minister and the treasury, and ordered the CSOS to take urgent steps to fix the mess within 14 days.

Although the department did not confirm the suspension, two CSOS insiders say the board is challenging the suspension, arguing it is its decision to make.

The board is also seeking legal advice on the directive issued by Mfeketo in terms of section 28 of the CSOS Act.

This section allows the minister to appoint an administrator and strip the board of its powers if it fails to take any action specified by the minister in cases when the service is in financial difficulty, is being mismanaged or is unable to perform effectively because of infighting.

“It has come down to technicalities,” one source said.

“Even though she [Letele] was originally seconded to CSOS by the department, her permanent employment [last month] as chief ombud was confirmed by the Cabinet. However, the minister did not formalise her appointment through a letter yet, so she can still be seen as a departmental employee.”

READ MORE: VBS chair’s family trust implicated in bank’s looting

The second source, who is part of the CSOS leadership, said: “The board is divided over whether to defend her or not. There were serious fights at the board meeting where they resolved to go for a legal opinion on whether the minister is empowered to act or not.”

The CSOS did not respond to the Mail & Guardian’s questions, but the human settlements department spokesperson, Xolani Xundu, said Mfeketo issued the directive after two meetings with the board last month.

“So far, she has not received a response from the board but a request for an additional seven-day extension to the original deadline is [what] it wanted to provide the minister with a ‘comprehensive response given the gravity of the matters’ involved.

“In a spirit of fairness, let us allow this process to play itself out, as the questions you are raising are the questions the board is grappling with as it seeks to meet the minister’s deadline,” Xundu said.

This extension, granted by Mfeketo, follows an inquiry from one of the CSOS’s stakeholders, the National Association of Managing Agents (Nama), to explain the payments.

Nama, which falls under the purview of the CSOS, pays monthly levies to the organisation’s admin­istration, Nama chief operations officer Coenie Groenewald said.

In June, the M&G reported that the CSOS was the latest of a number of government entities, including 15 municipalities, whose deposits, amounting to billions of rands, were in jeopardy.

VBS was placed under curatorship in March after it ran into liquidity problems when the treasury instructed municipalities to stop investing with the

Several other reports at the time revealed the bank had paid handsome commissions to middlemen, including politicians, who encouraged municipalities in Limpopo to deposit money in the bank.