PIC unable to recover R1.1 billion loan paid to Madibeng Municipality

The Public Investment Corporation (PIC) loaned R1.1 billion to the Madibeng municipality in 2010 — it has since refused to, and in any event, is unable to pay back the money.

This was confirmed by Auditor General for the North West Success Marota, in a briefing before the Standing Committee on Public Accounts (SCOPA). 

DA to question Tito Mboweni for PIC’s puzzling expenditure 

The DA will be submitting parliamentary questions to the Minister of Finance Tito Mboweni, asking him to provide details on the relevant due diligence that was made by the PIC, before a decision was taken to give the loan to an “obviously insolvent municipality”.

DA member of the Standing Committee on Public Accounts Alf Lees said the debacle points to the fact that there are very little safeguards when it comes to the management of PIC assets. 

“The PIC’s inability to recoup the loan, despite a court ruling that the municipality pays back the money, raises concern about the deteriorating prudential safeguards in the management of PIC assets. The asset manager has essentially become a piggy bank for subsiding corruption in government institutions,” said Lees. 

PIC should have seen the red flags 

According to the DA, Madibeng is one of the municipalities that lost taxpayers’ money in the VBS scandal, and even before that the red flags were present to warn any alert financier that the municipality was in no position to finance a R1.1 billion loan from the PIC or anywhere else.

“Public servants, who invest their hard-earned money to save for retirement deserve to know who made the decision to give Madibeng such an amount of money, using what criteria and how did they hope to recoup the money?” asked Lees. 

“The DA hopes Minister Mboweni will take active steps to ascertain how this loan was approved and to hold those responsible to account,” he added. 

Madibeng Municipality struggles to manage sewage

Yusuf Abramjee tagged the official accounts for the Madibeng Council on Saturday 22 February due to a sewage spill in the residential Primindia. 

He captioned it: “Look at the raw sewerage flowing in the residential area of Primindia and into a river – for weeks now. Residents say they are fed-up with the Brits council not helping”.

In another tweet, Abramjee explained that residents claim the Madibeng Council is not assisting in the matter and added that the sewage seeps “in a river for weeks now”.

If the municipality is struggling to overcome raw sewage, it comes as no surprise that it can’t pay back a R1.1 billion loan to the PIC.