Former CFO of Collins Chabane Municipality Convicted in VBS Collapse Case

Eadie Makamu Sentenced for Illegal Investment and Ordered to Pay R150,000 to VBS Liquidator.

The Directorate for Priority Crime Investigation (DPCI) has welcomed the conviction of Eadie Makamu, the former Chief Financial Officer (CFO) of Collins Chabane Municipality, in connection with the ongoing investigation into the collapse of VBS Mutual Bank.

On Wednesday, the Pretoria High Court found Makamu guilty of violating Section 173(1) of the Municipal Finance Management Act, 2003 (MFMA). He was sentenced to five years imprisonment, wholly suspended for five years, on the condition that he does not commit a similar offence during this period.

As part of the sentence, Makamu has been ordered to pay R150,000 to the VBS liquidator. This payment is intended to benefit those who lost their investments in the wake of the bank's collapse. The amount includes an immediate payment of R60,000, with the remaining balance of R90,000 to be paid in five monthly instalments of R18,000 each.

The Illegal Investment and Its Aftermath

The conviction stems from Makamu’s involvement in the illegal investment of R120 million of Collins Chabane Municipality’s funds in VBS Mutual Bank, an investment that ultimately contributed to the bank's collapse. The municipality has yet to recover the full amount, with R123,984,685 still outstanding.

Investigations revealed that a portion of these funds was misused to pay brokerage commissions to individuals and entities in a scheme designed to attract further deposits from municipalities, ultimately exacerbating the scale of the fraud.

Further Legal Proceedings and Accountability

Makamu's arrest on 5 May 2022 marked a significant step in the investigation. He has been attending court alongside his co-accused, Charlotte Ngobeni, who now faces trial alone in January 2025, from 20 - 22 January.

This conviction represents another key milestone in the continued effort to hold those responsible for the VBS Mutual Bank collapse accountable. The payment to the VBS liquidator is part of broader efforts to provide some measure of restitution to the victims, including municipalities and individual investors, who suffered significant losses due to the bank’s failure.

Ongoing Investigation and Efforts to Recover Public Funds

The Hawks have reiterated their commitment to continuing the investigation and prosecution of those involved in the VBS scandal. According to Lieutenant General Godfrey Lebeya, National Head of the DPCI, “The efforts by the investigation team and prosecution team continue to bear fruit. We are able to show that 35 arrests have been made since the start of the investigation, and 6 convictions have been secured.”

These developments demonstrate ongoing progress in the fight against corruption and fraud, as the DPCI and other law enforcement agencies work to ensure justice is served and that public funds are recovered for the benefit of those affected by the collapse of VBS Mutual Bank.