PIC losses R1.1 billion to bankrupt Madibeng municipality

In a briefing before the Standing Committee on Public Accounts (SCOPA), Auditor General for the North West, Success Marota, confirmed that the Public Investment Corporation (PIC) loaned R1.1 billion to Madibeng municipality in 2010 and the municipality has since refused to and in any event, is unable to pay back the money.

The Democratic Alliance (DA) will, therefore, 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.

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.

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.

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?

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