A sectional title regulator was put on the spot by angry property managers and owners in Port Elizabeth, who demanded to know why and how R80m of their levy money had become entangled in the VBS Bank scandal.
More than 120 people – including representatives of body corporates – gathered on Wednesday to fire questions at senior executives of the Community Schemes Ombud Service (CSOS) over the VBS investment, which resulted in the suspension of two top executives and the launch of an investigation.
The ombud service, which was established two years ago, oversees shared living schemes ranging from townhouse complexes to blocks of flats.
It is a schedule 3A public entity which falls under the human settlements department and was established through a government grant with the aim of being self-sufficient by the collection of 2% of scheme levies.
Two months ago, the regulator suspended its acting chief ombud, advocate Seeng Letele, and chief financial officer, Themba Mabuya, following allegations of gross negligence, dishonesty and dereliction of duty with regard to the investment in VBS.
The suspensions were also linked to their failure to provide relevant information to the board of the ombud service on the investment of surplus funds.
The money invested and held by the ombud service is considered public funds.
The suspensions saw new acting chief ombud Ndivhuo Rabuli and non-executive board member and chair of the CSOS audit committee, Taurean Holmes, having to face a packed convention hall at the Summerstrand Hotel for a roadshow intended to update stakeholders on developments.
Faced with repeated questions on how the VBS scenario had come about and whether the ombud service had benefited through interest payments or otherwise, the senior executives said they would not comment “and give their own opinions”, urging people to rather wait for the investigation report.
Rabuli assured stakeholders that mechanisms had been put in place to ensure “this does not happen again”.
Admitting that the CSOS was on the back foot, Holmes told The Herald that following due process and keeping stakeholders up to date was key to regaining confidence and trust.
“The CSOS has its own investment process,” he said.
“We hold our own people accountable.
“The [investigation] report is close to being completed and we would like to close this process as soon as possible.”
Holmes said part of the investigation involved the administrative processes which resulted in the VBS investment.
“It could have been any bank.
“The CSOS did not only place funds in VBS and in Absa, but in other banks as well.
“After this emerged, we immediately recalled our money from VBS,” he said.
A question which arose – and attracted applause – was on how much revenue was needed by the ombud service, after it revealed that it had, to date, registered about 33,000 community schemes around the country and was seeking to register a further 57,000.
This prompted one person to say that based on the number of schemes registered, the body was drawing revenue of about R13m a month.
“Based on the registration of another 57,000 schemes, the CSOS will be receiving about R22m a month – what are you going to be doing with all of this money, which is public money?” the woman said.
Another woman asked: “What is the long-term plan? If you are getting all of this money, will you reduce the levies payable?”
Holmes said the ombud service planned over the next three years to use the revenue to expand, increase its capacity, open more offices and effect training and upskilling.
“But, yes, the idea would be to consider reducing [costs to schemes].
“We do not want to make more money than we need.
“We do not want to be an investment entity,” he said.
Despite the clear concern about the ombud service’s investment strategies, there were lighter moments during the two-hour event when it revealed some of the more unusual aspects of its regulatory work.
“There is also this issue of dagga. You will all know that its use was recently legalised,” Rabuli said.
“What if someone wants to plant dagga in your community scheme? We have to address all of these things,” she said to loud chuckles.