JB Marks’ R17.9 Million Blunder: Idle Funds, Lost Paperwork, and Below-Market Returns Raise Alarm

Johané
Sep 23
3 min read

The JB Marks Local Municipality is facing mounting criticism after official reports and council questions revealed that millions of rands in public funds were mismanaged through idle investments, lost documentation, and poor financial controls.

Idle Funds: R17.9 million left untouched

According to the municipality’s own financial report, R17.9 million matured in October 2024 but was never reinvested. Instead, the money was placed in a call account at Investec “in case” it was needed for operational expenditure. To date, the funds remain untouched.

This decision meant residents’ money earned between 4.6% and 5.35% interest, far below inflation and significantly less than market-related returns. Financial experts consulted indicated that on such a product, the municipality should have earned at least 11–14%, meaning ratepayers were short-changed by millions.

The lost Promissory Note

The mismanagement deepened when it was revealed that the original promissory note was lost after two senior officials retired. Without the note, Investec refused to release the funds for reinvestment.

Although an affidavit and copy were later couriered, the damage was done: the municipality was stuck earning subpar interest for months. This lapse in document custody not only reflects administrative negligence but also cost the public heavily in missed returns.

Below-Market Deals: Who benefits?

The reports show that while JB Marks confirmed low call account returns, quotations for better rates had already been obtained. Yet delays and missing paperwork forced the municipality to settle for inferior returns.

The glaring question remains: who, if anyone, benefitted from JB Marks locking into such weak investment arrangements? With financial institutions offering far more competitive rates, suspicions of kickbacks or commissions are surfacing.

Financial Pressures and Cash Movements

Other municipal reports paint a picture of financial strain. In November 2024, R23 million had to be transferred from ABSA to Nedbank simply to cover commitments, including SARS payments and third-party creditors.

Council records for December 2024 further reveal that unspent capital grants were ring-fenced in call accounts, reflecting limited flexibility in cash flow. Taken together, these cash flow pressures underscore why the municipality claimed it “might need” the R17.9 million; yet, ironically, the money has still not been touched.

Calls for accountability

In a sharply worded letter to the Speaker and Municipal Manager, Cllr. MD de Bruin demanded:

A corrected financial report within 21 days comparing actual returns to market-related offers.
Referral of the matter to Internal Audit and MPAC as potential fruitless and wasteful expenditure.
A probe into possible commissions or benefits linked to the poor investment decisions.
Tighter internal controls, including dual custody of financial instruments and digitised recordkeeping.

Residents pay the price

For residents, the revelations are infuriating. Residents resonated with Councillor de Bruin's message in her letter when she stated:

“We are already paying for water that runs in the streets instead of taps, and roads that crumble daily. To then learn our money was left earning peanuts because of missing paperwork and bad decisions is proof public funds are not respected.”

A systemic problem?

The pattern across these reports (idle funds, misdirected transfers, ring-fenced but stagnant accounts) suggests systemic weaknesses in JB Marks’ financial management. While the CFO and Finance MMC recommend merely that Council “take cognisance” of the reports, critics argue that mere acknowledgement is not enough.

As the municipality grapples with ongoing service delivery failures, the question remains: will accountability finally follow the money, or will JB Marks’ financial woes continue unchecked?

We reached out to the CFO of JB Marks Municipality, but at time of publication, we still haven’t received a response to our questions.