The Cooperative Governance and Traditional Affairs (Cogta) Minister Zweli Mkhize said that the outcome of forensic investigations into municipalities which invested in VBS Mutual Bank means government can now launch disciplinary proceedings and criminal complaints against those implicated.

Mkhize, who was briefing the portfolio committee on Cooperative Governance and Traditional Affairs on Tuesday on the status of municipalities which have invested in VBS Mutual Bank, said they also planned to combine the respective Cogta departments at provincial governments and municipalities in a lawsuit to recover the money.

The next steps, however, depend on the outcome of the forensic reports.

Mkhize highlighted that the functioning of the affected municipalities have since been constrained but bailouts would not be provided. Government would, however, provide support to improve their internal controls.

There are currently forensic investigations underway in Limpopo, North West and Gauteng. Mkhize said the outcomes, due at the end of October, should be able to help government "pinpoint individuals" implicated.

"The report from the Reserve Bank has indicated the very crude abuse of finances which were destined for poor communities. It creates an impression we are not only dealing with the situation where investments were taken to the Mutual Bank which was illegal and unprocedural, but also, inside the institution was a systematic, structured, fraudulent process siphoning money out of municipalities, out of the bank."