The ANC in the West Rand municipality says its cash flow issues were present before its R77 million investment with VBS Mutual Bank.
The statement was made after workers were not paid their October salaries.
Workers then held officials hostage overnight on Wednesday and their salaries were subsequently paid.
Earlier this week, Cooperative Governance MEC Uhuru Moiloa said his department bailed out the municipality in May and June.
ANC spokesperson of the west rand Zaza Machakela said, “The municipality has been experiencing challenges.”
Machakela has called for the investigation into the VBS banking scandal to be finalized soon.