A forensic report by investigators appointed by the South African Reserve Bank into the failure of VBS Mutual Bank has found that there is no hope of salvaging the institution and details in crime thriller fashion how it was captured by corrupt directors and accomplices with political connections.
The report, titled "The Great Bank Heist", was released by the central bank on Wednesday and finds that some 50 people gratuitously received R1.894 billion from the bank over a three-year period starting in March 2015.
Most of that money flowed to VBS executives and entities linked to them, notably Vele Investments, resulting in the "significant impoverishment" of the bank's depositors.
The report was penned by Advocate Terry Motau, who led the probe along with Werksmans Attorneys, and recommend that criminal sanctions be brought against the culprits, that funds be frozen by the Asset Forfeiture Unit to recover the spoils and that steps be taken against KPMG.
It found that the firm signed off on the bank's statements though it was aware of its R1 billion shortfall.
"The investigation has revealed a wide range of criminality in the conduct of the affairs of VBS. That is also so in regard to Vele. Indeed, it emerges very clearly that VBS and Vele have been operated as a single criminal enterprise, with (chairman Tshifhiwa) Matodzi firmly at the helm.
It is imperative that those who have been identified as participating and benefitting from this criminal enterprise be charged and prosecuted."
Motau compared what transpired at VBS to a daring heist at Standard Bank in Krugersdorp over Easter in 1977 when robbers made off with R400,000 after tunneling into an underground vault. He found that Matodzi alone pocketed more than R300 million.
"My report will reveal that the perpetrators of the heist at VBS made away with almost R2 billion. And they certainly did not put in anything like the hard work and effort of Mister Nightingale and his team. I trust that, in this case, arrests will be made."
Motau wrote that VBS, historically a small lender and a depositor for retailers, burial societies and stokvels, embarked on a campaign to attract substantial deposits from municipalities and, later, the Passenger Rail Agency of South Africa (Prasa) through a system of paying "commissions". It also set its sights on bigger state entities, including Transnet and South African Airways.
"This, in many instances, included the payment of bribes to various public officials who were in a position to influence the making of such deposits.
Somewhere along the way, at roughly the same time the bank was trying to secure a deposit of R1 billion from Prasa, instructions were given to deposit R1 million into the Jacob G Zuma Foundation run by former SAA chairwoman Dudi Myeni.
Ultimately Prasa did not make the deposit, for which VBS was apparently prepared to pay millions in "commissions" to high-ranking officials at the rail agency. The report gives credit for this narrow escape to Prasa's former acting CFO Yvonne Page.
"Page’s steadfast and principled refusal to bend the rules saved PRASA from making what would have proved to be a very bad "investment".
VBS did however secure deposits of R3.4 billion from municipalities and in the course of the investigation those who testified reluctantly named the treasurer general of the ANC in Limpopo, Danny Msiza, as a "kingpin" in the commission's scheme that secured the deposits.
This happened despite warnings that the Municipal Finance Management Act did not allow deposits in mutual banks.
The report said that by the time that the bank was eventually placed under curatorship the position was exponentially worse. Had the truth been told the Registrar would have been able to act far more expeditiously and the looting could have been stopped earlier."
Three directors of VBS confessed to taking illicit payments.
The report concludes that urgent steps must be taken to wind up the failed bank.
- African News Agency (ANA)
