VBS loan recipients ordered to pay back R100m, plus interest

The Gauteng High Court has ordered Itumeleng Mafoko and Mabuyi Memela – directors of Leratadima Marketing Solutions, which received a loan from VBS Mutual Bank to supply a government agency with television set-top boxes – to repay R100 million with interest.

VBS Mutual Bank

In her judgment delivered on 9 February, Judge Avrielle Maier-Frawley ordered Mafoko and Memela to pay VBS R100 million, plus interest on this amount calculated from the date VBS began demanding repayment (28 November 2019) to the date of final payment.

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The two stood surety for the obligations of Leratadima, with the liability of its loans now falling on their shoulders, as the court has ruled.

VBS’s liquidators, who have been trying to recoup funds lost to what has been dubbed The Great Bank Heist, argued in court that the liability of Mafoko and Memela as sureties is not restricted to Leratadima’s indebtedness arising from its loans, but included liability for any other indebtedness linked to monies.

Their company landed a R345-million contract with the state-owned Universal Service and Access Agency of South Africa (Usaasa) in 2015, for which they approached VBS for funding.

Their company was to manufacture, supply and deliver half a million digital terrestrial television set-top boxes and related equipment.

Among the many loans granted to VBS clients without the requisite approvals was the contract finance facility granted to Leratadima, which was initially R100 million but was later increased to R250 million as a non-performing loan.

According to Advocate Terry Motau’s report that probed the affairs of VBS, Leratadima was merely a startup sans a balance sheet when it was granted the initial loan facility, at a time when VBS’s qualifying capital stood at just R70 million.

Leratadima was to repay the loans using monies it would earn from its contract with Usaasa. However, the two entities became embroiled in a dispute that stopped the flow of funds.

Leratadima accessed funds from VBS from January 2016 through to at least November 2017, shortly before VBS was placed under curatorship and all its credit accounts were suspended.

At the time, Leratadima was still contractually bound to Usaasa and needed additional funds from the mutual bank.

Its request for an additional R25 million was rejected, and the bank’s lawyers issued a demand for the payment of more than R150 million, with interest.

But Leratadima argued that the bank was in breach of their agreement, saying it was obliged to make the full funding available in order for it to complete its contract with Usaasa.

This, they argued was grounds for them to be released from liability under their surety agreement, saying that VBS had acted “unlawfully and unilaterally”.

This article originally appeared on Moneyweb and was republished with permission.

Read the original article here.

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