A forensic investigation report into the affairs of VBS Mutual Bank reveals large-scale looting and recommends that the bank’s former executives, their associates, shareholder executives, politicians and those related to them, and auditors who signed off on the bank’s fraudulent financials should face criminal charges and be held liable in civil proceedings, News24 reports.
The report was handed to the South African Reserve Bank (SARB) on October 5, 2018, by advocate Terry Motau.
The SARB said the report, titled The Great Bank Heist was in pursuance of Motau’s appointment as an investigator in terms of section 134 of the Financial Sector Regulation Act 9 of 2017 by deputy governor of the SARB and chief executive officer (CEO) of the Prudential Authority (PA) Mr Kuben Naidoo.
The Reserve Bank was quoted as saying in a statement that the evidence contained in the report reflects neither the guilt or innocence of any party because not all parties had been afforded the opportunity to respond to the evidence.
The Reserve Bank further said the report may be of assistance to law enforcement authorities investigating the affairs of VBS, adding that the outcome of these investigations would determine whether criminal prosecutions should be instituted.
“The courts will be the final adjudicator in this regard,” the reserve bank stated.
In March, Reserve Bank governor Lesetja Kganyago placed the bank under curatorship, citing its liquidity issues. Last year Treasury put a stop to municipal deposits into VBS because of legislation that dictates municipalities may only make deposits with full commercial financial institutions, not a mutual bank such as VBS. This led to its liquidity crisis.
The Citizen earlier this year reported on photos from social media which strongly suggested that at least some of the luxuries captured in the images could be linked to the scandal around VBS Mutual Bank and its controversial executives – VBSs former chairperson Tshifhiwa Matodzi and Vele Investments’ CEO Robert Madzonga, whose company is VBSs biggest shareholder.
Matodzi and Madzonga reportedly maintain that they are innocent.
Advocate Motau’s report recommends that the controversial VBS bank should be liquidated because there is no chance of it being saved.
Motau was quoted saying VBS was corrupt, rotten to the core, and that a majority of the bank’s employees in senior positions were in some way or other complicit in the shenanigans at the bank.
The report Motau completed reveals widescale looting of the money that was deposited at VBS.
According to News24, Motau’s report reveals that some of VBSs directors and others were paid bribes to stay quiet and turn a blind eye to the looting.
The bank’s executives reportedly deliberately campaigned for investments from a number of municipalities which deposited large sums of money at VBS.
In some cases, the executives apparently bribed public officials that could influence these deposits being made with the bank.
The report also reveals that VBS staffers had manipulated VBSs banking systems to create fake deposits by Vele Investments and a number of associates.
Motau reportedly found that the bank’s auditor, Sipho Malaba, had fraudulently signed off VBSs 2017 financial statements and its regulatory reports to the reserve bank.
Motau was quoted saying that fraudulent means were used to cover up the looting at the bank, which was allowed to continue and escalate.
“These frauds misled the Registrar [of Banks] into believing that VBS was [in a] financially sound position whereas, in truth, its liabilities exceeded its assets by about R180 million and it was thus hopelessly insolvent as [of] 31 March 2017,” Motau’s report was quoted.
The report was further quoted saying that when VBS was placed on curatorship, the bank was in a worse off position and that had the shenanigans at the bank been revealed at an earlier stage, the Registrar of Banks would have acted timeously and the looting would have been halted.
Motau apparently recommended that the Registrar of Banks (now the Prudential Authority) should lay criminal complaints with law enforcement agencies and that his report should accompany these complaints.
The advocate reportedly further recommended that VBSs non-compliance with tax laws should be reported to the South African Revenue Service (Sars).