The Economic Freedom Fighters (EFF) on Wednesday decried the demise of the VBS Mutual Bank, following the release of an explosive report detailing how R2 billion was looted by top management and their associates, who allegedly included the EFF’s Deputy President Floyd Shivambu’s brother Brian.
The EFF, which has been vocal on clamping down graft, released a statement Wednesday evening but did not comment on Brian Shivambu’s implication in the VBS saga. Shivambu is alleged to have received R16 million in “gratuitous” payments from the bank coffers. The red berets called for the law to take its course and that those responsible be held accountable.
“The EFF reiterates its position that all those who are responsible and illegally benefited from the fraud must be criminally prosecuted immediately. As we previously indicated, we also reiterate that they must be blacklisted. Above all, the law enforcement authorities must ensure that all the monies that can be recovered is paid back in full, including attaching properties from the individuals who benefited,” the party said in a statement.
The fact that the bank cannot be saved was of great concern, said the EFF.
“Shutting down the bank will not help efforts to increase black participation in the financial sector. A recovery plan that can save the bank or support other black-owned prospective black license applicants to service people in rural areas must be devised.”
Advocate Terry Motau was appointed by the SA Reserve Bank to probe the collapse of the mutual bank that was placed under curatorship.
Motau, assisted by Werksman Attorneys, found that there was “wide-scale looting and pillaging of the monies placed on deposit at VBS”. The monies were clients’ life savings and deposits, including millions of rands deposited by municipalities.
The report, titled “The Great Bank Heist” showed that at least 50 people “gratuitously” received R1.894 billion from the bank over a three-year period starting in March 2015.
They included top management at the bank’s major shareholder Vele Investments, its associates who cashed in more than R936 million. Others also included bank executives and Limpopo politicians.
VBS chairman Tshifhiwa Matodzi got R325m, CEO Andile Ramavhunga got R28 million, the Free State Development Corporation (R104mln) former ANCYL Limpopo leader Kabelo Matsepe (R35mln), former KPMG partner Sipho Malaba (R33mln) Venda king Mphephu Ramabulana (R17mln) and Shivambu (R16mln).
The elaborate scheme involved VBS directors creating large fictitious deposits in favour of Vele, which was put forward as the bank’s biggest shareholder, and its associates. They then went on what Motau terms “a massive spending spree at the expense of VBS’ depositors”.
Motau said that this could have been detected much earlier if not for the fraudulent misrepresentations in monthly regulatory returns that VBS submitted to the Registrar of Banks, and in its audited financial statements for the 2016-17 financial year.
Motau called for the prosecution of the illegal beneficiaries and that urgent steps must be taken to wind up the failed bank.
“It seems clear to me that there is no prospect of saving VBS. It is corrupt and rotten to the core. Indeed, there is hardly a person in its employ in any position of authority who is not in some way or other complicit.”