Government to institute legal action to recover VBS money

South Africa said Tuesday it would seek to recover millions of dollars stolen from a local bank that subsequently collapsed owing substantial sums to creditors.

A central bank report, titled “The Great Bank Heist”, into the failure of VBS Mutual Bank said nearly R2 billion was stolen over three years by 53 individuals, including executives and politicians.

Local Governance Minister Zweli Mkhize told parliamentarians that he had instructed lawyers to “launch a lawsuit on this matter so that we must chase and try and recover the money”.

The minister described the situation at VBS Mutual as a “very crude abuse of finances which were destined for poor communities”.

He said the bank had adopted “a systematic structured fraudulent process that was syphoning money out” to a few individuals, in a “case of the greedy robbing the poor”.

“We cannot allow this money to disappear, it’s our people’s money, poor people’s money,” he said, vowing that “justice must prevail”.

The VBS collapse is one of the most serious graft cases to rock South Africa since the departure earlier this year of scandal-tainted former president Jacob Zuma.

The investigation into the bank was launched after VBS suffered a severe liquidity crisis and it collapsed into administration.

The bank’s failure has hit poor and rural clients hardest.

“It’s grossly unfair. It’s not possible for R2 billion to just disappear,” Mkhize said.

“All the money must be recovered.”

The probe also revealed malpractice including the granting of overdrafts to well-connected clients and bribes paid to individuals in exchange for deposits from state-owned companies and municipalities.

Parliament last week said it would investigate legislator and prominent leader in the radical opposition Economic Freedom Fighters (EFF) Floyd Shivambu over claims his brother profited from the fraud.

The black-owned VBS Mutual gained notoriety in 2016 when it lent Zuma R7.8 million to repay taxpayers for upgrades made to his private home.

These are the municipalities that invested with #VBS. pic.twitter.com/TOw1XgF3Ov

— Scapegoat (@AndiMakinana) October 23, 2018

The status of municipalities which have invested in VBS Mutual Bank formed the focus of the briefing in which Mkhize revealed that the loss of the money invested in VBS hampered the functioning of the affected municipalities.

#Mkhize In the history of interventions, we didn't dissolve municipalities, we appointed administrators. You don't just go in when your case is not properly motivated. #VBS #Cogta

— ANC Parliament (@ANCParliament) October 23, 2018

He also added that government would provide support to affected municipalities to improve their internal controls but emphasised that the government would not be providing bailouts.

Mkhize also shared details about a plan to combine the respective Cogta departments at provincial governments and municipalities as part of the lawsuit.

#Mkhize The number of municipalities that are under intervention is large. Currently,there are 24 municipalities under the intervention,they are not necessarily part the VBS thing. #VBS #Cogta

— ANC Parliament (@ANCParliament) October 23, 2018

Further forensic investigations have been launched in provinces such as Limpopo, North Wes, and Gauteng and Mkhize believes the outcome of these investigations should be able to help the government “pinpoint individuals” implicated in order to allow for disciplinary proceedings and criminal complaints to be instituted against them.

Mkhize stresses that forensic investigations in municipalities must be concluded first to take action against those in municipalities responsible for the VBS investments. @fin24 @TeamNews24

— Lameez Omarjee (@LameezOmarjee) October 23, 2018

ALSO READ: Giyani municipality ‘unlawful’ VBS investment investigated

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