Malema questions Sarb’s role in VBS Bank collapse

Economic Freedom Fighters (EFF) leader Julius Malema questioned why no one at the South African Reserve Bank (Sarb) has taken “full responsibility” for the collapse of VBS Mutual Bank.

“We are questioning where was the Reserve Bank in all that? And I’m asking all of us to be consistent because when there is a crime committed and stats are released that murder has increased, we blame it on the police, we say the police are useless, why are the police not intervening. Reserve Bank is the police of banks,” Malema said.

Malema was speaking at the party’s press briefing today where the EFF leadership denied that the deputy leader of the red berets and the party had benefitted from the bank.

“The deputy president of the EFF Floyd Shivambu has taken the EFF leadership into confidence in relation to VBS media claims and we have no reason to doubt him, more so because he is not mentioned in the official Motau VBS report, the EFF has also not been mentioned in the report, neither has it been accused of any wrongdoing,” Malema read the party’s statement during the briefing.

The EFF leader further questioned why Sarb authorities were being vindicated and had not been implicated in the VBS scandal.

“Why is there no one in the Reserve Bank who takes full responsibility for these shenanigans?” Malema questioned.

Shivambu said when the intention to place VBS Mutual Bank under curatorship was articulated, EFF representation – including himself – on the standing committee on finance had demanded that Sarb’s intervention should have included recapitalisation, among others, just as had been done for African Bank.

The reason for this, Shivambu said, was because the bank was mostly supported by the mortgages of “rural masses”.

“We then said the interventions made at VBS must come with recapitalisation, from the beginning, so that the bank operations are not disrupted,” Shivambu said.

Shivambu said the red berets had also suggested that the bank’s directors and managers be removed.

“The intention was to protect the depositors, the people who had put their money in VBS,” Shivambu said, noting that the Sarb decided to place the bank under curatorship without any form of recapitalisation.

The EFF, Shivambu added, had further questioned the role National Treasury and the Reserve Bank played to prevent the collapse of VBS.

“Because we have recently passed legislation called the Financial Services Regulation Act, they call it twin peaks, with the Prudential Authority and part of the fundamental functions of the Prudential Authority or regulatory authority, is to prevent the collapse of banks. That legislation was passed specifically to prevent the collapse of banks,” Shivambu said.

The reason for emphasizing Treasury’s role in preventing the collapse of the bank, Shivambu said, was because a number of municipalities had made deposits with the bank from around 2014, a matter that Treasury knew about.

“The person who is supposed to oversee that municipalities are not exposed to wrong financial practices, including receiving and taking money from mutual banks, is Ismail Momoniat,” Shivambu said.

ALSO READ: Listen: EFF digs in its heels on Shivambu’s Momoniat comments

The EFF had questioned why Treasury had allowed mutual banks to accumulate a huge component of its deposits from municipalities since 2014, Shivambu said.

Another reason Shivambu gave for analysing Treasury’s role in the collapse of VBS is that year-on-year the Sarb kept saying the bank’s liquidity and capital adequacy was sufficient and had no problems.

“Why do you only realise when you have placed the bank under curatorship that it was not liquid, it didn’t have the necessary liquidity in terms of dealing with the banking services that it had to provide,” Shivambu said.

Shivambu added that the EFF had also questioned the governor of the reserve bank, Lesetja Kganyago, during the curatorship of VBS on how jobs at the bank would be saved and how the curators would be paid.

“We have got it on good authority that since the curator has taken over, they have been paying themselves with VBS money R2.6 million, to themselves, from a bank which they say is under strain and cannot pay salaries.”

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