Explosive report lifts lid on ‘great VBS bank heist’

A branch of VBS Mutual Bank in Thohoyandou, Limpopo
A branch of VBS Mutual Bank in Thohoyandou, Limpopo

The explosive findings of a damning report into the failure of VBS Mutual Bank reveals how its architects and accomplices stole a bank.

The report‚ by investigators appointed by the Reserve Bank to establish what transpired in relation to the failure of VBS‚ also said that criminal charges must be brought against those responsible.

Following a severe liquidity crisis in March‚ which led to the Reserve Bank placing VBS under curatorship‚ Kuben Naidoo‚ deputy governor of the Bank and CEO of the Prudential Authority‚ appointed a team of forensic investigators led by Werksmans Attorneys and advocate Terry Motau to establish what exactly had precipitated the failure.

The investigation benefited enormously from the gathering and securing of evidence by forensic and cyber-forensic investigators assisting Werksmans‚ which allowed “a regime which properly secured the chain of evidence‚ of enormous numbers of documents”.

This was, in part, made possible through search-andseizure operations permitted and executed under the recently adopted Financial Sector Regulation Act.

Over a period of about three weeks in April and May, investigators conducted search-andseizure operations at VBS offices in Makhado‚ Sandton and Thohoyandou‚ as well as at the offices of VBS shareholder Vele Investments.

The findings‚ published in a 148-page report entitled “VBS Mutual Bank – The Great Bank Heist” released on Wednesday, include a number of explosive revelations:

● The perpetrators of the heist made away with almost R2bn.

“It emerges from the forensic accountants’ report that an amount of R1.894bn was gratuitously received from VBS by some 53 persons of interest‚ both natural and juristic‚ over the period March 1 2015 to June 17 2018‚” the investigators said.

● The bulk of the funds stolen was for the benefit of individuals and entities related to VBS executives‚ including its largest purported shareholder‚ Vele Investments‚ which benefited to the tune of R936m.

● Tshifhiwa Matodzi‚ the chair of VBS Mutual Bank and Vele Investments‚ personally benefited to the tune of R325m.

Matodzi‚ who weeks ago had his estate provisionally sequestrated following an application brought by VBS curator Anoosh Rooplal‚ is identified as the alleged kingpin of the heist.

● A number of other previous VBS executives, including Robert Madzonga (R30.3m)‚ Phophi Mukhodobwane (R30.5m) and CEO Andile Ramavhunga (R28.9m), are also alleged to have benefited from the looting.

The bank’s previous CFO‚ Philip Truter‚ who was responsible for allegedly enabling the manipulation of the banking system‚ also benefited from financial gain‚ but nowhere near that of his peers.

● According to the report‚ Mukhodobwane and Truter have confessed to their complicity in the crime.

Ramavhunga denies he was involved in anything untoward‚ as does Madzonga.

Matodzi also denies any wrongdoing.

● KPMG partner Sipho Malaba‚ who was the engagement partner for VBS and the person who ultimately signed off the false 2017 year-end audit that was subsequently withdrawn by the bank’s curator‚ allegedly benefited to the tune of R34m.

Motau concludes: “The investigation has revealed a wide range of criminality in the conduct of the affairs of VBS. That is also in regard to Vele.

“Indeed‚ it emerges very clearly that VBS and Vele have been operated as a single criminal enterprise‚ with Matodzi firmly at the helm.”

On that basis‚ Motau recommends that the Prudential Authority takes immediate steps to pursue criminal charges against those who participated and benefited from the criminal enterprise.

He also recommends that those responsible for the coverup “constituted by the publication of the fraudulent audited financial statements for 2017” and the submission of regulatory returns that were fraudulently perpetrated “directly on the registrar of banks” be criminally prosecuted too.

This would seem to indicate that Malaba‚ and perhaps other employees of KPMG‚ could be prosecuted for allegedly falsely signing off on the accounts and other regulatory filings overseen by the audit firm.

The report also recommends that individuals who assisted in inducing municipalities to deposit money with VBS‚ “whether the maker of the bribes or as the recipient of the bribes”‚ be criminally prosecuted.

There are also major tax implications for those who benefited from the largesse and, in this regard‚ the investigators requested that the Prudential Authority informs the SA Revenue Service about the “multitude of offences” and “flagrant non-compliance” with various tax codes.

The curator should now apply for the final orders to liquidate and wind up the estates of executives who have already been provisionally liquidated.

To try to recover as much as possible of what is left of the asset base belonging to depositors of VBS‚ the asset forfeiture unit should preserve and confiscate the proceeds from the crime that has been committed, the report says.

The report and detailed annexures have now been handed over to the police and the National Prosecuting Authority for further investigation.