Liquidation of VBS investor Vele granted
The High Court in Johannesburg has granted an order allowing for the immediate liquidation of VBS Mutual Bank’s largest shareholder, thereby allowing liquidators to begin trying to recover as much as half of the R1.5bn that was stolen from depositors of the bank.
Acting Deputy Judge President Moroa Tsoka wasted no time on Tuesday in granting a final liquidation order against Vele Investments, the bank’s controlling shareholder. The application for the liquidation of Vele had been brought by the bank’s curator, Anoosh Rooplal.
“It’s a great milestone for the curatorship, it’s a step in the right direction to potentially recover assets that rightfully belong to the VBS depositors,” he said.
These depositors include municipalities in some of the poorest parts of the country, which stand to lose almost all of the R1.6bn they deposited with VBS, increasing the risk of budget shortfalls and violent protests that could result from a lack of service delivery.
Rooplal had stated in his application that Vele Investments was one of the primary beneficiaries of the fraud of “epic proportion” and had benefited to the tune of R745m, or about half of the R1.52bn he says was stolen from the bank.
“The court will now appoint a liquidator who will take over control of the assets and businesses of Vele.
“In addition, we look forward to getting a register of the company’s assets ahead of their disposal, as we have not had line of sight of that as yet. I suspect the liquidator will want to sell the legitimate businesses as going concerns [operating firms] in order to realise as much value as possible,” says Rooplal.
According to the court documents, Vele received the money through a series of fictitious and fraudulent deposits created in
suspense accounts by the bank’s executives. The funds were then transferred into accounts held by Vele Investments with VBS.
Vele used R697m of the money to pay for acquisitions of other financial services and logistics companies and included subscribing for more shares in VBS.
A small portion was spent on luxury cars and a helicopter. Business Day understands that the curator could not yet verify whether some of these assets have been sold on.
Based on the fact that Vele paid for the businesses almost entirely with fictitious money and did not borrow to acquire them, there should not be too many creditors standing in line with the bank to claim the proceeds of the asset disposals.
Judge Tsoka also ordered the provisional sequestration of three of the bank’s executives: treasurer Phophi Mukhodobwane, chief financial officer Philip Truter and chairman Tshifhiwa Matodzi.
Matodzi, identified as the architect of the fraud and under whose instruction it appears to have been executed, was also chairman of Vele Investments.
The provisional sequestration order granted by the court will prevent the executives from selling or transferring assets while the judge considers issuing a final order.
Two previous executives opposed the sequestration application in court— previous VBS CEO Andile Ramavhunga and chief operating officer Robert Madzonga — both arguing that the payments they received from VBS were legitimate. Arguments are still being heard on Madzonga’s and Ramavhunga’s applications.