VBS Mutual Bank a hopeless case, high court hears
Effort should be in recovering money, says Prudential Authority
The VBS Mutual Bank is “hopelessly insolvent” and should be wound up as the purpose and object of the bank no longer exist. This is according to the Reserve Bank’s Prudential Authority, which filed this application to the high court in Pretoria. VBS was placed under curatorship in March after looting by executives led to a liquidity crisis. A damning Reserve Bank report released earlier in October detailed looting of nearly R2bn and identified the roles of political players from the ANC and the EFF.
VBS Mutual Bank is “hopelessly insolvent” and should be wound up as the purpose and object of the bank no longer exists, according to the Reserve Bank’s Prudential Authority, which filed this application to the high court in Pretoria.
VBS was placed under curatorship in March after looting by executives led to a liquidity crisis. A damning Reserve Bank report by advocate Terry Motau and Werksmans Attorneys, released earlier in October, detailed looting of nearly R2bn and identified the roles of political players from the ANC and the EFF.
In an affidavit to the high court, Prudential Authority CEO Kuben Naidoo said the bank was hopelessly insolvent.
BLACK HOLE
“Despite the efforts of the curator, the vortex of the black hole created by the role-players named in the investigator’s report has resulted in the disappearance of VBS’s substratum and it being objectively impossible for VBS to achieve the purpose of its existence,” he said.
This decision will not sit well with ANC MPs and those from the EFF who have called for the bank to be recapitalised.
During his maiden mediumterm budget policy statement last week, finance minister Tito Mboweni indicated that the embattled bank could be saved.
Naidoo, however, said that the restatement of the 2017 financial statements, which were falsified and signed off by KPMG partner Sipho Malaba, was a monumental task for the curator, Anoosh Rooplal, who would have to reconstruct the VBS balance sheet.
The results of the report show VBS’s liabilities exceed its assets, which made it “factually insolvent”. Naidoo said there was no possibility that VBS would be in a position to pay its debts and there was no possibility or prospect of the bank becoming a successful concern.
Rooplal also determined that curatorship was no longer viable for VBS, and ending the curatorship would enable a liquidator to use the mechanisms provided by the insolvency and company law legislation to recover money from recipients in terms of void and impeachable transactions.
Naidoo said that after receiving a letter from the curator and after considering the investigator’s report he, in consultation with the governors of the Reserve Bank, determined that VBS must be wound up.
“VBS is hopelessly insolvent and massive frauds have been perpetrated against it. There is no prospect of entering into any resolution plan in respect of VBS,” he said.
The present activities relating to VBS are primarily directed at recoveries resulting from the thefts and frauds addressed in Motau’s report, he said.
Naidoo has asked the court to hear the urgent application to finally liquidate VBS on November 13 and asked the high court to appoint Rooplal as the liquidator as he has been inextricably involved in the affairs of VBS for the past seven months.
VBS IS HOPELESSLY INSOLVENT THERE IS NO PROSPECT OF ENTERING INTO ANY RESOLUTION PLAN IN RESPECT OF VBS