SARB: councils knew VBS accounts illegal

The municipalities that were banking with VBS Mutual Bank knew they were breaking the law.

This is according to SA Reserve Bank governor Lesetja Kganyago, who yesterday said the government had provided the Bank with guarantees to pay back clients who banked with VBS.

These included individuals, burial societies, stokvels and savings clubs.

He said, however, the guarantee did not cover the municipalities or corporate deposits.

A number of municipalities around the country had banked with VBS.

“They [municipalities] knew they were breaking the law. These are the institutions who knew what they were doing. It [VBS] is a bank that serves the important segment of our society. It is a travesty that mismanagement at the bank put their deposits at risk. Management at the bank was determined to commit fraud.”

Kganyago said the government had provided a guarantee to the Reserve Bank to facilitate the repayment of all retail deposits up to R100 000 per retail depositor starting from Friday.

Retails deposits are defined as deposits in VBS by individuals, burial societies, stokvels and saving clubs.

“What has happened at VBS is fraud. The fraud was committed by people watching over the institution,” Kganyago said.

In March 11, finance minister Nhlanhla Nene placed the bank under curatorship. VBS has over 20 000 clients.

It has emerged that the bank was looted by its executives, including the bank’s chairman and Vhavenda king Toni Mphephu Ramabulana, who were living it up on the bank’s dime.

This included having loans for a fleet of luxury vehicles, private helicopters and shopping sprees.

Yesterday VBS curator Anoosh Rooplal revealed that R1.5-billion had been siphoned out of the bank.

“That is the amount we are looking to recover from the executives of the bank and high profiled people benefited from the bank,” Rooplal said.