‘I helped defraud VBS out of R1.5bn’
‘Conspirators cooked up fake deposits, bribes for PIC, Prasa’
A suitcase stuffed with R5-million was flown to Johannesburg by helicopter and handed to a Public Investment Corporation executive as a bribe from VBS, according to an affidavit by the broke mutual bank’s former head of treasury.
Phophi Mukhodobwane says he received R10-million for his part in defrauding VBS of just over R1.5-billion, and spent R6.5-million of his windfall on a Ferrari.
Mukhodobwane’s affidavit lays bare the full extent of the deception that led to a liquidity crisis at VBS, including how executives at rail agency Prasa received bribes to invest R1-billion with VBS.
● An amount of R5-million was stuffed in a suitcase and flown in a helicopter from Makhado in Limpopo to Lanseria Airport to bribe an executive of the Public Investment Corporation to facilitate payments to VBS mutual bank.
An admission to this effect is contained in an affidavit deposed by the curator of VBS bank who is seeking the urgent liquidation of the assets of the bank’s holding company, Vele Investments, as well as the sequestration of the assets of five executives at both Vele and VBS.
The affidavit lays bare for the first time the full extent of the deception and trickery that led to a severe liquidity crisis at VBS, including how senior executives at rail agency Prasa received bribes to invest R1-billion in VBS and how middlemen were paid to convince municipalities to invest funds with the bank.
Phophi Mukhodobwane, the bank’s former head of treasury, has blown the lid off an elaborate scheme devised by executives at Vele who used suspense accounts to defraud VBS of just over R1.5-billion to purchase subsidiary companies, pay themselves millions in bonuses and fund their lavish lifestyles.
In the affidavit, Mukhodobwane tells of how in April 2017 he was instructed to deliver the R5-million.
Vele Investments chairman Tshifhiwa Matodzi “arranged for the Bell helicopter to fetch me from a small airport in Makhado on the 8th of April 2017. The helicopter arrived at Makhado and then flew to Lanseria airport and Matodzi met me there between 14h30 and 15h00 to fetch the suitcase.
“I asked him what the money was for and he advised me that the funds were intended for a senior executive at the PIC. He said this was so that we could receive swift support with regard to bank funding that was needed,” Mukhodobwane told VBS curator Anoosh Rooplal during investigations into how the bank’s money disappeared.
Application for R2-billion
The PIC, which has a 25% stake in VBS, extended a R350-million credit facility to the bank to be used for the financing of fuel transactions.
There was also an application for the PIC to inject R2-billion into the bank before it was placed under curatorship.
Rooplal has filed an urgent application in the High Court in Johannesburg for the liquidation of Vele Investments, and a further application for the sequestration of the five Vele and VBS directors implicated.
These are Matodzi, a former chairman of VBS; Robert Madzonga, the former chief operations officer at the bank; Andile Ramavhunga, former CEO of VBS; Philip Truter, former chief financial officer; and Mukhudobwane.
Rooplal’s application describes how the five met at Matodzi’s house at the exclusive Eagle Canyon golf estate, west of Johannesburg, and planned the looting spree to the tune of R1.5-billion.
“All of the victims of the fraudulent scheme entrusted VBS with personal savings and/or public funds.
“The victims may therefore be classified as the South African people,” Rooplal states in the affidavit.
Illusory deposits
He details how Mukhodobwane and Truter created “the illusion of deposits being made into VBS”.
This they did by manipulating the bank’s electronic accounting system to create fictitious deposit entries, which then reflected back as cash in the accounts of Vele Investments, the accounts of its directors and 34 companies and entities linked to them or their associates.
“Truter and Mukhodobwane transferred the ‘deposited’ funds from a VBS ‘suspense account’ to another VBS account held by one or more of the perpetrators, their associated entities or parties related to them. Once the deposits appeared in a VBS account, the account holder was enabled to draw on the deposit.”
About R929-million in fraudulent deposits was made through the scam, with Vele Investments receiving R745-million of that money.
The money was used by Vele to buy subsidiary companies including Insure Group Managers for R250-million. Fraudulent payments totalling R262-million were also made to repay or clear overdrafts of the five, their friends and other associates held at VBS.
“The perpetrators were effectively stealing money at a greater rate than was being deposited into VBS. This resulted in the severe liquidity crisis in which VBS finds itself.”
Auditing firm KPMG signed off on the audited financial statements of VBS through its audit partner responsible for the bank, Sipho Malaba. Rooplal found that Malaba had been to meetings at Matodzi’s house.
Four of those implicated rewarded themselves with R48-million in bonuses. Matodzi received R18-million, Ramavhunga R15-million, Mukhodobwane R10-million and Truter R5-million.
Mukhodobwane told the curator that he bought a Ferrari worth R6.5-million with some of his windfall.
A shelf company called Robvert was used to pay commissions to third parties that assisted VBS in raising municipal deposits.
Ten Limpopo municipalities have investments with the bank.
Mukhodobwane showed the curator a copy of a WhatsApp message between him and Ramavhunga where reference is made to payments made to “Kabelo”, “Bra Danny” and “Bauba” in relation to municipal deposits.
Kabelo Matsepe, a former ANC Youth League leader, confirmed to the Sunday Times that he received a commission to facilitate municipal deposits to VBS.
He said he was brought into the bank to raise capital from private and public institutions through his company Moshate Investment Group, which signed a contract with VBS in 2016.
“I am caught up in this mess,” he said.
The “Bra Danny” referred to is ANC Limpopo treasurer Danny Msiza. He has previously denied receiving money to facilitate municipal deposits.
Prasa link
Mukhodobwane also revealed how he had been instructed to pay R1.5-million to individuals that would ensure Prasa placed R1billion with VBS.
“Prasa never placed the R1-billion. However, the amount of R1.5-million was still paid by VBS,” Rooplal says in the affidavit.
PIC spokesman Adrian Lackay said the fund was not aware of a bribe to one of its employees and supported any appropriate action against those responsible for the demise of VBS.
“The PIC expects of its employees to act with integrity and in an ethical manner, and should further information emerge that implicates any PIC employee in wrongdoing, the PIC will deal with the matter in terms of its disciplinary code,” he said.
Ramavhunga denied that he was paid bonuses worth millions by the bank.
“I never received any bonus and I will explain all the payments that were made to me. The investigation is still ongoing and I believe it is going to exonerate me,” he said.
Matodzi declined to comment, saying he would respond to the allegations in court.
Madzonga, in his capacity as Vele CEO, said the company had sold its 51% share in Insure Group Managers to help recapitalise VBS.
“I gave VBS an assurance to do all things possible to save the bank and dispose of Vele assets to repay any amount owed to VBS by Vele,” Madzonga said.