VBS victim goes after KPMG for R4.7m
● Businessman David Mabilu is suing KPMG for R4.7m for damages he allegedly suffered in the collapse of VBS Mutual Bank.
Mabilu initially issued summons against KPMG last August. He filed his amended claim in February.
Mabilu, who is a friend of EFF leader Julius Malema and owns the Sunday World newspaper, held a 25% stake in VBS through Dyambeu Investments. He is one of many shareholders, depositors and municipalities who lost money when the bank failed.
In court papers, Mabilu said he had the chance to sell his VBS shares to the bank’s parent company, Vele Investments, in December 2017. He said he didn’t sell because the bank’s financial statements, signed by KPMG, led him to believe the bank was profitable and that his shares were worth far more than the R4.7m Vele offered.
“The 2017 VBS annual financial statements for the years 2014 to 2016 indicated exponential growth … The percentage increase over the years was 5.4% in 2014 to 2015, 215% in 2015 to 2016 and 56% between 2016 and 2017,” he said in court papers.
He “decided not to conclude a transaction with Vele ... on the basis that R11 per share constituted too low a price since VBS was on a highly profitable trajectory and in a very sound financial position.”
Former KPMG partner Sipho Malaba was responsible for the VBS account. He was arrested and appeared in court last month on charges of fraud, theft and money-laundering. Appearing with him were former VBS executives.
KPMG will defend the claim. Its spokesperson, Dudu Ndlovu, said: “We have been advised that there is no merit in the claim. When issues arose around the audit for VBS in 2018, KPMG investigated Malaba. He resigned in
April 2018 prior to a disciplinary hearing.
“The firm has fully co-operated in the SARB [SA Reserve Bank]/Terry Motau investigation and we provided extensive information to support the process. The SARB/Motau report acknowledges that Malaba misled KPMG regarding his financial position and his conflict/independence.
“We reported all potential illegal activity that we identified in our investigation. Any unlawful action taken by Malaba was neither authorised nor known to KPMG.”
Two years before VBS crashed, Mabilu alerted authorities to the bank’s dealings, first the Financial Sector Conduct Authority, which referred him to the Reserve Bank. In mid-2016, he wrote a detailed submission to the Reserve Bank and asked it to investigate VBS “to ensure that depositors’ funds are no longer placed at risk”.
He then approached the Public Investment Corporation, one of VBS’s main shareholders.
“Our aim has always been to save the black bank and bring in competent management, but no-one listened to us. I still believe in a black bank. The transformation of the financial sector is almost impossible without at least one bank in the hands of black people,” he said.
Mabilu said he was pleased that the Hawks and the National Prosecuting Authority are finally prosecuting those suspected of looting VBS. “Finally, it looks like justice is happening,” he said.