R1.9bn looted from VBS Mutual Bank

A probe into the failure of VBS Mutual Bank found that at least 53 people and companies may have benefited from the looting of R1.9 billion from the SA lender before its collapse.

Terry Motau, appointed by the Central Bank to lead the investigation, is calling for arrests to be made and for tax authorities to swoop on those identified in his 139-page report, titled The Great Bank Heist.

He also recommends an auditor’s liability claim be brought against the company’s auditor, KPMG South Africa, and that VBS be wound up.

“There is no prospect of saving VBS,” Motau said in the report. “It is corrupt and rotten to the core. Indeed, there is hardly a person in its employ in any position of authority who is not, in some way or other, complicit.”

Motau’s report described a bank that extended overdrafts to favoured clients’ accounts that had no deposits, and that issued payments to individuals in exchange for deposits from various state entities and municipalities.

Before being taken over by an administrator in March, the bank caught public attention in 2016 when it gave former President Jacob Zuma a mortgage to settle a Constitutional Court order to repay taxpayers some of the money spent upgrading his private residence.

According to the report, Andile Ramavhunga, former CEO of VBS, said he oversaw the payment of R1.5 million to what he called the Dudu Myeni Foundation in order to secure a R1 billion deposit from a state-owned rail agency.

This foundation didn’t exist under that name and may have been a reference to Zuma’s own foundation, which is chaired by Myeni, Motau alleged. Myeni, was ousted as SAA chair last year, having served on the board since 2009.

WhatsApp messages showed that SAA and Transnet were among Ramavhunga’s targets for deposits. Investigators also heard testimony claiming that VBS sought R2 billion of funding from the Public Investment Corporation, Motau said.

Ramavhunga “steadfastly denied that he was in any way involved in any unlawful conduct”, his report showed.

There were many examples of loans extended by the bank where “few, if any, monthly instalments were honoured”, the report said.

“There are also very large overdraft facilities where no amounts were ever paid into the accounts and the facility limits simply increased to permit the escalating outflows.” – Bloomberg