SA Re­serve Bank probe shows many of the peo­ple who re­ceived large sums from the failed VBS Mu­tual Bank acted in this ca­pac­ity, lead­ing to its col­lapse

The Sunday Independent - - BUSINESS - LUYOLO MKENTANE luyolo.mkentane@inl.co.za

THE MURKY world of fa­cil­i­ta­tion, re­fer­ral or com­mis­sion fees came back to spook South Africa this week af­ter it emerged that most of the peo­ple who re­ceived large sums of money from the failed VBS Mu­tual Bank acted as mid­dle­men.

While some have de­fended the prac­tice as stan­dard, oth­ers have raised con­cerns about how the fa­cil­i­ta­tors con­trib­uted to the bank’s spec­tac­u­lar col­lapse this year.

The SA Re­serve Bank (Sarb) foren­sic in­ves­ti­ga­tion into VBS Mu­tual Bank’s af­fairs un­earthed the role played by mid­dle­men in the bank’s col­lapse.

The re­port iden­ti­fied ANC Lim­popo trea­surer Danny Msiza as the brains be­hind a mul­ti­mil­lion-rand com­mis­sion scheme which paid out bribes to mu­nic­i­pal of­fi­cials who made pay­ments to VBS Mu­tual Bank on be­half of mu­nic­i­pal­i­ties.

He re­port­edly col­lected about R4 mil­lion in cash for fa­cil­i­tat­ing the deals.

EFF deputy pres­i­dent Floyd Shivambu’s brother, Brian, was also sin­gled out af­ter he pock­eted a wind­fall of R16m, for what the re­port claimed was a gra­tu­itous pay­ment.

Econometrix chief econ­o­mist Azar Jam­mine said pay­ing com­mis­sion was con­ducive to mas­sive cor­rup­tion.

“I have al­ways found that prac­tice to be very con­ducive to cor­rup­tion, but that’s how the busi­ness world works. It’s not only in South Africa, but in many parts of the world,” Jam­mine said.

Con­cerns around the prac­tice in­creased af­ter busi­ness­man Fana Hlong­wane re­port­edly re­ceived more than R200m from Bri­tish multi­na­tional BAE Sys­tems for fa­cil­i­tat­ing the arms deal. Swedish au­thor­i­ties also said Hlong­wane, who was then de­fence min­is­ter Joe Modise’s ad­viser on the deal, re­port­edly col­lected a fur­ther R24m in 2003.

He was also re­port­edly paid R7m by Bri­tish Aero­space project man­ager Bernard Col­lier in 2007 through a com­pany called Ivema, it­self 51% owned by Hlong­wane through Ng­wane De­fence Hold­ings.

For­mer VBS chair­man Tshifhiwa Ma­todzi’s com­pany Vele al­legedly scored R325m from the failed bank.

The Sarb re­port, con­ducted by ad­vo­cate Terry Mo­tau, iden­ti­fied Ma­todzi as the cen­tral fig­ure in the VBS loot­ing spree.

Ned­bank chief econ­o­mist Den­nis Dykes said the VBS pay­ments looked sus­pi­cious.

“If you look at the VBS is­sue, for ex­am­ple, it looks highly ir­reg­u­lar, be­cause you are pay­ing of­fi­cials to di­rect de­posits to your in­sti­tu­tion. It cer­tainly is ir­reg­u­lar,” Dykes said.

The Com­pe­ti­tion Com­mis­sion sanc­tioned SAA in 2005 for abus­ing its dom­i­nance by pay­ing an over­ride com­mis­sion to travel agents in ad­di­tion to the 7 per­cent that was charged by all air­lines.

In the year ended March 2017, SAA paid R1.8 bil­lion in what it de­scribed as com­mis­sions and net­work charges.

Gupta lieu­tenant Salim Essa re­port­edly pock­eted a R10m fa­cil­i­ta­tion fee by China South Rail for the sale of lo­co­mo­tives to Transnet, while Ger­man soft­ware group SAP re­port­edly paid a 10 per­cent “sales com­mis­sion” to a com­pany con­trolled by the Gup­tas to se­cure a Transnet con­tract.

Dykes said com­mis­sions were cer­tainly be­ing paid in both the pri­vate and pub­lic sec­tors.

“All we know is that there is a lot of money be­ing chan­nelled around by sus­pi­cious char­ac­ters.”


FANA Hlong­wane, who used to be an arms deal con­sul­tant, crosses his fin­gers dur­ing the Ser­iti Com­mis­sion af­ter he with­drew an ap­pli­ca­tion for him not to be pho­tographed when he pre­sented ev­i­dence. |

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