VBS: ‘CYRIL KNEW’

Sources al­lege that a VBS share­holder briefed Ramaphosa about loot­ing ‘early last year’ – and even be­fore then, in­formed the cen­tral bank and Fi­nan­cial Ser­vices Board

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Pres­i­dent Cyril Ramaphosa knew about the wide­spread loot­ing at VBS Mu­tual Bank early last year, but al­legedly failed to take any ac­tion. City Press has learnt that Ramaphosa was in­formed of wide­spread cor­rup­tion and loot­ing in­volv­ing bank ex­ec­u­tives at a meet­ing in Johannesbu­rg very early last year.

Sources close to a ma­jor VBS share­holder said the share­holder per­son­ally in­formed Ramaphosa about what was go­ing on.

“I know that the share­holder met with Ramaphosa, who was not pres­i­dent at the time. The share­holder briefed him about the out­ra­geous cor­rup­tion at VBS,” said a source.

An­other said: “Dur­ing the meet­ing, Cyril had ap­par­ently raised se­ri­ous con­cerns about VBS. He promised to do some­thing about it.”

Khusela Diko, Ramaphosa’s spokesper­son, said yes­ter­day: “We have no record of such a meet­ing.”

The share­holder, whose name is known to City Press, be­gan blow­ing the whis­tle from 2016 about what was go­ing on at the bank. He de­clined to com­ment.

On Wed­nes­day, Ad­vo­cate Terry Mo­tau SC re­leased his damn­ing re­port, The Great Bank Heist, into how 50 in­di­vid­u­als and com­pa­nies, in­clud­ing many of the bank’s ex­ec­u­tives, re­ceived “gra­tu­itous pay­ments” amount­ing to R1.8 bil­lion from the bank.

How­ever, Ramaphosa was not the first per­son the share­holder went to for help.

City Press has learnt that in June 2016 – more than six months be­fore he met with the then deputy pres­i­dent last year – the share­holder re­ported what he knew to the SA Re­serve Bank and the then Fi­nan­cial Ser­vices Board (now the Fi­nan­cial Sec­tor Con­duct Au­thor­ity, or

FSCA).

Then, in about June last year, af­ter meet­ing Ramaphosa, the share­holder ap­pealed to a “for­mer politi­cian at

Trea­sury, who fa­cil­i­tated a meet­ing be­tween the Pub­lic In­vest­ment

Cor­po­ra­tion (PIC) and the whistle­blow­ing share­hold­ers”.

“No ac­tion re­sulted from the PIC and the share­holder,” said an­other source. “No­body was will­ing to do any­thing. Had they re­sponded ear­lier, these guys would not have looted this much.”

The PIC has a 27% stake in VBS.

The re­port found that two of its for­mer ex­ec­u­tives, Paul Mag­ula and

Ernest Ne­sane, who rep­re­sented the PIC on the VBS board, were paid R7.6 mil­lion and

R7.2 mil­lion, re­spec­tively, for their si­lence.

In Septem­ber 2016, City Press re­ported that the whis­tle-blower asked the FSCA to in­ves­ti­gate how VBS lent R136 mil­lion to Vele In­vest­ments, a com­pany in which the bank’s for­mer chair­per­son, Tshifhiwa Ma­todzi, and its for­mer chief op­er­at­ing of­fi­cer, Robert Mad­zonga, had un­de­clared in­ter­ests at the time.

Vele sub­se­quently be­came VBS’s main share­holder on the ba­sis of a fic­ti­tious de­posit, Mo­tau found.

In the same re­port, City Press broke the news of how VBS lent R7.8 mil­lion to then pres­i­dent Ja­cob Zuma to cover his por­tion of the up­grades to his Nkandla home, in line with the re­port by for­mer pub­lic pro­tec­tor Thuli Madon­sela. This week, sources said the loan to Zuma was an at­tempt to buy po­lit­i­cal in­sur­ance.

“When­ever other share­hold­ers raised the is­sues at VBS, the bank’s ex­ec­u­tives would run to Zuma and tell him that they were un­der at­tack from share­hold­ers be­cause they had given him a loan. The share­hold­ers who were against loot­ing at VBS had be­come the en­emy of the state,” said a source.

Mean­while, an­other share­holder, busi­ness­man David Ma­bilu, who has also been fight­ing cor­rup­tion at VBS, said he was glad the re­port had vin­di­cated him and oth­ers who were un­happy with how VBS was run.

“Let the law take its course,” he said this week. “This is what we have been call­ing for from day one.”

Mo­tau’s re­port con­firms a se­ries of ar­ti­cles in City Press, run since Fe­bru­ary, which de­tailed the un­fold­ing plun­der that in­volved more than R1 bil­lion in de­posits by 15 mu­nic­i­pal­i­ties.

Mo­tau, as­sisted by Werks­mans At­tor­neys, was ap­pointed by the Re­serve Bank to in­ves­ti­gate af­ter the bank was placed un­der cu­ra­tor­ship in March, hours af­ter City Press re­ported that VBS was bank­rupt.

Mo­tau found that the “pay­ment of very large sums of money was made to the var­i­ous per­pe­tra­tors of the scheme of loot­ing, as a re­ward for their par­tic­i­pa­tion, and sub­stan­tial bribes were paid to cer­tain of VBS’s di­rec­tors and other re­lated par­ties in or­der to buy their si­lence and to look the other way while the loot­ing was go­ing on”.

No­body was will­ing to do any­thing. Had they re­sponded ear­lier, these guys would not have looted this much

FIERCE FIGHT­BACK LOOMS

How­ever, sev­eral peo­ple cited in Mo­tau’s re­port have launched a se­ries of in­di­vid­ual court ac­tions to chal­lenge its find­ings.

Ka­belo Mat­sepe, who al­legedly acted as an agent to re­cruit mu­nic­i­pal­i­ties and con­vince them to de­posit funds at VBS, has hired ex­pe­ri­enced crim­i­nal lawyers BDK At­tor­neys to fight his case.

Mat­sepe’s com­pany, Moshate In­vest­ment Group, de­nied all the al­le­ga­tions against him. His at­tor­ney, Mariq van der Westhuizen, said she planned to at­tack the con­sti­tu­tion­al­ity of Mo­tau’s in­ves­ti­ga­tion.

“The in­quiry of­fended var­i­ous con­sti­tu­tional prin­ci­ples. This will be­come ev­i­dent when we lodge the re­view ap­pli­ca­tion. We will il­lus­trate that some of the ev­i­dence can­not be used or ad­mit­ted as ev­i­dence,” she said, adding that Moshate had signed a con­tract with VBS and the com­pany was paid ac­cord­ingly.

Banks of­ten con­tract agents to tout for busi­ness for them, and this “con­tract was noth­ing out of the or­di­nary,” she said.

Danny Msiza, the ANC’s Lim­popo trea­surer, whom the re­port ac­cuses of plac­ing po­lit­i­cal pres­sure on mu­nic­i­pal­i­ties in the prov­ince to bank with VBS, hit out at Mo­tau for in­jur­ing his rep­u­ta­tion, dig­nity and fam­ily.

“What Ad­vo­cate Terry Mo­tau did was to con­vict me in ab­sen­tia and

[he] left me to be cas­ti­gated by the court of pub­lic opin­ion, as it is hap­pen­ing now,” he said in a state­ment to City Press.

“It goes without say­ing that my con­sti­tu­tional right to dig­nity has been se­ri­ously in­fringed. I have al­ready in­structed my lawyers to in­sti­tute le­gal pro­ceed­ings in the

High Court to re­view and set aside por­tions of the re­port which im­prop­erly and falsely in­sin­u­ate any wrong­do­ing on my part.”

Msiza said he had “vol­un­tar­ily de­cided to sub­mit my­self to the au­thor­ity of the ANC’s in­tegrity com­mis­sion”, which he will ask to “pri­ori­tise this mat­ter”.

Sipho Mal­aba, a for­mer part­ner at KPMG, which was VBS’s ex­ter­nal au­di­tor, is also ex­pected to launch a court chal­lenge to set aside the re­port which im­pli­cates him in fraud.

Mal­aba, who will be rep­re­sented by Eco­nomic Free­dom Fight­ers chair­per­son and se­nior coun­sel Ad­vo­cate Dali Mpofu, is ac­cused of not declar­ing more than

R30 mil­lion of VBS loans he re­ceived.

The char­tered ac­coun­tant is also ac­cused of sign­ing off the bank’s fi­nan­cials when he knew that they were mis­stated by more than R700 mil­lion.

THE POOR COUNT THE COST

A som­bre mood pre­vailed in Tho­hoyan­dou, Lim­popo, this week as news of Mo­tau’s re­port spread. Stunned clients said they hoped the bank could still be saved, but were re­luc­tant to re­veal their names be­cause pow­er­ful fig­ures such as Venda King Toni Mphe­phu Ram­ab­u­lana were im­pli­cated.

A 63-year-old hawker from Manini vil­lage, who has been bank­ing with VBS since 1990, said she “still can­not be­lieve that the bank has been killed by ed­u­cated peo­ple all be­cause of greed”.

“We had put our hope in them, think­ing that they will lead us well as VhaVenda, but it was not to be,” she said.

Ntan­ganedzeni Masid­wali’s burial so­ci­ety de­posited R116 000 with VBS. It has man­aged to re­cover R100 000 from Ned­bank, which was ap­pointed by the Re­serve Bank to fa­cil­i­tate the pay­ments to clients.

The stay-at-home mother of three does not hold out much hope for the re­cov­ery of the re­main­ing R16 000.

“We were told that we would re­ceive it af­ter three years be­cause VBS would, by that time, al­ready have sorted out its is­sues and be ren­der­ing ser­vices again to its clients,” she said.

A 66-year-old pen­sioner said the Venda king and all oth­ers im­pli­cated should be dealt with.

“No one is above the law. All these peo­ple who stole our money should ac­count for their wrong­do­ings be­cause they are not spe­cial,” he said.

Nt­sieni Mbu­lun­geni, chair­per­son of the Thu­lamela Busi­ness Fo­rum, said it was time those im­pli­cated “faced the con­se­quences”.

“Also quite dis­heart­en­ing is the fact that they stole from the poor, and as the pub­lic, we never got to see how that ben­e­fited our peo­ple,” he said.

“Clos­ing VBS doors has al­ready started dis­ad­van­tag­ing lo­cal peo­ple. For in­stance, the ma­jor­ity of hawk­ers can no longer save money the way they used to and stokvels have also de­clined in num­bers.”

DID HE KNOW? Cyril Ramaphosa

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