VBS CEO grilled in court over bonus

THE court battle to sequestrate executives accused of looting VBS Mutual Bank has begun with a R15 million bonus to chief executive Andile Ramavhunga coming under scrutiny.

Michael Antonie, the senior counsel for curator Anoosh Rooplal, wanted the South Gauteng High Court to rule that the payment was a fraudulent transaction. Rooplal was appointed as curator by Reserve Bank governor Lesetja Kganyago.

In his affidavit, Rooplal said the instruction to pay this R15m to Ramavhunga was made to an employee on the same day that a “fictitiously generated deposit” of R350m was created in the bank account of Vele Investments, VBS’s main shareholder.

But Ramavhunga denied the payment was fraudulent.

He submitted under oath that it was a legitimate fee due to him for helping Vele acquire Mvunonala Holdings for R300m.

Ramavhunga said he was entitled to R6m for introducing Robert Madzonga, Vele’s chief executive, to Bongani Mhlanga, and a further R9m once the deal went through.

Rooplal wants Ramavhunga and four other VBS executives sequestrated for orchestrating a “fraudulent scheme of epic proportions” at VBS, and allegedly making off with R1.5 billion after raiding depositors’ money.

Provisional sequestration orders were granted against Tshifiwa Matodzi, Philip Truter and Phophi Mukhodobwane yesterday.

In arguments before Judge Moroa Tsoka, Antonie said it was simply not probable for Ramavhunga to be paid such money for just facilitating the deal.

“It’s commercially irrational,” Antonie said. “On his version, all he had to do was introduce Mhlanga to Matodzi, and he’s entitled to R6m. It’s just nonsense. It’s bizarre in the extreme.”

Antonie said it was clear that the payment was not part of a genuine banker-client relationship.

“Ramavhunga, as the CEO of the bank, is dealing with its biggest shareholder, ostensibly in the form of Vele Investments, and he’s also dealing with his biggest client,” Antonie told the court.

“Now he would have us believe that it is commercially rational that the CEO of a bank would say to its biggest shareholder and its biggest client, ‘I want to make money out of this transaction in my personal capacity’.

“‘You are going to have to pay me 5% of R300 million if you want me to introduce you to Mhlanga’.

Absurd

“It’s absurd. If this was a genuine banker-client relationship, no CEO would ever do that,” Antonie added.

Adrian Kruger, the senior counsel for Ramavhunga, insisted to the court that the R15m payment to his client was above board.

He said that Ramavhunga was not involved in Vele.

“My client was not a director at Vele at the time. He has never been a director of Vele. He was director and CEO of the bank.

“There was no prejudice to the bank through this transaction,” said Kruger. He also told the court that the agreement to pay Ramavhunga was concluded orally.

But this submission shocked the judge: “An oral agreement dealing with so much money? And this is a chartered accountant, a chief executive of a bank?” Judge Tsoka asked.

The South African Institute of Chartered Accountants announced last week that it was investigating Ramavhunga’s conduct.

Judge Tsoka will today hear arguments for a sequestration order against Robert Madzonga, VBS’s former chief operations officer and the group chief executive of Vele Investments.