SA to recover 'looted' cash after VBS bank collapse

A central bank report, titled The Great Bank Heist, into the failure of VBS Mutual bank said almost R2 billion was stolen over three years.

VBS Mutual Bank in Thohoyandou. Picture: Sethembiso Zulu/Eyewitness News

JOHANNESBURG – South Africa said on Tuesday it would seek to recover millions of dollars stolen from a local bank that subsequently collapsed owing substantial sums to creditors.

A central bank report, titled The Great Bank Heist, into the failure of VBS Mutual Bank said almost R2 billion was stolen over three years by 53 individuals, including executives and politicians.

Local Governance Minister Zweli Mkhize told parliamentarians that he had instructed lawyers to "launch a lawsuit on this matter so that we must chase and try and recover the money".

The minister described the situation at VBS Mutual as a "very crude abuse of finances which were destined for poor communities".

He said the bank had adopted "a systematic structured fraudulent process that was syphoning money out" to a few individuals, in a "case of the greedy robbing the poor".

"We cannot allow this money to disappear, it's our people's money, poor people's money," he said, vowing that "justice must prevail".

The VBS collapse is one of the most serious graft cases to rock South Africa since the departure earlier this year of scandal-tainted former president Jacob Zuma.

The investigation into the bank was launched after VBS suffered a severe liquidity crisis and it collapsed into administration.

The bank's failure has hit poor and rural clients hardest.

"It's grossly unfair. It's not possible for R2 billion to just disappear," Mkhize said.

"All the money must be recovered."

The probe also revealed malpractice including the granting of overdrafts to well-connected clients and bribes paid to individuals in exchange for deposits from state-owned companies and municipalities.

Parliament last week said it would investigate lawmaker and prominent leader in the radical opposition Economic Freedom Fighters (EFF) Floyd Shivambu over claims his brother profited from the fraud.

The black-owned VBS Mutual gained notoriety in 2016 when it lent Zuma R7.8 million to repay taxpayers for upgrades he made to his private home.