From bank heist to arrests: A timeline of the VBS scandal
Almost R2 billion simply disappeared and many were left destitute, but how did it all fall apart? Here's a few key developments around the fall of the Venda Building Society Mutual Bank.
JOHANNESBURG - The words 'VBS scandal' have become as common in the South African political lexicon as state capture, thanks to the major corruption bust that stemmed from a small, relatively unknown bank a few years ago.
Almost R2 billion simply disappeared and many were left destitute, but how did it all fall apart? Here's a few key developments around the fall of VBS Mutual Bank.
VBS Mutual Bank - a black owned financial institution - was established in 1982 by the then Venda homeland government - and given the name the Venda Building Society (VBS).
Its mandate was initially to operate as an investment scheme with the aim of encouraging and helping communities to invest.
VBS COMES TO THE FORE THROUGH JACOB ZUMA
VBS Mutual Bank went from a regional building loan bank to a nationally known institution overnight in 2016 when former President Jacob Zuma obtained a loan worth over R7 million from it to repay the money the Constitutional Court ruled he had to pay back for upgrading his Nkandla homestead.
At the time, the bank website listed the Public Investment Corporation as the majority shareholder, while just over 25% of the company was owned by the Dyambeu Investments.
THE BIG BUST
The same year, reports about it being broke began to emerge when a number of the bank’s users claimed they hadn't been able to withdraw their savings.
These customers stated they were told by VBS Bank that there was no money.
Initially, when Eyewitness News asked the bank about the allegations, it claimed its communications team was in back-to-back meetings.
Then VBS issued a statement saying only that it has been dealing with challenges at its Thohoyandou branch in Limpopo.
Fast forward a couple of years later and the scandal that broke headlines was uncovered. Billions had been siphoned out of the bank, effectively robbing scores of elderly, poor and hardworking South Africans.
SARB Governor Lesetja Kganyago placed the bank under curatorship.
“VBS experienced increasing liquidity challenges over the last 18 months. These problems emanated from a failure of the board of directors and executive management to manage the bank’s rapid growth and its funding and liquidity position,” he said at the time.
He added this resulted in VBS being placed under intense regulatory scrutiny.
“The liquidity challenges emanated from the maturity of a large concentration of deposits from municipalities and was exacerbated by the termination of other sizable deposits and the inability to source sufficient funding timeously.”
He said it was highly risky for the bank to take sizable municipal deposits that were short term and lend them out long term.
The bank was then reported to have lost R1.5 billion worth of funds.
The money was wasted due to money allegedly given to Vhavenda King Toni Mphephu Ramabulana and other executives, as well as politicians in the Economic Freedom Fighters - such as Julius Malema and Floyd Shivambu - and African National Congress parties in support of their extravagant living.
More than 20,000 retail customers who had deposits of less than R100,000 had their claims honoured by the Reserve Bank.
MOTAU REPORT CRACKS OPEN WHAT HAPPENED
An in-depth investigation into the plundering of VBS funds was jaw-dropping. The Reserve Bank released Advocate Terry Motau's report, which implicated 53 people and companies in fraud and corruption worth nearly R2 billion.
Here are the people implicated and the amount they received:
Vele and its associates, the majority shareholder in VBS R936,669,111
VBS and Vele chairman Tshifhiwa Matodzi R325,896,831
Free State Development Corporation R104,130,932
Former Limpopo ANCYL leader and director: Moshate Investment Group Kabelo Matsepe R35,400,105
Former KPMG partner Sipho Malaba R33,978,379
VBS general head of treasury and capital management Phophi Mukhodobwane R30,572,296
Attorney and Venda king’s advisor Paul Makhavu R30,461,788
Vele investments chief executive Robert Madzonga R30,372,282
VBS chief executive Andile Ramavhunga R28,925,934
VBS retail managing director Solly Maposa R24,441,877
Gundo Wealth Solutions director and ANC connected Ralliom Razwinane R24,224,198
Firmanox R17,748,384
Venda king Toni Mphephu R17,729,758
VBS/Vele spokesperson Ndivhuwo Khangale R16,830,091
Businessman Sechaba Serote R16,653,458
Former PIC head of legal Ernest Nesane R16,646,086
Brian Shivambu, brother of the EFF's Floyd Shivambu R16,148,569
Former PIC head of risk and compliance Paul Magula R14,818,098
CA, Insure Group chief executive Charl Cilliers R12,683,947
Tiisang Private Capital R12,489,230
Vele Investments chairman, former MTN boss Maanda Manyatshe R11,279,242
VBS sales general manager Sasa Nemabubuni R9,169,288
Sabicorp R8,453,585
VBS non-executive director & former SAPS CFO Avhashoni Ramikosi R5,972,288
Brilliantel finance and admin manager Takalani Mmbi R4,404,178
Matodzi personal assistant Phillip Tshililo R2,039,990
According to the findings, there was a concerted effort to attract substantial deposits from municipalities that had made deposits into the bank – without proper procedure. Twenty of them deposited around R3.7 billion.
That’s where hush money was also paid to officials at these municipalities.
By the time VBS Bank collapsed, 15 of the municipalities had collectively invested R1.5 billion - with little or no hope of getting it back.
Some of the people linked to the scandal have defended themselves and hit out at media reports, this includes Malema and Shivambu, who vehemently deny any involvement on their part.
ARRESTS - FINALLY
Four years after the first clues of trouble emerged and two years after it was confirmed that indeed, VBS Mutual Bank was involved in a huge corruption scandal, arrests were made on 17 June 2020.
Hawks head Lieutenant-General Godfrey Lebeya said those who had been suspected of money laundering and fraud at VBS were expected to appear in court on Thursday.
Lebeya and NPA head Shamila Batohi briefed the media on the progress made in the VBS Mutual Bank heist matter on Wednesday.
Lebeya explained that early morning simultaneous raids were conducted in Gauteng and Limpopo.
Those arrested included former VBS and Vele Investments chairperson Tshifhiwa Matodzi, the alleged kingpin behind the heist.
Former board members and senior KPMG auditors were also rounded up earlier on Wednesday and were charged with corruption and money laundering among others.
The eighth suspect is in quarantine after contracting COVID-19 and is expected to be arrested soon.
Lebeya said the eight men - who will be charged in the VBS scandal – were accused of enriching themselves with R122 million of the bank’s money.
“The investigation has revealed that the eight men who are the suspects either unduly indirectly or directly benefited from R122 million.”
He said investigations revealed a trail of looting after the board chair, CEO and CFO cooked the books even though the bank was already insolvent.
“The financial statements were shockingly inflated - the allegations are that the chairman and executive officer signed the directors’ responsibility statement, which was prepared by the chief financial officer of VBS.”
They will be charged with racketeering, theft, fraud, corruption and money laundering.
