A branch of VBS Mutual Bank in Thohoyandou, Limpopo. Picture: Antonio Muchave
A branch of VBS Mutual Bank in Thohoyandou, Limpopo. Picture: Antonio Muchave

The curator of VBS Mutual Bank believes there may have been fraudulent reporting and transactions to extract money from the bank in order to further the personal interests of certain key individuals and companies related to the bank, Registrar of Banks Kuben Naidoo said.

He made the claims in an affidavit opposing the application by the parent company of VBS, Vele Investments, to have the curatorship set aside on the grounds that it was irregular. VBS was put under curatorship on March 11 because it was facing a severe liquidity crisis and could not repay deposits as and when required.

Naidoo referred to the initial findings by the curator, Sizwe Ntsaluba Gobodo Advisory Services’ representative Anoosh Rooplal. These indicated that VBS had been "severely mismanaged". In Rooplal’s initial assessment there were suggestions of fraudulent transactions.

In addition, there were a significant number of large transactions between the bank, rel-ated companies and staff. Corporate governance at the bank was particularly weak.

Rooplal was concerned that large balances, about R1.8bn, in suspense accounts "may be a fictitious creation of deposits on the banking system". The assets were reflected as a suspense account entry, which Naidoo said was highly unusual.

Rooplal had not been able to corroborate this entry and/or confirm that it represented a real and tangible asset of the bank.

Among Rooplal’s initial findings were that as at March 12 the liquid cash position of the bank amounted to R24.7m compared with total deposits that were "ostensibly" in the region of R2.9bn, although Rooplal had not been able to confirm the ver-acity of a large portion of the corporate deposits of R900m.

"It is uncertain as to whether all of these corporate deposits represent ‘true’ deposits and Mr Rooplal has to date been unable to confirm that … these deposits were actually received by VBS Mutual Bank.," Naidoo said.

The bank apparently paid brokerage commissions to attract deposits, mainly from municipalities. Naidoo said this was "highly unusual" for banks.

He said the integrity of the financial information of the bank was "highly compromised" with "significant deficiencies" in the administration and management of the bank.

Significantly, nine of the bank’s 20 largest loans were non-performing, with a large portion of R400m falling into this category. There was also an advance to an entity of about R150m, which was also non-performing, where Rooplal had been unable to obtain any meaningful information.