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

In December 2017 the Vhembe District municipality mayor was pleading for a “Christmas” for her and the speaker of the municipality as they were the ones making sure the money deposited in the VBS Mutual Bank was kept by the bank for six months.

“Christmas” is often used in local lingo during the year-end holiday season to signal a request for a monetary gift.

The Reserve Bank placed VBS under curatorship in March after withdrawals by municipalities led to a cash crunch. The Bank then appointed a team of forensic investigators led by Werksmans Attorneys and advocate Terry Motau, to establish what exactly had precipitated the failure.

The forensic report describes a criminal enterprise led by executives of the bank who  were supposed to be its custodians, starting with the chair of VBS, Tshifhiwa Matodzi, who was identified as the kingpin. It recommends that they face criminal charges.

A WhatsApp message from politically connected middleman Kabelo Matsepe to Matodzi on December 20 2017 shows one example of the “rampant corruption and bribery that occured”, Motau said in his forensic report.

“We gave her 300k and she cried [local lingo for complained] and said we gave juniors R1.5m and we give her 300k.… We said we will consult with you and will sort her out on Friday morning … If we can let’s give her 1% or 2% on a level of trust because she did keep her promise that she will block the money from being withdrawn,” the rest of the brazen WhatsApp message reads.   

The report shows how bank executives allegedly bribed municipal officials to deposit public funds in VBS.

The deposits made by municipalities in Gauteng, Limpopo and the North West were only one facet of the sordid mess which has emerged from the dealings of the bank.

Read the full report

The report reveals that R3.4bn was deposited from January 27 2015 until the bank was placed under curatorship, and that payments made to municipalities amounted to just more than R2.3bn. On April 30, R1.2bn remained from 14 municipalities, and this amount included fees and interest.

The report found that VBS went on a “concerted and deliberate” campaign to attract “very substantial” deposits from the municipalities by paying “commissions” in order to solicit the deposits.  

Andile Ramavhunga, CEO of the bank, testified that there was “nothing at all wrong” with the bank paying commissions to middlemen to solicit the deposits, but denied that he had any knowledge of bribes being paid to municipal officials to make deposits with VBS or to roll over funds that were due for repayment to the municipalities.

Phophi Mukhodobwane, GM of the treasury at VBS, gave more detailsof the “commissions”, saying in some cases agreements were in place to give a 2% commission of the sum deposited. The bank kept records  of these commissions, in invoices as well as on e-mail.

He said there was initially no direct contact between VBS and the municipalities, and that all payments were made to the consultants, who would then deal with the payment to the officials in question. However, he testified about a municipal official who complained that he had only received “a can of Coke” for his efforts, while the consultant raked in R1m.

From that point onwards the bank started making direct payments to officials, whom the report said were mainly dealt with by Ntendeni Nemabubuni, who is the GM of sales at VBS. However, it was impossible for VBS to cut out the consultants, who Mukhodobwane said had political ties to “very powerful people” within the ANC structures in the particular region.

On one occasion the acting CFO of the Capricorn District municipality, Mariette Venter, had resisted depositing money at VBS and demanded that the funds be returned, since municipalities were not allowed to deposit money in mutual banks in terms of the Municipal Finance Management Act.

But she was accused of just being a “white lady” who had an issue of banking with a black bank. The report said she stood firm, and the municipality stopped making any new deposits at the bank, and it ended up as one of a few municipalities in Limpopo not in “serious financial difficulty” after VBS was placed under curatorship.

Players such as Matsepe scored big in the process of effectively bribing officials. The report details that his company, Moshate Investments Group,  received R27m for doing “consulting” work for the bank. He testified that he was paid commission by virtue of initial introductions he made at the Ranch Hotel in Polokwane between mayors, municipal managers and CFOs of municipalities and VBS.

The biggest losers are the residents of some of the country’s poorest municipalities, which had to table budgets without the money they had deposited. It is unclear if and when they would ever see it again.