VBS must be saved, says Yunus Carrim
MP calls the fall of the bank a blow to transformation and diversity in the sector
The chair of parliament’s standing committee on finance, Yunus Carrim, says every attempt should be made to rescue VBS Mutual Bank under a new “effective leadership”.
The committee will in November hold a meeting with law enforcement agencies the Hawks and the National Prosecuting Authority (NPA), as well as regulatory bodies such as the Independent Regulatory Board for Auditors (Irba) and the SA Institute of Chartered Accountants (Saica), in a bid to get to the bottom of one of SA’s biggest banking scandals.
A forensic report released last week‚ titled The Great Bank Heist, details how some of SA’s poorest municipalities and the elderly who had deposited their life savings in VBS lost close to R2bn after their deposits were used to fund the lavish lifestyles of individuals linked to the doomed bank‚ including its largest shareholder‚ Vele Investments. It detailed how internal and external auditors, including those from the embattled firm KPMG, turned a blind eye to the looting spree.
The collapse of VBS is a major setback for diversity and transformation in the financial sector.
This week, finance minister Tito Mboweni said the government will provide more details on how it plans to deal with the fallout from the VBS matter when he delivers the medium-term budget policy statement (MTBPS) next week. However, the minister called for tough action to be taken against those implicated.
On Wednesday, Carrim also urged the Hawks and the NPA to act swiftly and decisively against those alleged to be responsible for wrongdoing. However, he said the bank should be saved.
“The collapse of VBS is a major setback for diversity and transformation in the financial sector,” said Carrim, adding that until the committee is convinced otherwise, its view remains that every attempt should be made to rescue VBS under a new effective leadership.
Carrim also expressed concern that employees of the bank who were not accused of being part of the plunder had lost their jobs. He asked other banks with vacancies to absorb them.
“We need to learn the lessons from the collapse of VBS Mutual Bank to reduce the prospects of this happening in other financial institutions in future. Consideration needs to be given to an inquiry into whether SARB [Reserve Bank], National Treasury, the department of co-operative governance & traditional affairs, the SA Local Government Association and other relevant organs of state could have acted sooner on VBS and reduced the extent of its failures,” Carrim said.
He said with the implementation of the Financial Sector Regulation Act from April 1 this year, the new Prudential Authority now has greater powers to subpoena witnesses and access information to investigate allegations of wrongdoing by financial institutions.
“The committee strongly believes that these greater powers will serve the interests of depositors and policyholders, especially the lower-income depositors and policyholders who disproportionately lose out the most when financial institutions collapse.”
On Tuesday the EFF voiced similar concerns, saying the government should do its best to save the bank.
DA leader Mmusi Maimane said that he would write to the speaker of the National Assembly, Baleka Mbete, requesting an urgent debate in parliament on the VBS scandal.
“The blatant theft of almost R2bn from VBS bank accounts by rich politicians, politically connected business persons and their associates is crime against the poor, vulnerable and elderly in SA. It is a national disgrace, and the DA will not let this become another corruption scandal to be swept under the carpet,” said Maimane.
“While the report implicates a laundry list of ANC public office bearers and elected officials, the role of President Cyril Ramaphosa in the scandal needs parliament’s urgent consideration. If it is true that the president had prior knowledge of the corruption and looting at VBS — and failed to act — he may be criminally liable in terms of section 34(1) of Prevention and Combating of Corrupt Activities Act,” he said.