At the centre of it: VBS Mutual Bank in Thohoyandou, Limpopo. Picture: ANTONIO MUCHAVE/SOWETAN
At the centre of it: VBS Mutual Bank in Thohoyandou, Limpopo. Picture: ANTONIO MUCHAVE/SOWETAN

The two former directors appointed to the board of VBS Mutual Bank as the Public Investment Corporation’s (PIC) shareholder representatives have been declared delinquent by the high court in Pretoria.

Ernest Nesane, the former executive head of legal at the PIC, and Paul Magula, the former executive head of risk, were declared delinquent by an order of the court last week, the state-owned asset manager said in a statement. 

In addition, the pair have also been disbarred as investment professionals by the Financial Sector Conduct Authority (FSCA). This prevents them from being being appointed directors of a company or from practising as investment professionals in SA, until or unless that decision is overturned. 

The PIC had sought to have the pair declared delinquent in the fallout of the forensic report commissioned by the Reserve Bank into the collapse of VBS Mutual Bank.

The report, authored by advocate Terry Motau and entitled the “Great Bank Heist”, described how Magula and Nesane received irregular payments from the bank amounting to tens of millions of rand to turn a blind eye to the grand theft that was under way at the regional bank.

The Reserve Bank placed VBS under curatorship in March 2018 owing to serious liquidity issues that, in light of Motau's report, were caused by the brazen theft of depositor's funds.

VBS is currently being liquidated. 

The PIC was a minority investor in VBS as a result of a prior “legacy” investment it assumed from the pension funds of the TBVC states. It had also provided a credit facility of R350m to the bank.

The PIC’s former CEO, Dan Matjila, testified before the commission of inquiry into allegations of impropriety at the state-owned asset manager earlier in August, and described how he handpicked Nesane and Magula “who had roots in Venda” to represent the PIC’s interests on the board of the bank.

Magula was dismissed by the PIC in 2018 in connection with VBS while Nesane resigned two days after he testified before Motau.

thompsonw@businesslive.co.za