VBS Mutual Bank. Picture: ANTONIO MUCHAVE
VBS Mutual Bank. Picture: ANTONIO MUCHAVE

Seven suspects arrested in connection with the collapse and looting of VBS Mutual Bank have been granted bail of R100,000 each.

The group, which includes the bank’s top executives, appeared in the Palm Ridge regional court on Thursday after a search-and-seizure operation was conducted by the Hawks on Wednesday.

Those arrested were the bank’s former chair Tshifhiwa Matodzi; CEO Andile Ramavhunga; treasurer Phophi Mukhodobwane; former KPMG audit partner, who signed off on the bank’s allegedly falsified financial statements, Sipho Malaba; two former representatives of the Public Investment Corporation (PIC) on the bank’s board, Paul Magula and Ernest Nesane; and Phalaphala Avhashoni Ramikosi, board member and former CFO of the SA Police Service.

VBS CFO, Philip Truter, was not in court as he is in Covid-19 quarantine. He will be added to the indictment next week.

The group is facing a combined 47 counts, including of racketeering, theft, fraud, corruption and money laundering. During their submissions to the court on Thursday the accused indicated they would be pleading not guilty.

These are the first arrests in almost two years since the Hawks investigation into the matter started in August 2018.

VBS Mutual Bank collapsed amid allegations that its executives looted almost R2bn they were supposed to be looking after on behalf of municipalities, stokvels and elderly people in Limpopo.

Investigations by the Hawks found that those arrested had eac, directly or indirectly, benefited unduly to the tune of million. The state did not oppose bail, but some of the accused asked that the amount be set at a lower amount, pleading poverty.

Magistrate Brian Nemavhidi, granted the R100,000 bail for each of the accused, set by the state, questioning what message he would be sending to the public if he set the bail amount lower.

Prosecutor Hein van der Merwe told the court that the R100,000 reflects the seriousness of the charges they are facing, but that it also serves as a proper guarantee for them to attend court when required. He said giving regard to where they lived and their movable assets, it is clear the group “do not live a life of poverty”. 

The matter has been postponed to October 8.

A report on the scandal by advocate Terry Motau detailed a criminal enterprise perpetrated at the behest of executives and benefiting politicians, who illegally deposited money with the bank in return for backhanders. It detailed how one mayor allegedly pleaded for “Christmas” — slang for a monetary gift — for herself and the speaker of her municipality.

In March 2018, the Reserve Bank had VBS Mutual Bank placed under curatorship after withdrawals by municipalities caused a cash crunch.

The Reserve Bank then appointed law firm Werksmans Attorneys and Motau to establish reasons for the bank’s failure. Municipalities in some of the country’s poorest areas with shoddy local services had about R1.2bn deposited at VBS Mutual Bank when it went under.

Five of the bank’s executives have since been sequestrated.

quintalg@businesslive.co.za