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

There has always been corruption in SA. But in 2018 it reached an Olympic standard as an industrial-scale looting exercise resulted in a whole bank being stolen in four years. VBS Mutual Bank, based in Thohoyandou, Limpopo, collapsed this year after being fleeced by the very people entrusted with looking after depositors’ money. Almost R2bn was stolen by the bank’s directors, senior executives and well-connected politicians.

VBS has taken SA’s corporate corruption gig to a new level. Most alarmingly, the auditors employed by KPMG are believed to have participated in the feeding frenzy, helping the thieves cover up the crime. It’s not as if the embattled auditing firm needed any more negative publicity, so the revelations by the Reserve Bank investigators that KPMG’s senior partner on the audit, Sipho Malaba, received more than R34m in gratuitous payments from VBS, were a body blow. Those payments were not disclosed to KPMG. When confronted, Malaba resigned, together with another VBS auditor, Dumi Tshuma.

Reclaiming the stolen cash hasn’t been easy. The estates of six of the top brass of the 36-year-old bank were sequestrated in the high court. About R700m of the cash was used to fuel an acquisition spree by the bank’s largest shareholder, Vele Investments, which is also being sequestrated.

It is a scandal that has reverberated across the northern provinces. This month the ANC fired 14 mayors in municipalities across Limpopo and the North West for allegedly instructing officials to deposit municipal funds with the bank (illegally). Some municipalities lost as much as R234m as VBS ran out of cash and went into business rescue in March. In Gauteng, the ANC is said to be pressuring two mayors to resign, as it is illegal to deposit municipal funds with a mutual bank. The ANC has also had to admit it benefited to the tune of more than R2m in sponsorships by Vele and VBS, which hired buses to ferry members to its December 2017 elective conference.

But it is the EFF that is hurting most from the scandal. The brother of EFF deputy president Floyd Shivambu and a cousin of EFF leader Julius Malema allegedly received about R20m of the funds looted, according to the report on VBS written for the Reserve Bank by advocate Terry Motau, and reports in the Daily Maverick.

The municipal officials are said to have received personal inducements, averaging about 2% of the deposits, to place funds with VBS. In the process, municipalities lost more than R1.6bn in funds deposited with the bank. This cash was used to pay bribes, fuel Vele’s acquisition spree, for personal vanity projects, or to buy flashy supercars and multimillion-rand properties.

The looting scheme worked like this: Vele Investments first sought the help of VBS chief technology officer Philip Truter, who allegedly created fictitious deposits in the bank’s IT system, which were then converted to equity in the bank. It allowed Vele to become VBS’s largest shareholder, with 26% of the stock. Vele’s nominees were then appointed to the VBS board, including chair Tshifhiwa Matodzi and CEO Andile Ramavhunga. Then the game really picked up: more fictitious deposits were created in VBS accounts, while real money was transferred from the pool of actual deposits to beneficiaries at other banks. Motau called it one of the most unsophisticated bank heists seen in SA. It’s no understatement.