BOOK EXTRACT

VBS – A Dream Defrauded: Where did the millions to bail out Brian Shivambu come from?

By Dewald van Rensburg 4 October 2020

VBS: A Dream Defrauded unravels the R2-billion fraud that had created Vele Investment’s empire out of thin air and which ultimately left the bank a hollow shell. The book explores how suspected mastermind Tshifhiwa Matodzi and his associates first took control of VBS, fed political patronage networks and operated under a nationalist mantle endorsed by Venda royalty. In this extract, read about the backstory to why the EFF fought against the bank’s curator.

Dewald van Rensburg

Despite the VBS saga mostly implicating ANC deployees to the municipalities, it was the EFF that fought most vociferously against the bank’s curator and the SARB’s handling of the implosion. And the party just doubled down after the release of  (Advocate Terry) Motau’s report.

The reason was simple. Among the persons identified as having received gratuitous payments was Brian Shivambu, the brother of EFF deputy leader Floyd Shivambu. Of all the people accused of benefiting from the defrauding of VBS, he was arguably the most politically damaging. VBS may have been an ANC show, but it hadn’t got anywhere near this close to the ruling party’s top national leadership structure.

On 23 October 2018, two weeks after “The Great Bank Heist” report was released, Floyd Shivambu addressed Parliament. “We are going to state here categorically clear without any fear of contradiction that the EFF and ourselves as Members of Parliament never benefitted anything from the VBS Mutual Bank looting and the so-called heist that happened there,” he stated.

Nonetheless, VBS immediately became a political stick wielded against the EFF. On 6 November, President Cyril Ramaphosa fielded questions about the bank in Parliament and promised that action would be taken against “those municipal officials, and in some cases they include political officials, who deposited council funds into VBS”.

In the same session, DA chief whip John Steenhuisen used VBS as a broadside against the EFF, calling the rival opposition party “the VBS Bank looters”, to which Julius Malema responded: “No, no! You are not going to call me a VBS looter, you racist, young white man!” The fight dragged on into the next day’s session with Steenhuisen refusing to withdraw the comment.

On 7 November, Advocate Terry Motau was among a group that briefed the parliamentary Standing Committee on Finance. In the minutes it is noted that EFF spokesperson Mbuyiseni Ndlozi criticised Motau’s report, saying it “did not read like a very good legal document to him” and that “there was a lot of fiction there”. He also “asked why certain people were interviewed before the report was released, yet others were not” and “why some people were named in the report, such as Brian Shivambu”. Ndlozi and his EFF comrades would presumably have preferred the report to use the name of Shivambu’s company, Sgameka Projects, through which the money allegedly flowed. “What was the criteria used to identify some people in their individual capacities whilst others as companies?” he demanded.

Last but not least, he fell back on the party’s line adopted from the start. “Why was there such a quick call to liquidate VBS?” Ndlozi challenged. “It was very odd that the Reserve Bank does not want to save a black bank. Many other banks have been saved and so it is wrong to not save VBS.” He charged that the “VBS failure was not on the part of regulation but the absence of conviction to protect black people”.

The day before this meeting, Floyd Shivambu launched an attack on Yunus Carrim, the then chair of the standing committee who is also a ranking member of the SACP. There were reports at the time that the SACP had received R3-million from VBS for its 2017 national congress. In a formal letter, Shivambu challenged Carrim to declare that he was not conflicted “given that you have benefitted from a three million-rand (R3-million) donation from VBS Mutual Bank and Vele Investments”. “We ask the Chairperson to answer honourably and honestly,” Shivambu wrote. “We also request the Chairperson to expeditiously attend to the matter, given its urgency and sensitivity.”

Carrim replied the next day with a livid letter of his own, in which he charged: “Actually, it is your brother, not mine, who is alleged to have received about R16 million from Vele Investments or VBS …  And it is you, not me, who is alleged to have received money from your brother that might have come from Vele. And it is you, not me, who is to appear before Parliament’s Ethics Committee to respond to allegations that you benefitted from VBS or Vele Investments. So if there is anybody who might have a conflict of interest, it is you who is being accused of this.”

In the meeting later that day, however, Carrim seconded Ndlozi’s sentiments. “The collapse of VBS has reinforced racial stereotypes that Black people are corrupt and [can] not run banks,” the minutes report him as saying. “The bank should be revived and nurtured. The collapse of the VBS [is] a severe setback for the transformation agenda.”

Political point-scoring aside, VBS became a growing embarrassment for the EFF through 2019 and the beginning of 2020, as it became clear from a number of journalistic exposés, particularly by Pauli van Wyk of the Daily Maverick, that the money received by Brian Shivambu was anything but above board.

According to bank records used by Motau for his report, Shivambu’s company Sgameka Projects channelled payments totalling R16-million out of VBS, none of which were based on any loan agreements. As detailed in Chapter 13, most of the money went to Grand Azania and Mahuna Investments, two companies that, according to compelling evidence, are controlled by Floyd Shivambu and Julius Malema, respectively. A lot of this money was also paid directly to the EFF and some also directly to Floyd.

Over and above those payments, Sgameka’s VBS account paid out R680 000 to buy a Range Rover for Floyd Shivambu and other amounts that were clearly related to cars and property. The Range Rover was incidentally purchased from the same dealership where VBS’s crooked accountant, KPMG auditor Sipho Malaba, bought his, also with VBS money.

This was just the money Sgameka took out of the bank without the backing of loan agreements. It had two real loans from VBS as well, which had the potential to land Brian Shivambu in serious trouble in early 2019. When VBS’s liquidators launched their first wave of liquidation applications against companies that owed the bank money, they had Sgameka in their sights for the two loans. This was not good news for Shivambu or the EFF. If Sgameka was liquidated, the liquidators could launch a Section 417 insolvency inquiry into the company’s affairs, which would allow them to summon witnesses to make sworn statements. It would conceivably have been in the best interests of the EFF and its leadership to avoid this.

In January 2019, the VBS liquidators served Sgameka Projects with a letter of demand. At that point, the company owed just shy of R4.4-million – R1 580 154 on a mortgage from 2016 and R2 785 781 on a 2017 loan facility. The mortgage was to buy a house for the Shivambu brothers’ parents, while the loan was to ostensibly fund a wine bar.

Brian Shivambu begged for leeway. Through his lawyers, he said he had only fallen behind on the mortgage payments because he “did not know which account to utilise for such payments”. He also tried to argue that he was not obliged to repay the loan because it had been extended with the understanding that he would fund a business venture and repay his debt out of the profits, but only once there were profits. This had apparently been a verbal agreement with an unidentified individual at VBS. He then asked Rooplal if he could repay the loan debt at R5 000 per month – significantly less than even the interest accruing on the balances or the terms of the mortgage, which called for repayment of R190 637 per month. “Our client can only afford this amount in the interim,” Shivambu’s lawyers wrote on 27 February in a letter contained in liquidation court papers.

Even then, someone had his back. That same month, as he pleaded to have his loan repayments reduced, someone identified in court documents as Musa Shivambu paid R180 000 into the mortgage account, which, according to Brian Shivambu’s lawyers, brought him up to date with his repayments. Although the lawyers gave Musa’s surname as Shivambu, according to company records his surname is actually Shibambu. He is apparently a cousin of the Shivambu brothers.

Rooplal rejected the R5 000 per month repayment plan and proceeded with a liquidation application against Sgameka. A hearing was scheduled for 12 September 2019. Meanwhile, on 5 August, the Johannesburg High Court dealt Brian Shivambu a further blow: it ruled him personally liable for the loan debt.

Luckily for Shivambu, his fortunes radically improved at this point. On the same day as the High Court order, his lawyers paid R1-million into the loan account. I asked Brian Shivambu and his attorneys where this sudden windfall came from, but received no response. A month later, on 9 September, unknown parties again came to Shivambu’s rescue. The full outstanding mortgage balance, which had by now reached R1 657 589, was paid off overnight.

Then, on 11 September, the night before the liquidation application hearing, unknown parties paid a further R340 000 into the loan account, leaving a debt of R1.3-million. The following week, on 20 September, the day the court was due to make its order on the liquidation application, Brian Shivambu found another R1.4-million to settle all his debt. The EFF deputy leader’s little brother was saved from financial ruin and a potential investigation into the party’s source of funding was quashed.

The source of Brian Shivambu’s sudden wealth remains unclear. The payments were made through his attorneys’ trust account and it is impossible to divine from court papers whether or not a third party paid the debt. It seems likely, though.

This did nothing, however, to address the looming problem of the other R16-million that had moved through Sgameka. VBS records show unambiguously that the money did not come from any real deposits. DM

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  • May this happened, maybe that happened. Dewald, its seems like a good book, but ultimately, there are too many gaps and lack of genuine evidence. Sometimes, a book, or news article, creates more confusion. Personally, what we need now, are books about success stories. About crime cases successfully prosecuted. If you have real evidence that will stand up in court, why don’t you provide it to the NPA?

  • Follow the money you know is crooked if these two are involved. Never worked a day in their lives. Robbers of poor people disgraceful!

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