In the end, VBS was just a carcass, a dead bank walking that had briefly been a feast for scavengers who stuffed themselves with the entrails, leaving a fly-infested skeleton for the poor and downtrodden in one of apartheid’s “homeland” relics of rural poverty. 

This fine book is a useful guide to many of the currents that have disfigured South African history: the fiction of the homelands and their legacy of underdevelopment, the dysfunction that has gripped local governments, and the unseemly pursuit of capital accumulation and the bling it brings by any means. The irony of an allegedly leftist African liberation movement in the form of the ANC and its mutant spawn the EFF gobbling whatever flowed their way from VBS will not be lost on readers. 

The general story is fairly well known, but in this book, it has been stitched together in a readable way, and for this reviewer, there were enough revelations to keep the pages turning. As Van Rensburg notes, it had literally become a classic pyramid or Ponzi scheme which gave the VBS treasurer Phophi Mukhodobwane “sleepless nights” — “making sure the money flying out the back door matched the money coming in, so that the whole thing did not collapse”.

But of course it did collapse eventually because the amount of money that flew out the back door did not match the amount coming in. Scavengers scrape away until the bones are clean. 

What astonished this reviewer was the amounts that could potentially have flowed, which would have inflicted far more damage on many more innocent souls. I was completely unaware of a little-reported incident related in the book detailing how VBS “almost got its hands on a crucial part of South Africa’s higher education system, the National Student Financial Aid Scheme (NSFAS)”.

In late 2017 — as the scavengers were getting close to the bone — they almost landed an elephant to replace the impala they were gnawing on. VBS and Standard Bank jointly won a tender for an e-wallet platform to disburse financial aid to thousands of university students from poor households. It is not clear how much would have accrued to VBS, “but it would have involved receiving and distributing a gargantuan R28.3-billion in 2018”. One can imagine that much of what VBS received would not have been distributed. If you don’t give a flying you-know-what about poor rural pensioners who have placed their life savings in the bank, you are hardly going to care about students from such backgrounds. 

The tender was thankfully pulled. As the author points out: “Had VBS crashed while holding a significant chunk of NSFAS money, the entire tertiary education system would have been jeopardised.” 

VBS Theft, Money Laundering & Life’s Little Luxuries: Julius Malema’s time of spending dangerously

The VBS scavengers also circled around Prasa, hoping for a R1-billion deposit from it to keep the pyramid standing, but in Van Rensburg’s rendering, the watershed ANC conference at the end of 2017 that saw Cyril Ramaphosa elected as president of the ANC probably put paid to that scheme. 

The role of municipalities in the VBS scam has been reported on far more extensively, but Van Rensburg has detailed these shenanigans in a clinical and eye-opening manner. “At least 12 ANC-controlled municipalities” likely saw their top political appointees playing a role in, and accumulating capital and bling, from “epic fraud”. Such dysfunction and outright criminality goes a long way toward explaining the epic failure of local governance in South Africa and the explosion of “service delivery protests”.  

Basically, municipalities are not allowed to deposit funds in mutual banks under the Municipal Finance Management Act (MFMA) — which might explain why they are lightly regulated. They are supposed to deposit money — raised from the likes of ratepayers — into proper commercial banks with credit ratings. But several deposited such cash into VBS, creating what the author describes as the “municipal money machine”. That was the gift that for a while kept on giving.

The rogues’ gallery of (alleged) scavengers assembled here is large, even if the pickings were ultimately relatively slim. Former president Jacob Zuma, former North West premier Supra Mahumapelo, and the EFF leadership, among many others, appear in these pages. In the end, a R2-billion fraud was conjured out of thin air, almost as if the money grew on trees. The Public Investment Corporation (PIC) has a starring role, as does Venda royalty. And there is the suspected mastermind Tshifhiwa Matodzi and Vele Investments.

One common thread through the narrative is the sheer avarice of South Africa’s predatory elite when it comes to flash cars and big SUVs. Car dealerships in this country clearly don’t care where the money comes from provided they clinch a sale. 

Van Rensburg notes the many fault lines this saga has thrown into sharp relief, including “the shocking collapse of municipal financial management and accountability. It has shown that generally respected national authorities such as the SARB, Treasury and the Auditor-General often have very little insight into what happens on the ground. Invisible networks run roughshod over the formal rules that supposedly govern the country.”

Founded in 1982 from modest roots, the Venda Building Society had a noble goal: providing mortgages to homeowners in the Venda homeland who lacked title to their property which could be used as collateral because they resided on communal land. Development economists say such situations give rise to “dead capital”. Title deeds would breathe life into such capital, but that is anathema to tribal authorities, whose power largely rests on their ability to allocate plots or negotiate with the mining sector and other agents of living capital. 

The story could have been a good one — a tiny black-owned bank rising above its humble origins to fulfil its mandate. The bank could have provided credit, for example, to emergent farmers who face development obstacles if they are tilling communal land. 

“Whatever else it might be called, VBS was above all a betrayal of a dream espoused by many: the rise of formidable black businesses built from scratch,” writes Van Rensburg. It was, indeed, a “dream defrauded”.

The VBS tale of woe is also a microcosm of wider and disturbing global trends, such as those etched in Tom Burgis’ Kleptopia: How Dirty Money is Conquering the World. In the case of VBS only a stripped carcass was left that could no longer be scavenged from. But on a global scale, the pickings remain rich, as do the pickings in South Africa. DM/BM