In a 206-page indictment detailing the 2018 implosion of VBS Mutual Bank, 14 men are now charged with a total of 188 counts of theft, fraud, money laundering, corruption, racketeering and contraventions of provisions in the Prevention of Organised Crime Act (Poca) and the Prevention and Combating of Corrupt Activities Act (Precca). These alleged crimes relate to the looting and subsequent implosion of VBS Mutual Bank between 2015 and March 2018.

The latest arrest comes about nine months after the first group of seven accused pleaded not guilty to the crimes against VBS. Former CFO Philip Truter was the only defendant to plead guilty in a plea bargain that offered him lesser jail time in exchange for turning state witness.

Philip Truter. (Photo: VBS 2016 Annual Report)

The accused are six bank managers, including VBS chair Tshifhiwa Matodzi, the KPMG auditor Sipho Malaba, two executives from the Public Investment Corporation (PIC) and five fixers, including ANC bigwig Danny Msiza. They are chartered accountants, lawyers, politicians and businessmen.

The eighth accused, Charlotte Ngobeni, was the manager of Collins Chabane Local Municipality in Limpopo. She appeared separately on various charges and was released on bail granted at R50,000. 

The group is charged for allegedly conspiring to loot the bank while putting up extensive structures to hide the theft. The indictment claimed their greed was insatiable, on the one hand, and on the other, more money was needed to hide the theft. In this process of looting and obfuscation, more than R2,296,599,008 in poor people and municipalities’ money was stolen in around three years, the Hawks and National Prosecuting Authority (NPA) claim. The bank was insolvent before the Registrar of Banks Kuben Naidoo at the Reserve Bank (SARB) got any the wiser.

One method in obfuscation was to reward all the team players for their part in the cover-up, the NPA says. A second was to dish out ‘consulting’ or ‘success’ fees to fixers who cajoled officials at municipalities and state-owned entities to invest more money into the bank. The third was to lie to SARB about the ever-increasing black hole in the bank’s finances. The purpose of this racket, the NPA’s indictment states, was a concerted effort of the fourteen to enrich themselves and their associates. 

To achieve this goal, a scheme was hatched to gain complete control over the financial systems of VBS. The crime was aired when the looters spent more money than the bank received. VBS chair Tshifhiwa Matodzi, CEO Andile Ramavhunga, treasurer Phophi Mukhodobwane, managing director for retail Solly Maposa and COO of VBS and Vele Investments Robert Madzonga managed the affairs of the enterprise, the NPA states. Non-executive director of VBS Phalaphala Ramikosi and KPMG auditor Sipho Malaba allegedly misrepresented the financial statements to the shareholders and SARB. The PIC’s representatives at VBS Ernest Nesane and Paul Magula allegedly covered up the fraud and duped the PIC into investing in the bank. Fixers Danny Msiza, Kabelo Matsepe, Ralliom Razwinane, Takunda Edgar Mucheke and Tshianeo Madadzhe allegedly bribed, cajoled and threatened state officials to invest in VBS. Together, the Hawks and NPA say, they created a racket with the goal of enriching themselves while hiding the fraud. The witness list contains the names of 42 people.

VBS Mutual Bank looting suspects. (Photos: Gallo Images / OJ Koloti)

This week’s arrests: Danny Msiza, Kabelo Matsepe, Solly Maposa, Robert Madzonga, Ralliom Razwinane, Takunda Edgar Mucheke and Tshianeo Madadzhe

Solly Maposa (49) is the former VBS managing director for retail. He exercised control over some of the banking systems. The indictment alleges Maposa received a cumulative R38.5-million in benefits, loans and cash. In several instances, cash payments were allegedly made from VBS chair Matodzi’s accounts to accounts Maposa controlled. These payments were allegedly made on the instructions of Matodzi, Ramavhunga and Mukhodobwane. 

When the fraud was discovered back in 2018, an investigation at the behest of the SARB and headed by adv. Terry Motau and law firm Werksmans found Maposa played an important role. He testified before Motau about the use of numerous banking accounts as “slush funds” to distribute the loot. 

Former COO of VBS and CEO of Vele Investments Robert Madzonga (53) is an admitted attorney with over 23 years’ experience in corporate and financial business. Madzonga has had a terrible 2021 so far. His Constitutional Court bid to halt his final sequestration initiated by the curator of VBS was dismissed last month and on Thursday he was arrested for his alleged thieving ways.

The NPA alleges that about R34.5-million in cash and loans were funnelled to Madzonga through his fronts on the instruction of Matodzi and Madzonga himself. 

The crux of Madzonga’s defence in sequestration proceedings before the high court, heard in 2019, was that he knew nothing of the fraudulent scheme or the financial position of VBS or the financial position of Vele Investments. 

He also claimed he did not knowingly benefit from the VBS fraud. 

The high court then found this improbable, his defence not credible and remarked that there are “strong indications that Mr Madzonga had personal knowledge of the fraudulent scheme at VBS”. 

Madzonga’s ethics have been questioned before in his role as COO of MTN when a PWC report mentioned him specifically in relation to corruption at the cellphone giant.

The law seems to have finally caught up with Madzonga when VBS imploded. 

Motau’s investigation found that none of Madzonga’s income from 2017 to 2018 was declared to SARS.

The five fixers, the NPA alleges, solicited deposits from various municipalities and state-owned entities. They were allegedly rewarded with large cash payments and beneficial or illegal loan agreements. 

The most prolific fixer, businessman Kabelo Matsepe (29), seems to be the link between some of the municipalities and ANC Limpopo leader Danny Msiza, the indictment states. According to Motau, he received R35.4-million, which Matsepe claimed were righteous ‘fees’ for bringing together the bank and municipalities. In several telephone conversations with Scorpio, Matsepe consistently denied any wrongdoing. 

The NPA isolated R28.9-million in cash and loans they feel confident to prosecute Matsepe on. A Scorpio investigation revealed the first big-ticket item on his shopping list was a Range Rover and a R5.5-million house in Midstream Estate, Centurion.

The South African Revenue Service (SARS) is also on his case for R61.5m.

Several sources told Scorpio Matsepe has incessantly phoned officials and people in and around SARS in order to sort out his tax drama in a roundabout, impermissible way. 

Danny Msiza (53) used Matsepe as a front, the NPA alleges. Matsepe is alleged to have paid a cumulative R4.46m in cash “on instruction” of Msiza to various companies linked to him. 

Suspended ANC Limpopo treasurer Danny Msiza. (Photo: Twitter)

Msiza had a brief court victory when the high court scrapped the findings against him in adv. Motau’s report on the VBS theft because Msiza wasn’t given the opportunity to offer his side of the story. Even though Msiza offered it as proof that he was innocent, the case was not decided on the merits. Msiza will now have his day in court to explain the actual money flows into accounts linked to him.

The Free State Development Corporation, the Community Schemes Ombud Service and municipalities were allegedly linked to VBS by fixer and ‘businessman’ Ralliom Razwinane (39). 

The NPA wants Razwinane to answer for allegedly receiving about R7-million in various accounts for his part in the looting of VBS. 

The NPA further alleges that an additional R390,215 was used to fraudulently ‘settle’ a contract finance account for Razwinane – meaning that VBS used depositors’ money to pay Razwinane’s debt.

Takunda Edgar Mucheke (37) describes himself as the chief investment officer at TNE Advisory Services. His Twitter bio states he is a “Chartered Accountant, entrepreneur, business coach, father, husband, believer.” The NPA claims he was paid R7-million in VBS-loot of which he sent R3.38-million to a company under the control of Tshianeo Madadzhe (37).

The state witness

VBS CFO Philip Truter had control over the bank’s financial system. He had a fiduciary duty to guard the bank’s interest but was bribed to support the racket’s interests with loans and cash totalling about R5.8-million. 

Truter pleaded guilty to charges of fraud, corruption, racketeering, theft and money laundering. He was sentenced to ten years imprisonment, of which three years are suspended for five years. He has undertaken to cooperate with the state’s case.

The NPA alleges he did Matodzi’s bidding by designing and implementing a system of creating fictitious deposits in order to facilitate the theft of monies from VBS. Truter was somewhat helped by senior VBS official Solly Maposa, the NPA alleges. Truter was party to several WhatsApp and email discussions and may be able to offer a subjective view of the dynamics and activities in the bank.

The arrests of June 2020: Tshifhiwa Matodzi, Andile Ramavhunga, Phophi Mukhodobwane, Sipho Malaba, Phalaphala Ramikosi, Ernest Nesane and Paul Magula

The NPA’s central argument is that VBS chair Tshifhiwa Matodzi (42) had control over the accounts and people that mattered. He stands accused of orchestrating the fraud, lying to the SARB, paying bribes, defrauding investors and defrauding the PIC. Matodzi has benefitted directly or indirectly from about R1.2-billion flowing towards him, his fronts, Vele Investments and its associates, the Motau investigation found.

VBS Mutual Bank looting suspect Tshifhiwa Matodzi appeara at Palm Ridge Regional Court on June 18, 2020 in Johannesburg, South Africa. (Photo: Gallo Images/OJ Koloti)

Executive director and CEO of VBS Andile Ramavhunga (44) had control over several front companies, the NPA alleges and has to answer for a total of R23.49-million for his benefit.

A Scorpio investigation suggests Phophi Mukhodobwane (31), VBS treasurer, used his brother as a front. The NPA now wants answers about at least R17.1-million in VBS loot Mukhodobwane allegedly benefitted from. Mukhodobwane allegedly also lied to the SARB when he attempted to cover up the fraud. 

Former VBS Mutual Bank treasurer Phophi Mukhodobwane appears at Palm Ridge Regional Court in Johannesburg on 18 June 2020. (Photo: OJ Koloti / Gallo Images via Getty Images) and his Porsche Cayenne the night of 24 August 2019 in Lonehill. (Supplied)

Scorpio further found that Mukhodobwane was involved in a fatal car crash in 2019 with a Porsche Cayenne GTS funded by VBS. He is now being investigated for culpable homicide and reckless and negligent driving.

KPMG auditor Sipho Malaba (46) is accused of using his wife as a front to hide the receipt of about R31-million in VBS-loot. Malaba was instrumental in hiding the fraud at VBS, the NPA alleges. 

Chairman of the VBS audit committee Phalaphala Ramikosi (46) seems to have been the cheapest of them all. He is alleged to have also used a front to hide his receipt of R750 000 for his role in the VBS-looting. As chairman of the audit committee his role was to oversee the control and operation of the banking system. The NPA alleges that he also fraudulently and falsely signed off on the audit committee report stating that the annual financial statements were true and accurate. The NPA claims Malaba and Ramikosi facilitated and hid the fraud at VBS bank.

VBS Mutual Bank looting suspects appear at Palm Ridge Regional Court on 47 counts of fraud, racketeering, corruption, theft and money laundering on June 18, 2020 in Johannesburg, South Africa. (Photo: OJ Koloti/Gallo Images via Getty Images)

Ernest Nesane (41) and Paul Magula (43) were executives at the PIC sitting on the board of VBS. The NPA wants answers about R7.45-million Nesane received and about R7-million Magula received for their role in allegedly covering up the fraud. Nesane and Magula approved the annual financial statements which pretended that VBS was financially sound and did not act in the best interest of PIC, the NPA states.

The Motau report vs the Hawks and NPA findings and charges 

In several instances, the Motau-report found wrongdoing on a grander scale than the NPA overtly lets on. Nesane and Magula, for example, were found to have received about R16-million and R14-million respectively in gratuitous payments for their role in looting the bank. 

The NPA, however, picked specific transactions and only charged Nesane and Magula for around R7-million each in alleged fraudulent and illegal payments. That is because the NPA has a certain level of confidence in the underlying documents and evidence they have to prosecute what is detailed in the indictment. To cherry-pick in this way is an efficient tactic used internationally. DM