By now, the story is well known. Last week, investigators appointed by the South African Reserve Bank (SARB), led by Advocate Terry Motau, dropped a bombshell of a report exposing the wholesale looting of VBS Mutual Bank. In no uncertain terms, it was entitled The Great Bank Heist.
From obscure beginnings as the Venda Building Society, VBS Bank had grown into a small but struggling mutual bank by 2014, according to the Motau report. It took deposits primarily from the rural poor and their burial societies and stokvels. It also issued mortgages, and a few small loans secured by deposits.
All that changed when the bank began implementing a “turnaround strategy” under the leadership of chairman Tshifhiwa Matodzi and CEO Andile Ramavhunga. Key to the strategy was to attract large, short-term deposits from municipalities. To secure these deposits, VBS executives openly paid “commissions” and bribed public officials who could influence such decisions.
Bank executives made loans which were never collected, looted the growing hoard of deposits, and covered up the bank’s losses by making fictional deposits. Its loan book quintupled in three years, and its deposits and cash holdings increased by a factor of six. None of it was reported honestly, however.
The chief looters, led by Matodzi, richly rewarded those who participated in the criminal conspiracy, and generously bribed others to look the other way. The scheme was hidden from regulatory view by blatant lies in the annual reports, and by paying off corrupt auditors from that eternal wellspring of trust, KPMG. Unbeknownst to anyone other than the criminals running it, the bank was insolvent a full year before it finally went into curatorship on 11 March 2018.
In total, some 53 beneficiaries made off with R1.9-billion of real or fictitious funds. The heist at VBS amounted to stealing from the poor to give to the rich. It was blatant and shameless, and implicated almost everyone that owned, managed, worked at, or did business with the bank.
Besides recommending criminal charges, tax investigations and civil proceedings against everyone involved, including the auditors, Motau recommended that urgent steps be taken to wind up VBS.
“It seems clear to me that there is no prospect of saving VBS,” he wrote.
“It is corrupt and rotten to the core. Indeed, there is hardly a person in its employ in any position of authority who is not, in some way or other, complicit.”
The formerly obscure bank came to public attention in 2016 when it lent former president Jacob Zuma R7.8-million to “pay back the money” government had spent on “security upgrades” to his private homestead in Nkandla.
It has emerged in court documents that this was a “sham transaction”, intended to buy Zuma’s recognition of a king of the Venda whose succession was in dispute. That king happened to be a part-owner of, and a recipient of irregular payments from, VBS Bank. The Hawks are now on the case, trying to determine who exactly made Zuma’s loan repayments before March 2018, since it was not Zuma himself.
Its business with Zuma drew VBS into the political rhetoric created by the Gupta family and its public relations stooges to cast the State Capture project as an epic struggle between black nationalism and white monopoly capital.
Numerous politicians and public figures jumped to the defence of VBS Mutual as its problems grew deeper.
In February 2018, the Sunday Times reported that the Passenger Rail Agency of South Africa (Prasa) was on the brink of depositing a whopping R1-billion with VBS Bank. The deal was thwarted by Prasa’s former chief financial officer, Yvonne Page, who is commended in the Motau report and in the media for preventing that money from landing in the hands of the criminals.
At the time, however, the Black Business Council claimed that the reporting on VBS Bank constituted “intimidation” with the goal to “retard the growth of black-owned businesses”.
When VBS was placed under curatorship on 11 March 2018, Matodzi, who personally made off with R326-million according to the Motau report, claimed that it was all a racist plot.
“In the end, we were faced with a well-organised and powerful system which does not tolerate growing black banks and black excellence,” Matadozi wrote to the SARB, according to a report in the Citizen.
In January 2018 the SARB had made a public statement about Capitec bank, which had come under fire in an analyst report. It said the bank was solvent, well-capitalised, had adequate liquidity and met all prudential requirements.
After VBS was placed into curatorship, EFF spokesperson Mbuyiseni Ndlozi issued a statement in which the EFF accused the government itself of precipitating the collapse of VBS, and of seeking to “undermine and hinder black people’s participation in the financial sector”.
According to the EFF, VBS is merely “being victimised due to a loan it gave to Mr. Jacob Zuma for a house in Nkandla”.
Ndlozi asked, “Why is the Reserve Bank quick in saving a white-owned bank [Capitec], and quick in placing a black-owned bank [VBS] under curatorship? … It must not be easy to destroy financial services institutions that are owned by black people.”
That there was a world of difference between what happened at Capitec and what happened at VBS did not appear to matter to the EFF. It also forgot that white-owned banks such as Saambou and Regal Bank have also been placed under curatorship. In the latter case, the bank’s CEO, Jeff Levenstein, was jailed for fraud. Yet for the EFF, the actions against VBS were all attributable to racism.
Floyd Shivambu, the EFF’s chief whip, repeated Ndlozi’s claims in a Parliamentary finance committee meeting on 30 May 2018, and attacked, in nakedly racist terms, Ismail Momoniat, a Treasury official who said that VBS “acted like it was politically untouchable and enjoyed protection”.
Not only was Shivambu protecting brazen criminals, but in the Motau report, it emerged that his brother, Brian, was himself a beneficiary of some R16-million of VBS money. Some R10-million of that reportedly made its way to Floyd himself. It turns out that he wasn’t protecting a black bank; he was (allegedly) protecting his own piggy bank.
Mariette Venter is a chartered accountant and the acting CFO of the Capricorn District Municipality, which includes the city of Polokwane. According to the Motau report, she “stood up to immense pressure and managed to force VBS to return the municipality’s funds to it”.
Motau continues: “She was unfairly suspended from her post as a result and pilloried as a racist who did not want to invest public monies in a Black bank.”
On the day VBS was placed under curatorship, the Black First Land First (BLF) movement, led by radical Marxist and Gupta lackey Andile Mngxitama, issued a statement headlined, “SARB hands off VBS Mutual Bank now!”
In it, the organisation claims that the SARB is controlled by “white monopoly capital” and that the SARB played a “similarly destructive role” in the closure of the Bank of Baroda, the financiers of the corrupt Gupta family.
“BLF will not allow the shutting down of VBS Mutual Bank,” the statement blustered.
“SARB is the enemy of Radical Economic Transformation (RET). It is moreover the instrument used by WMC to kill black empowerment. All the governors of SARB must be fired including its Registrar.”
Well, that hasn’t happened yet, and BLF now has egg on its collective face.
According to the Motau report, the general manager of treasury at VBS Bank, Phophi Mukhodobwane, who provided incriminating information about the goings-on at the bank, himself benefited to the tune of more than R30-million, and admitted to playing a central role in the manipulation of the bank’s systems and the fraudulent misrepresentations in its regulatory returns.
Despite these disclosures, he claimed in July 2018 that the investigation of VBS was a racist undertaking by a legal firm (Werksmans Attorneys) which embodies “the very essence of whitism”.
Racism, both casual and institutionalised, remains a very real scourge in South Africa. When people like Mngxitama and Shivambu declare that investigations into crime and corruption are motivated by racism, opposition to transformation, or a desire to sabotage black business, they aren’t merely full of shit.
They give cover to thieves, fraudsters and corrupt officials. They cause genuine harm by distracting us from dealing with valid claims of racism. They insult the vast majority of honest black people by suggesting that a minority of dishonest black people shouldn’t face the consequences of their actions. They make it harder to hold politicians accountable, and to bring criminals in the private sector to book.
They don’t serve the interests of achieving justice for historically oppressed black people. They serve the interests of corruption, crime and State Capture.
Their vehement defence of VBS Bank ought to finally discredit the race card as a weapon in the arsenal of political rhetoric. If it does, the black nationalists and radical socialists would have done the country a tremendous favour.
Whether someone is honest or dishonest, competent or incompetent, innocent or guilty, has absolutely nothing to do with their race. We should automatically dismiss any argument that relies solely on race for its validity.
It’s time to retire the race card and deal openly, firmly and equitably with all South Africa’s criminals, no matter the colour of their skin. DM
"By scepticism...we arrive first at suspension of judgement, and second at freedom from disturbance." ~ Sextus Empiricus