VBS Looters Rounded Up
VBS Crooks Rounded Up By Cops
After a long wait, several key figures in the coordinated looting of VBS Bank have been rounded up by police in coordinated raids across the country.
The Venda Building Society Mutual Bank (VBS) has been around for a long time and was a fairly profitable bank for a long time. Then warning signals began to appear that something may not be right. In recent history it came to light that the Bank had given then SA President Zuma a loan he really could not afford to repay (which is called reckless lending and is illegal). This was just one of a bunch of red flags that began to go up.
Then a whistleblower came forward and opened the ugly can of worms. When the story first broke there was some concern that an employee or two had been involved in some inappropriate behaviour. Little did everyone realise that by then the bank had been hollowed out to the tune of around R2 Billion Rand. Those figures would only come into focus later as a full investigation was conducted.
The Bank was placed into curatorship to try save the day and ensure that consumers who had deposited their life savings into the bank would recover their money. Eventually, other banks (like Nedbank and the National Treasury) would come to the rescue of these embattled consumers to ensure that most of them got some of their funds back.
The theft and corruption at the bank was later described in a lot of detail a report called the Great Bank Heist that shook the banking and auditing industry and laid bare the crimes that a wide network of employees and officials had been involved in for years. Key to the issue was municipalities illegally depositing funds into the bank and seemingly receiving bribes in return.
The whole set up has been described as running much like a Ponzi scheme where the auditors were paid off to keep quiet while the funds were whisked away for personal use by the crooks involved.
What happened? Where Did The Money Go?
In 2015, the looting began. The bank began to take deposits from municipalities (smoothed by dozens of bribes and payoffs). VBS Chairperson Tshifhiwa Matodzi had an investment company called Vele Investments.
VBS gave Vele Investments money to buy a bunch of other companies and even to buy shares in VBS itself.
‘The whole set up has been described as running much like a Ponzi scheme where the auditors were paid off to keep quiet while the funds were whisked away’
Vele also got VBS money to the tune of R250 Million to buy a firm that simply does not exist (Insure Group Managers). Who knows where that money went?
Bank employees created accounts for people or businesses who had never actually deposited any money into the bank. The accounts were then credited with as much money as the ring leaders of the scam decided. Money being deposited by real businesses, individuals and municipalities was then used in these “fake” accounts and withdrawn. No money in and lots of money out. The problem was that the money was really coming from depositors funds and municipal funds.
Another scam was to allow certain people to open lines of credit that they were never required to repay. Some people got to buy cars and houses that they were never required to repay. These endless loans were another way to loot Millions and enjoy some sweet rides and homes along the way.
Other scam members (there seem to be over 50 of them) were paid gratuitous benefits that added up to R1 894 923 675 (R1.9 Billion). VBS CEO Ramavhunga supposedly got R28.9 million while the 2 PIC board representatives got around R32 Million on the side between them.
Who Has Been Arrested So Far?
The Banks former chairperson Tshifhiwa Matodzi, CEO Andile Ramavhunga, Treasurer Phophi Mukhodobwane and CFO Philip Truter were all rounded up since it seems they were the ones who benefitted the most and knew all about what was going on.
2 Public Investment Corporation (PIC) representatives, Paul Magula and Ernest Nesane, who sat on the VBS board have been arrested.
The former CFO of SAPS (Phalaphal Ramikosi) has also been rounded up. Ramikosi sat on the VBS board and was part of an audit committee who hid the theft.
Former KPMG employee Sipho Malaba has also been rounded up supposedly for quashing questions by junior KPMG staff about auditing irregularities and concerns. KPMG were the auditors who should have quickly picked up that the books were being crooked to hid the looting.
Some pretty important people like Venda King Toni Ramabulana Mphephu, ANC Treasurer- General (Limpopo) Danny Msiza and EFF, second in command, Floyd Shivamba have been implicated. Even former President Zuma had a seemingly dodgy loan from the bank. A VBS treasurer has said that bribes were paid to officials at every municipality (about 20) that ever deposited money into VBS. So, it looks like the net was cast pretty wide. Though it will take some time, and a lot of backroom deals may be made to get out of jail time, court cases will clear the guilty from the innocent it is hoped.
The various charges carry a punishment of prison time for those convicted. A minimum of 15 years and up to 30 years prison time could be on the books for the main role players. SA law is much tougher on white-collar crimes than most places in the world and the looters could end up spending decades in jail for their crimes (unless they use some of those millions to get decent lawyers).