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CAPE TOWN - VBS curator Anoosh Rooplal revealed in a new affidavit the extent of the alleged fraud committed at VBS Mutual Bank.

This includes the creation of millions in fake deposits and bribes paid to politicians and “senior officials” of the Public Investment Corporation (PIC) and the Passenger Rail Agency of SA (Prasa) to get them to deposit public money in the bank according to Fin24. 

The affidavit also states that the directors of VBS Mutual Bank and its majority owner, Vele Investments, allegedly stole more than R1.5bn from the bank’s depositors, reported Fin24. 

Additionally, an urgent application to liquidate Vele accompanied the affidavit which was filed on Friday. Applications to legally seize all assets of the bank’s executives are expected to follow shortly. 

VBS’s former treasurer, Phopi Mukhodobwane, provided the evidence of how he and his colleagues allegedly stole depositors’ money. He also provided evidence of the support network built to keep money flowing into the bank.

An unnamed “senior executive” of the PIC allegedly received a suitcase with R5m in cash. In return, the PIC gave VBS a R350m credit facility meant to fund VBS’s tender finance business. VBS executives have been accused of going to pillage this loan by creating fake finance contracts. 

The amount of R1.5m was also allegedly paid to “individuals at Prasa” to facilitate a R1bn deposit which ultimately fell through.

Mukhodobwane’s evidence also appears to implicate the ANC’s Limpopo treasurer, Daniel Msiza, and the ANC Youth League’s Gauteng leader, Kabelo Matsepe. 

On December 22 2017, a company owned by Matsepe was paid R1.5m via a shelf company that Mukhodobwane claims was used to channel bribes. In messages between VBS executives, they discuss “Kabelo” as well as “Bra Danny” in relation to their help with facilitating municipal deposits into VBS. 

Rooplal’s affidavit sheds light on the bizarre movements of money in and out of VBS into various related parties’ accounts that City Press reported on two weeks ago.

City Press reported earlier that Msiza received a R9.5 million loan from VBS to buy a conference centre in Polokwane, but he said at the time that it was a normal commercial loan.

These would either be transferred into their own VBS accounts from a so-called suspense account – or be simply fictitiously entered directly into their accounts and the accounts of their other companies, alleges Rooplal.

Once that was done, the perpetrators could withdraw actual cash or simply have their overdrafts disappear – all at the expense of actual depositors, ranging from individuals to burial societies, the PIC and the municipalities that infamously stuck hundreds of millions of rands into the bank. 

Vele’s directors allegedly not only used depositors’ money to live large buying cars and houses, but also to acquire practically all their other businesses – and even control over VBS itself – without paying a cent.

“VBS fell prey to a fraudulent scheme of epic proportions, which has resulted in a loss to the bank of at least R1 521 925 280.46,” claims Rooplal.

Half of this amount was used by Vele to acquire its various businesses, effectively for free. 

These “free” acquisitions included Insure Group Management, bought with fake money in order to direct its real money into VBS to help plug the holes the executives were leaving.

Vele allegedly also acquired Malibongwe Petroleum, Anglo African Finance, Mvunonala and Fairsure with invented money.

While the fraud was very complicated and pervasive, it was also “unsophisticated”, says Rooplal.

VBS chairperson Tshifhiwa Matodzi was the “main architect of the fraudulent scheme” and made the most money from it, alleges Rooplal. 

VBS chief executive Andile Ramavhunga, chief financial officer Philippus Truter, treasurer Mukhodobwane and chief operations officer Robert Madzonga were, however, all part of it, he claims.

Truter, who has worked at VBS since 2005, and Mukhodobwane made the fictitious entries and carried out fraudulent transactions on Matodzi’s instructions, Rooplal alleges.

According to Rooplal, Mukhodobwane testified to how it was done in the following way: 

Matodzi instructed Truter and Mukhodobwane to facilitate the acquisition of Insure Group Managers for R250m with fictitious money. The imbalance in VBS’s balance sheet would then be fixed by having Insure deposit its real money back into VBS. 

The deal was done and the fake R250m ended up in an Insure account at VBS. From there it was paid out to other related parties, becoming real money. Vele, in effect, “paid nothing for the investment” in Insure, claims Rooplal. Other Vele subsidiaries were bought in the same way.

 VBS created a fake R350m deposit in favour of Vele, of which R90m was used to buy more shares in VBS.  Another R80m in VBS shares was acquired by having Insure put money in VBS for unrelated purposes. R48m was allegedly paid as “bonuses” to Matodzi, Ramavhunga, Mukhodobwane and Truter.

The most complex part of the fraud is R262m in fake deposits created to settle 35 different overdrafts. According to Rooplal, Matodzi gave Truter and Mukhodobwane the list of overdrafts to settle with fake money and they could also use it to pay their own overdrafts. Many of the overdrafts were for Vele and its directors but the list includes a large network of shelf companies with no directors. 

“The perpetrators were effectively stealing money at a greater rate than was being deposited into VBS. This resulted in the severe liquidity crisis in which VBS finds itself,” alleges Rooplal.

Deon Botha, head of corporate affairs for the PIC, sent City Press the following response to the allegations:

“The PIC is not aware of the alleged payment of a bribe to one of its employees. All PIC investments and related financial transactions must comply with the approved mandates of its clients and follow a thorough investment evaluation process. Investment decisions by the PIC are taken by committees and not by any individual. Any investment decision by the PIC may either be subject to approval from the PIC’s board or be reviewed by the board or any of its subcommittees.

“The PIC fully cooperates with the Reserve Bank as well as the curator and the forensic investigation into VBS, and supports any appropriate action against those responsible for the bank’s demise and those involved in any corrupt practices, including the demand for, payment of or acceptance of bribes.

“The PIC expects its employees to act in an ethical manner. Should further information emerge that implicates any PIC employee in wrongdoing, the PIC will deal with the matter in terms of its disciplinary codes. It will also request law enforcement agencies to investigate.

“The PIC supports every effort by the Reserve Bank to restore VBS to a position where it can trade again on a commercial basis in terms of its banking licence.”

CALLS FOR A PROBE 

The Democratic Alliance on Sunday urged the South African Police Service (SAPS) to investigate allegations of bribery and corruption at the controversial VBS Mutual Bank.

"The DA notes the damning reports today [Sunday] of how VBS Mutual Bank directors and their shareholder Vele Investments allegedly defrauded the bank of more than R1.5 billion," DA spokesman Alf Lees said.

The details of the large-scale corruption formed part of an affidavit by VBS curator Anoosh Rooplal, he said.

"These are damning allegations and all those who enriched themselves must be investigated by the South African Police Service and face the full force of the law," Lees said.

- BUSINESS REPORT ONLINE