#VBSBankHeist puts middlemen in the spotlight
JOHANNESBURG – The murky world of facilitation, referral or commission fees came back to spook South Africa this week after it emerged that most of the people who received large sums of money from the failed VBS Mutual Bank acted as middlemen.
While some have defended the practice as standard, others have raised concerns about how the facilitators contributed to the bank’s spectacular collapse this year.
The SA Reserve Bank (Sarb) forensic investigation into VBS Mutual Bank’s affairs unearthed the role played by middlemen in the bank’s collapse.
The report identified ANC Limpopo treasurer Danny Msiza as the brains behind a multimillion-rand commission scheme which paid out bribes to municipal officials who made payments to VBS Mutual Bank on behalf of municipalities.
He reportedly collected about R4 million in cash for facilitating the deals.
EFF deputy president Floyd Shivambu’s brother, Brian, was also singled out after he pocketed a windfall of R16m, for what the report claimed was a gratuitous payment.
Econometrix chief economist Azar Jammine said paying commission was conducive to massive corruption.
“I have always found that practice to be very conducive to corruption, but that’s how the business world works. It’s not only in South Africa, but in many parts of the world,” Jammine said.
Concerns around the practice increased after businessman Fana Hlongwane reportedly received more than R200m from British multinational BAE Systems for facilitating the arms deal. Swedish authorities also said Hlongwane, who was then defence minister Joe Modise’s adviser on the deal, reportedly collected a further R24m in 2003.
He was also reportedly paid R7m by British Aerospace project manager Bernard Collier in 2007 through a company called Ivema, itself 51% owned by Hlongwane through Ngwane Defence Holdings.
Former VBS chairman Tshifhiwa Matodzi’s company Vele allegedly scored R325m from the failed bank.
The Sarb report, conducted by advocate Terry Motau, identified Matodzi as the central figure in the VBS looting spree.
Nedbank chief economist Dennis Dykes said the VBS payments looked suspicious.
“If you look at the VBS issue, for example, it looks highly irregular, because you are paying officials to direct deposits to your institution. It certainly is irregular,” Dykes said.
The Competition Commission sanctioned SAA in 2005 for abusing its dominance by paying an override commission to travel agents in addition to the 7 percent that was charged by all airlines.
In the year ended March 2017, SAA paid R1.8 billion in what it described as commissions and network charges.
Gupta lieutenant Salim Essa reportedly pocketed a R10m facilitation fee by China South Rail for the sale of locomotives to Transnet, while German software group SAP reportedly paid a 10 percent “sales commission” to a company controlled by the Guptas to secure a Transnet contract.
Dykes said commissions were certainly being paid in both the private and public sectors.
“All we know is that there is a lot of money being channelled around by suspicious characters.”