SOUTH AFRICA - PRETORIA - 27 February 2019. Justice Lex Mpati at the PIC Commission of Enquiry. Picture: Oupa Mokoena/African News Agency (ANA)
PRETORIA – Former executive head of risk and compliance at the Public Investment Corporation (PIC), Paul Magula, on Monday vehemently denied that he had ever participated in any illegal, fraudulent activities during his tenure as a VBS Mutual Bank board member. 

PIC acting chief executive Matshepa More, told Parliament in December that the PIC board had directed that criminal charges be brought against two former directors, Magula included, who were seconded to VBS Mutual Bank but failed to report any suspicious transactions.

Magula told the PIC Commission of Inquiry that it was an undeniable fact that he was a board member at VBS Mutual Bank for some time as a shareholder representative of the PIC when the bank began to have problems.

“Some of the things like, fictitious deposits, fraudulent withdrawals, bribes, that are said to have happened at VBS I got to know about when I went before the Prudential Authority’s forensic investigators. I am willing and ready to subject myself and co-operate with the law enforcement agencies,” he said. 

“l request the Commission’s indulgence in presenting my submission to the Commission in so far as it is deemed appropriate as per the Commission’s terms of reference, that I do so having regard to other on-going investigations and proceedings in relation to which I do not wish to prejudice my rights. 

“Nevertheless, I would like to categorically and emphatically state that the PIC took issue with me on VBS Mutual Bank after I already had issues with the chief executive, chief financial officer and executive head of human resources of the PIC and it was added to the disciplinary charges preferred against me when I already was on suspension during the disciplinary hearing,” said Magula. 

Magula told the commission that he was aware that there were ongoing criminal investigations by the police special investigative units, and they were at an advanced stage to bring the facts to the fore. 

“I want to use this opportunity to clear my name on issues that were reported in the media. 

“As a former board member of VBS Mutual Bank representing the PIC, I take responsibility that what happened at the bank was wrong, but also there is no way I could have known what was happening beyond the misrepresentation made to the board through audit reports that were presented to me as a board member and also as an executive head of risk within the PIC,” he said. 

More told Parliament’s Standing Committee on Public Accounts in December that Magula was fired after a disciplinary process. She said Magula had failed to inform the PIC of fictitious transactions at VBS. “They told us nothing, on appearance they told us business was good, we were growing the advancement of a black bank.”

A forensic report released by the South African Reserve Bank revealed that R1.9 billion was looted from the failed bank by directors and politically connected individuals.

An interesting question raised by a person following the proceedings was: "How can the head of risk and compliance fail to pick up risk at the VBS Bank?"