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 SizweNtsalubaGobodo director Anoosh Rooplal. Other Vele subsidiaries were bought in the same way. Suspended Insure chief executive Charl Cilliers is listed among the people who looted VBS.
Insure is estimated to control 75 percent of the country’s gross short-term premium collections. The premiums are collected through brokers and paid over to insurance companies. The size of the industry is estimated to be in excess of R120 billion annually. Handling amounts of this magnitude thus require robust systems, high levels of integrity, efficiency, reliability, honesty and a host of similar best practices. Recently Insure said that it had exceeded R2bn premium collections a month.
How close then are we to seeing a total collapse of the insurance collections industry in South Africa? For had VBS extended its looting further at Insure it would have made at least another R2bn or perhaps R4bn in two months. Will the losses be recouped? Is anyone going to jail?
In his report, advocate Terry Motau says Cilliers, a chartered accountant, allowed Vele to acquire a substantial stake in Insure through a fictitious deposit of R250m. Cilliers is stated in the report to have received R12 683 947. Motau makes the following recommendations: “It is imperative that those who have been identified as participating and benefiting from this criminal enterprise be charged and prosecuted.”
Industry leaders say Insure should not have received the proceeds, but shareholders. The “fake” deposit, however, was made in the name of Insure. It would be interesting to see how Insure handled that entry in its books to get the money out of Insure to the shareholders. “We cannot see how IFRS (International Financial Reporting Standards) or the SA Company Law can accommodate such a transaction,” an analyst said.
It would also be interesting to see the original sale agreement. In our previous correspondence with Cilliers we requested this information, but he failed to respond. We quote: “During the same month in which the transaction to buy Insure took place, a deposit of R80m was made by Insure in VBS. According to Rooplal, this deposit was for an unrelated matter. From what was reported, part of the transaction between VBS and Insure was that Insure was in future to use VBS as their banker." Placing R2bn in the hands of VBS would have been extremely reckless, to say the least.
BR asked Cilliers the following questions recently, without receiving a reply:
- Was it a requirement of the sale agreement that premiums collected by Insure Group would be deposited with VBS Bank?
- If premiums collected were deposited with VBS, what was the amount?
- Were all collected duly paid over to the destined insurers?
- Is a limit of cover at R100m not way too little for a company handling as much as R2bn per month?