The DA has asked Kuben Naidoo to establish a commission of inquiry into VBS Mutual Bank and municipalities which illegally deposited funds with VBS. Picture: Screenshot

Cape Town - The Democratic Alliance has asked the Registrar of Banks Kuben Naidoo to immediately establish a commission of inquiry into troubled VBS Mutual Bank and municipalities which illegally deposited funds with VBS.

"The dire state of affairs at the institution [VBS] necessitates an urgent and thorough investigation to ascertain the full extent of the problems at the institution given the increasing number of allegations and the potential loss of billions of rand of municipal deposits," DA spokesperson Kevin Mileham said on Sunday.

The DA urged the registrar to establish a similar commission to that set up when the African Bank was placed under curatorship to expose any further issues not yet publicly known, he said.

In early March, the South African Reserve Bank placed VBS Mutual Bank under curatorship. 

Mileham said the DA's call followed a series of scandals which drew attention to VBS’s "dubious conduct", including that municipalities illegally deposited funds at VBS; lawyers were paid “commission” to induce such deposits; VBS was advised that they were acting illegally in taking such deposits in August 2017 and continued to do so; the bank recklessly used short-term deposits from municipal funds to finance long-term loans; and the bank entered into high-value loans with bank officials, shareholders, and related individuals/entities.

The terms of reference for this commission should follow similar processes taken by the registrar in the African Bank instance, he said.

"The DA cannot sit by idly while municipal officials, lawyers, auditors, and bank staff, shareholders and directors squander the resources of municipalities through illegal or risky financial activities. We will relentlessly continue to hold all individuals and entities who nonchalantly abuse public funds accountable. The DA will not permit corruption or financial maladministration to cripple service delivery to people on our watch," Mileham said.

African News Agency/ANA