Frustration reigned at the R2.3-billion VBS Mutual Bank heist court case after another postponement, with one of the accused’s lawyers arguing that his client was suffering financial prejudice because of the state’s alleged ineptitude.
Plans to revive the looted VBS Mutual Bank are ongoing, with significant efforts being made to reopen the bank as a commercial entity under a new name.
Chief Livhuwani Matsila, founder of the Matsila Community Development Trust, told the Mail & Guardian this week that the trust had held discussions with the South African Reserve Bank on how to revive VBS.
The trust is an organisation focused on community development and empowerment, particularly in Limpopo. It has been instrumental in helping some people recover their money after VBS was liquidated.
Matsila said the trust had been advised to consider commercialising the bank to subject it to “regulatory oversight”, which could help prevent the mismanagement and corruption that previously plagued VBS.
“The Reserve Bank explained to us that increased regulation contributes to greater financial stability and liquidity, attracting more investment and deposits, and rebuilding trust among depositors and the financial community,” Matsila said.
Although the successful revival of VBS as a commercial bank would be beneficial to the people of Venda, it could benefit from having the name and management changed to rebuild people’s trust in it.
He added that a new bank would stimulate local economic growth, create jobs and support entrepreneurship, demonstrating a commitment to accountability and restoring confidence in the banking sector.
“Having a bank in the community is not just about restoring a financial institution; it is a crucial step in rebuilding our local economy and restoring confidence in the financial sector.”
He added that the bank would work with public relations and marketing companies, which will direct them on which name to consider.
VBS was ransacked of R2 billion by its executives from 2015 to 2017 using fraudulent accounting practices. The stolen money was spent on mansions, expensive cars and helicopters.
In a recently leaked affidavit, the bank’s former chairperson, Tshifhiwa Matodzi, implicated several executives and politicians in the looting, including leaders from the ANC and Economic Freedom Fighters (EFF).
Matodzi’s affidavit was part of a plea deal in which he received an effective 15-year jail term for his role in the looting. The affidavit alleged the involvement of the ANC’s Zweli Mkhize and Danny Msiza in fraudulent and corrupt activities, and the EFF’s leader Julius Malema and deputy president Floyd Shivambu.
It detailed how Shivambu and Malema were aware of the illicit nature of payments made to them through Sgameka Projects, registered under the name of Floyd’s brother, Brian Shivambu.
Matodzi — in an affidavit before the Johannesburg specialised commercial crimes court — stated that he paid the EFF R16 million after meeting Malema, Shivambu and secretary general Marshall Dlamini in April or May 2017.
The money was allegedly paid to stop the party’s criticism of the bank on public platforms.
The criticism followed VBS granting then president Jacob Zuma a R7.5 million loan for his Nkandla residence in KwaZulu-Natal, and Matodzi said the EFF’s “negative commentary” related to the loan was “damaging [VBS’s] reputation”.
Matodzi claimed that he was asked to make a “donation” to the EFF so that its public lashings of the bank would stop.
“Myself, Julius, and Floyd understood the concept of donation to mean gratification, hence Floyd and Julius did not provide me with the EFF’s own banking details for these ‘donations’,” Matodzi stated.
Matsila said to avoid a repeat of what happened to the bank, there would need to be thorough background checks on the accountants and managers of the bank, adding that there would be regular auditors that will ensure that the process is free from fraudulent means.
He said that a better relationship with the Reserve Bank would allow it to swiftly respond to any problems at VBS.
Matsila’s comments echoed those of Madambi Muvhulawa, a founding director of VBS, who said he had lodged complaints with the Reserve Bank about “suspicious” activities at the bank but received no response.
“The lack of relationship between VBS and SARB [South African Reserve Bank] was also detrimental to the bank. Had the relationship been better, SARB would have acted swiftly and that could have saved the bank,” Mavhulawa said.
Last week, at the ANC’s national executive committee meeting, the party’s Limpopo secretary, Reuben Madadzhe, proposed the revival of the bank, including measures to avoid a repeat of the looting.
But the Reserve Bank said a revival of the looted bank in its current form was not possible because it had no banking licence.
“The bank has been in liquidation and the licence has been withdrawn. With regards to the new banking licence, any entity can apply for a banking licence once they meet the criteria required to be a deposit taking institution. As you may know there are different banking licences that can be applied for,” the Reserve Bank told the M&G.
The Reserve Bank’s Prudential Authority expressed its willingness to talk to people interested in establishing a similar bank.
VBS was placed under liquidation in 2018, with its banking licence suspended. The bank’s liquidators are still in the process of recovering improperly disbursed loans.
The bank’s remaining assets are being sold to recover millions owed to depositors.