Businesspeople from SA, Namibia and Zimbabwe, a cash delivery firm in Benoni and an oil company in Democratic Republic of Congo linked to massive VBS fraud scandal
While VBS Mutual Bank was looted, a similar small-scale bank in Namibia was suffering the same fate – allegedly with the help of VBS staff and a business associate of its chief executive, Andile Ramavhunga.
At least five different cases involving Namibia’s SME Bank are now before the Johannesburg High Court.
These cases are being heard while a commission of inquiry sits in Sandton, as the ruined bank’s liquidators try to track down as much as R380 million of its money that went missing in South Africa.
Their investigation so far has uncovered a bizarre scheme involving South African, Namibian and Zimbabwean businesspeople; a cash delivery company in Benoni that allegedly handles R500 million a month; a supermarket chain; and an oil company in the Democratic Republic of Congo.
The SME Bank case may be the first controversy related to fraud allegedly perpetrated by officials at VBS involving Ramavhunga’s childhood friend and business associate, Mauwane Kotane.
SME Bank’s liquidators allege Kotane played a major role in the matter and is now fighting to avoid testifying.
SME Bank’s investigations in South Africa have led to the freezing of R53 million in two companies’ bank accounts.
Of that, R11.5 million belongs to Kotane, who City Press reported earlier this year provided Ramavhunga with a second income of millions of rands while he ran VBS.
Ramavhunga earned “consulting” fees from Kotane’s company Mamepe Capital and simultaneously sent VBS business Kotane’s way, according to the transcript of Ramavhunga’s interrogation by South African investigators earlier this year.
Importantly, he signed off on a deal for VBS to be the South African banker in Kotane’s dealings with SME Bank.
The other R41.5 million that SME Bank’s liquidators have frozen in South Africa belongs to Benoni-based Asset Management Financial Services (AMFS), which the liquidators claim in court papers helped launder money for the ultimate mastermind allegedly behind SME Bank’s collapse – Zimbabwean banker Enoch Kamushinda, a minority shareholder in SME Bank.
Kamushinda and Kotane are now waging legal campaigns to stop SME Bank’s liquidators from pursuing their investigation with a barrage of litigation in Windhoek and Johannesburg.
But it all began with a deposit at VBS.
SME Bank went into provisional liquidation in June last year after its auditor BDO flagged a massive hole in its books that appeared as early as August 2016 – long before the local VBS bank fraud came to light.
It was an amount of R185 million allegedly invested in VBS for which the evidence was “not persuasive”.
This was an investment Kotane allegedly managed for SME Bank.
It is unclear whether this investment existed as there are wildly conflicting account statements received from VBS, SME bosses and Kotane himself.
A VBS account statement provided to SME’s auditors in late 2016 reflected a balance of R185.3 million, which was supposedly invested with Kotane’s company Mamepe, with VBS providing an “escrow account”, court papers say.
In January last year, VBS provided another account statement, this time directly to SME, reflecting a balance of R154 million after R37 million was paid back to SME.
In the same month, SME Bank’s CEO and finance manager deposed affidavits saying there was R154 million at VBS and another R27 million at Mamepe.
But another VBS account statement given to the Bank of Namibia, the country’s central bank, in March last year reflected a balance of zero – showing that there had not once been more than R10 million in the account.
One set of VBS bank records shows that R60 million of SME Bank’s money was transferred into VBS’s own corporate account.
The statements were “unreliable, highly questionable and suspicious”, said Bank of Namibia governor Ipumbu Shiimi in an affidavit at the time.
The conflicting versions kept piling up.
In an affidavit in June last year, Ramavhunga said Mamepe opened an “escrow account” at VBS for SME Bank, which was meant to receive R185 million, but he added that SME Bank’s VBS accounts only received R60 million.
Of this, an undisputed R37 million went back to SME Bank, while R20 million went to Mamepe and R10 million to Peregrine Equities, which turned out to be a payment to Kotane as well.
The next day, Kotane deposed an affidavit telling a completely different story, saying he was being subjected to a baseless “fishing expedition”.
“The funds are held and invested safely by my organisation, as per our mandate. The funds are safely invested with us and with maturity dates that are not far into the future,” he said.
Kotane provided a term sheet, showing that R188 million in investments he made for SME Bank would mature and be repaid during last year.
The money had been paid to a number of SME Bank’s nominee accounts, he said.
Most of the money was, he said, invested in fertiliser for speculative trading. A consignment note he produced was, however, denounced as fake by the Bank of Namibia.
The money was not repaid by the supposed maturity dates and SME Bank was liquidated. Its liquidators have been fighting an array of court battles ever since.
ALL ROADS LEAD TO SA
In July, SME Bank’s liquidators established a commission of inquiry in Johannesburg after their Namibian investigations indicated most of the missing SME Bank money made its way to South Africa.
Liquidators say that evidence from FNB and Standard Bank showed that R380 million from SME Bank “was transferred to a number of entities in South Africa”.
The liquidators also froze R53 million in the accounts of Kotane and AMFS, a cash delivery company in Benoni that the liquidators now allege helped launder stolen SME Bank money.
Kotane is now in court fighting to unfreeze his accounts and to challenge the validity of the commission of inquiry, at which he refused to testify.
When first subpoenaed in August, Kotane’s lawyer arrived with a sick note stating he had a “medical condition”.
It was arranged that he would instead testify in October, but the day before he was due to appear, he filed a court application claiming that SME Bank’s liquidators had no legal standing to hold a commission in the first place, and that the liquidators were not legitimately appointed.
Kotane showed up at the inquiry in October, but refused to answer questions and walked out, SME Bank’s liquidators say.
In an affidavit attached to his application, Kotane apparently contradicts the statement he made last year.
Despite previously swearing that the R188 million “investments” were safe and due, Kotane now denies any knowledge of any investment, saying: “I strongly dispute that the amount of 196 million Namibian dollars was invested in Mamepe Capital.”
He said he did not understand on what basis the liquidators expected that “any amount of money invested by SME Bank in Mamepe Capital should have been repatriated”.
Kotane also speculates that SME Bank may well have lost money, but says this “is normal in the world of investments”.
He is also fighting SME’s liquidators to unfreeze his R11.5 million, which he says were legitimate fees earned from the bank.
The bank’s liquidators fingered Kamushinda, the Zimbabwean representative of two minority shareholders in SME Bank, as the alleged “mastermind” behind the theft.
They also accuse him of abusing the courts to wage a protracted legal campaign to “avoid the grand fraud from being exposed”.
There are now at least seven court cases in Namibia and South Africa, mostly related to Kamushinda raising technical points to stop the liquidators’ investigations.
The liquidators now allege collusion between Kotane and Kamushinda, saying there are identical paragraphs copied and pasted in affidavits filed separately by them.
In court papers, Kamushinda says the allegations against him are “clearly scandalous, vexatious and irrelevant”.
He says evidence linking him to companies that received SME Bank money is irrelevant, adding that this doesn’t prove he did anything wrong.
The investigation of the missing money, and of Kamushinda, leads to Benoni.
Apart from Kotane’s money, SME Bank’s liquidators have frozen another R42 million in the accounts of Benoni company AMFS, which they accuse of laundering money for Kamushinda.
The liquidators had access to AMFS’s bank statements, which allegedly reveal that the money delivery firm handles as much as R500 million in cash each month.
About R79 million of SME Bank’s money found its way to AMFS, and R64 million of that was allegedly delivered by hand – in cash – to an address in Springs.
AMFS allegedly paid more cash to companies owned by Kamushinda.
It is unclear where this money ended up, said liquidator John Bruni in an affidavit last month.
In his affidavit, AMFS owner and director Carlo Stickling said he had nothing to do with these payments because he bought the company after they had taken place.
His lawyer did not respond to a request for comment emailed on Wednesday.
Luke Mouyis, the lawyer of AMFS’s previous owner, Kalandra Viljoen, said she attended the commission hearings.
“It is now clear to our client that certain misrepresentations were made to the [company] so as to conceal the source of the funds, but ... our client can in no way be seen to be complicit in any crime,” he said.
Another alleged recipient of about R24 million of SME Bank money is Johannesburg company Moody Blue Trade & Invest 14, which was hit with an account freeze application after the inquiry.
This case was supposed to have been heard this week, but was postponed to February.
Moody Blue is the South African buying house for Democratic Republic of Congo retail chain Hyper-Psaro and its affiliate United Petroleum, says an affidavit by its general manager Lizelle Iverson.
In an affidavit last year claiming that all the SME Bank money was safely invested, Kotane initially named Moody Blue as a nominee for some of the SME Bank investments he managed.
In her affidavit, Iverson said Kotane provided “mere hearsay and incorrect evidence”, and that her company had not heard of him.
Instead, she claims the money Moody Blue received from SME Bank belongs to an SME Bank client – a mining company in the Democratic Republic of Congo called MCK Katanga.
She claims MCK used its SME Bank account to pay for goods in South Africa for shipment to the Democratic Republic of Congo.
She attached a series of invoices showing MCK orders, but the liquidators claim these are fakes, and that the money did not come from a MCK account, but from the bank’s own corporate account.
In a later plea before court, Iverson said her company was “under the impression” the money came from MCK. Her lawyers declined to comment.
WHAT THEY SAY
In response to requests for comment, Ramavhunga said: “Can I be left in peace. I’ve got nothing to say to you. Please refrain from sending me any more messages because I don’t even know where you got my number from.
"If this continues, I will have to get a restraining order against you.”
Kotane’s lawyer said: Our client is not in a position to comment, as the matters are currently before court, and are as a result sub judice.”
Kamushinda’s lawyer did not respond to emailed questions sent on Wednesday.