Business

VBS Bank 'broke our back'

2018-10-28 17:44

One of the companies bought with allegedly stolen VBS money now belongs to Patrice Motsepe, but still can’t shake the reputational damage

They were promised an invaluable partnership with South Africa’s only black-owned bank and massive credit facilities of up to R300 million.

Instead a majority stake in Anglo African Finance (AAF) was bought by Vele Private Equity (VPE) with about R80 million allegedly stolen from VBS depositors.

The promised facilities never came and now funders won’t touch AAF because of the “VBS risk”, said the company’s managing director and minority shareholder Jean Prieur (JP) du Plessis.

Vele sold its shares in the Stellenbosch-based wine industry financier as soon as VBS went into curatorship in March this year.

The buyer was Patrice Motsepe’s rapidly growing financial services empire African Rainbow Capital (ARC) which paid R66 million for 51% of AAF.

If the findings of the VBS curator and the forensic investigation of advocate Terry Motau are true, the money Vele paid for the shares in AAF would be the proceeds of crime.

Du Plessis, however, said both his and ARC’s backs are covered in this regard and Motau’s report does not implicate anyone from AAF the way it did executives of other Vele acquisitions.

The association with the VBS scandal has, however, affected the business, especially its ability to procure financing, said Du Plessis.

“This VBS thing has really scared the credit guys. People keep asking whether something new might jump out. It’s hard for people to believe you. We told everyone [about the partnership] because we were proud of it.”

Last week a major past funder of AAF declined to do further business with them due to the “VBS risk being too high”, he said.

“The damage these guys did to us ... its a back-breaker.”

‘SMART AND PLEASANT’

AAF was one of a handful of companies VBS’ supposed majority shareholder, Vele Investments, acquired using “fictitious deposits” at the mutual bank, according to Motau’s Great Bank Heist report.

Du Plessis told City Press that his company’s path crossed that of the “VBS men” in 2016.

Up to April that year AAF was majority-owned by Sanlam, but the insurance giant was at that point getting rid of its credit-provider investments.

Du Plessis’ company Vincorp bought back Sanlam’s share in AAF and set out to find a new partner, he said.

“We were looking for a BEE partner and then unfortunately ran into the VBS men.”

This was the start of 18 months of negotiations about Vele buying a stake in AAF and VBS providing massive credit facilities.

“I met [VBS and Vele chairperson Thifhiwe] Matodzi a few times and I was very impressed,” said Du Plessis.

After that, Vele’s alleged “dealmakers”, Russell Chipoyera and Abe Nyathi, operating through Foxburgh Capital, started coming to Stellenbosch to seal the deal.

“They are interesting individuals ... truly pleasant people. The only red flags were that they kept missing the milestones [to complete the purchase of equity in AAF],” said Du Plessis.

Halfway through last year Vele proposed converting the R75 million in credit that had already been extended to AAF at that point into equity.

This seems to be from the R80 million Motau identified as stemming from a fictitious deposit at VBS, a mechanism for stealing the money of real depositors.

“I was disappointed but still keen to do business with them,” said Du Plessis.

“They always had a good excuse. Towards the end, they said Prasa [the Passenger Rail Agency of SA] would provide liquidity,” said Du Plessis – a reference to the plan by VBS to secure billions in deposits from Prasa, also canvassed in Motau’s report.

During this period VBS also extended a R20 million facility to a new special purpose vehicle (SPV) called Anglo African MBR Finance owned 50-50 by VBS and AAF. The MBR stands for “motor body repair”. The SPV was a niche business in Johannesburg that provided invoice discounting to panelbeaters.

This account was subsequently settled by Motsepe’s ARC after demands from VBS curator Anoosh Rooplal earlier this year.

PROCEEDS OF CRIME

Motau’s report lists seven companies, including VBS itself, that Vele acquired with fictitious deposits. The major one was Insure Group Managers which was bought for R250 million.

Motau said that Insure CEO Charl Cilliers benefited personally to the tune of R12.6 million while his company “having received the proceeds of a manifest fraud, now finds itself in an untenable position”.

The Motau report, however, makes no judgement on AAF or Du Plessis.

According to Du Plessis there was no benefit to AAF or his company Vincorp.

Vele got its shares in AAF cheaply at precisely the net asset value of the company, he told City Press.

“Our transaction was well documented and below market [price].

“We did not benefit, thus I am not too concerned,” said Du Plessis.

“We bent over backwards to accommodate them.”

“Today they are the skunk of the business world, but I was very excited to have the only black-owned bank as my partner,” said Du Plessis.

“We didn’t have an idea about the plundering, just as no one knew what was happening at Steinhoff.”

ARC spokesperson Ainsley Moos said the company obtained legal opinion and made sure no VBS ghosts would come to haunt it. “At the time of the deal it was not apparent that Vele might have used fraudulent funds to acquire AAF,” said Moos.

“However, ARC did obtain legal opinion on the transaction to ensure that risks with respect to potential future claims were minimised.”

Any future claim will seemingly be Vele’s problem. “Care was taken in the transaction documents, specifically with respect to the approvals and indemnifications required from the VPE board, that potential future fall-out is limited,” said Moos.

“In addition, the curator was also informed. The transaction was subsequently finalised on arm’s-length commercial terms,” said Moos.

He told City Press that it was repaid in full in June “together with the outstanding interest, within days of the redemption request being received from the curator”.

Du Plessis also had to repay almost R700 000 to AAF clients after he had made clients deposit money at VBS. “It is incredible that no one picked it up for two years.”


Dewald van Rensburg
Business journalist
City Press
p:0117139001
w:www.citypress.co.za  e: dewald.vrensburg@citypress.co.za
      
 
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October 13 2019