crisis-ridden VBS Mutual Bank lent out large sums of money to its own
directors, municipal officials and the SA Municipal Workers’ Union (Samwu) to
finance a building the union already owned. At least five of VBS’s senior
executives received mortgage loans running into millions of rands between 2015
and last year.
2017 mortgage deal worth R11.8 million, which VBS signed for the Samwu
headquarters in Johannesburg, is now shrouded in mystery. This week, Samwu
denied that it ever mortgaged its headquarters, Samwu House in Marshalltown,
downtown Johannesburg, with VBS last year.
claimed that it owned the building outright and had done so since 2007.
However, a copy of the mortgage deal filed at the Johannesburg deeds office is
dated October 4 2007 and signed by Samwu’s president Pule Molalenyane.
general secretary Simon Mathe, however, insists that the mortgage bond held at
the deeds office is a fake. “We own the building. We bought it nine years ago
for R6 million. We are not paying anything on it. That information is false,”
he told City Press by phone from Cuba this week.
claimed Samwu is the victim of a disinformation campaign by people who have
“intercepted our documents on our IT system” – insinuating that the bond held
at the Johannesburg deeds office may be a forgery. The union partnered with VBS
last year to launch a series of low-cost financial products targeting Samwu
members, which is not unusual for unions which often team up with insurers and
however, says rumours about Samwu’s further support for VBS are lies.
Reserve Bank (Sarb) placed VBS under curatorship last month when it ran out of
cash after relying on large, illegal, and short-term municipal deposits to fund
long-term loans. The cash crunch at the bank has left a number of
municipalities in the lurch as hundreds of millions of rands remain stuck at
VBS. The bank has R1.5 billion in municipal deposits, of which R1.1 billion is
from eight Limpopo municipalities.
of bond records City Press has conducted over the past two weeks shows that a
large proportion of VBS’s mortgage lending went to government and municipal
officials, and to people closely related to Vele Investments, the controlling
shareholder in VBS. This portion of the VBS loan book is visible through public
records, in which some of the largest loans are recorded.
benefited from loans with VBS included at least two officials from a Gauteng
municipality. They received their mortgages, totalling R2.4 million, in the
same month that the municipality transferred a significant portion of its funds
into the bank.
Anoosh Rooplal earlier this month withdrew VBS’s annual financial statements
for 2017 because they were not to be trusted. One respect in which these
statements are almost certainly incorrect is in the misreporting of related-party
loans – or loans to its own employees and shareholders.
annual report does declare a big spike in “related-party” loans to its own
directors. These jump from only R800 000 in 2015 to around R14 million by March
2017. This is still only half of the loans City Press found which VBS extended
to indirect shareholders and companies owned by Vele Investments. The loans to
people close to the company include:
- A R6.9
million loan to Maitazwitoma Trust in 2015. The trustee is Hubert Muzimba
Ramagwede, a director of Dyambeu Investments, a 25% shareholder in VBS;
- A R2.2
million loan, also in 2015, to Venmont, another company run by Dyambeu directors
Tshifhiwa Matodzi and Maanda Reuben Phalanndwa;
- A R4.5
million bond issued to VBS spokesperson Ndivhuwo Khangale last year. His
partner in communications firm Gogoro, Mmuso Pelesa, obtained a R5 million
mortgage from VBS last year as well;
- VBS risk
officer Takani Madzhadzhi has two VBS mortgages dated 2015 and 2016: for R1
million and R1.5 million respectively;
- A R2.1
million mortgage issued to VBS chief executive Andile Ramavhunga;
- A R3
million mortgage issued to staffer Tsumba Matambella in 2015. Matambella has
been referred to as another spokesperson for the bank; and
- A R1
million loan which VBS’s human resources manager Qalinge Mkhuseli was given
these kinds of mortgages at VBS remarkable is the bank’s tiny size. As of February
this year, VBS’s entire mortgage book was worth R450 million, a number that
relies on its official filings with the Sarb.
famous for the R7.8 million mortgage it gave to former president Jacob Zuma in
2017, to repay the state for his portion of the R246 million upgrades to his
private home in Nkandla. He did so, after a lengthy court battle, to comply
with former Public Protector Thuli Madonsela’s recommendations.
affidavit defending the decision to put VBS under curatorship last month,
registrar of banks at Sars, Kuben Naidoo, explained how VBS grew mostly by
extending loans to fund tenders, especially ones with Eskom. Unlike mortgages,
these loans are not publicly traceable.
revealed how the bank tended to not pursue repayment from “prominent”
borrowers, but he mentioned no names. He said the bank allegedly paid
“inducements” to secure deposits from municipalities.
money to the KPMG auditors checking its books, which led to the auditing giant
firing them. The two KPMG partners responsible for auditing VBS failed to
disclose the full extent of their financial interests in the bank. KPMG’s chief
executive, Nhlamu Dlomu, confirmed two weeks ago that Sipho Malaba, her firm’s
lead auditor responsible for signing off the bank’s financials, was given loans
by VBS, the full extent of which he had not declared.
investigation then threw up similar concerns about another partner, Dumi
Tshuma. Both resigned before disciplinary charges were laid against them.
clients have now found themselves caught up in the mess. These include ANC
Limpopo treasurer Daniel Msiza who, in December 2016, obtained a R9.5 million
loan from VBS to buy a conference centre in downtown Polokwane through his and
his wife’s company, Mojovax.
Msiza said on
Saturday that the loan was on strictly commercial terms and that he had applied
to three different banks for financing to buy the property out of business
rescue. “VBS simply responded first. It is a purely commercial loan and I am
paying it.” He said there was no wrongdoing involved.
deputy director-general of home affairs Thulani Mavuso, who obtained a R2.88
million mortgage from VBS in March 2017.
City Press he took the loan to build a house on his property in the northern
Johannesburg suburb of Sundowner. “When the construction is complete I will
start to service that loan,” he said. He had shopped around for a loan and
settled on VBS, although he also wanted to support “what they were doing” at