Vele Investments boss Robert Madzonga has turned on his VBS Mutual Bank allies, saying he was informed of the dodgy transactions to inflate the bank’s balance sheet, but he denies he knew this was part of an elaborate fraudulent scheme.
In his court papers Madzonga is the first person to independently verify allegations that VBS’s treasury head Phophi Mukhodobwane, “together with others in VBS, had created false contract finance assets on the books of VBS”.
But, he said, his “knowledge did not extend to the creation of false bank accounts and of fictitious credits to those bank accounts”.
Madzonga said he learnt of those allegations and that he was implicated in curator Anoosh Rooplal’s founding affidavit, which was based on a confession by Mukhodobwane.
Vele Investments, a majority shareholder in VBS, is embroiled in a legal bid by Rooplal to recover more than R1.5 billion that he claims Vele and VBS executives stole from the bank’s depositors through the wanton creation of millions in fake deposits.
Rooplal lodged a court bid to liquidate Vele and separate applications to sequestrate the estates of Madzonga, as well as VBS board chairperson Tshifhiwa Matodzi, chief executive officer Andile Ramavhunga, VBS’s chief financial officer Philip Truter and Mukhodobwane.
The Sandton meeting
Madzonga’s submission tells of a meeting in Sandton that he attended with Matodzi, Ramavhunga, Mukhodobwane, Amanda Mashapa and Tsumbo Matabela on March 11 – a day after VBS was placed under curatorship – where he was being lobbied to support a planned bid to challenge the curatorship.
As a result of his reluctance to get involved, he said, Mukhodobwane called him to his office, where he learnt for the first time how the bank’s “contract finance” scheme was executed.
“I understood that companies, at the instance of VBS executives, applied for contract finance through VBS and VBS approved that finance. But this finance was not real because the companies did not require it and did not make use of the finance,” Madzonga said.
This created the false impression that VBS had these finance facilities as assets on its books.
Madzonga said Mukhodobwane had even sought advice from him about whether to delete these false accounts, which he had collated on a “Gmail” account.
“I advised him against this and informed him that I would not be party to any manipulation of the records of VBS.”
He said he did not accede to Mukhodobwane’s threats that all of them would go down together so “it would be in my best interests that I assist him and the other executives of VBS”.
“It does not surprise me now that Mukhodobwane seeks to implicate me in his affidavit,” said Madzonga, adding that his “interests and those of the others mentioned in the founding affidavit are not aligned”.
In his affidavit, Mukhodobwane provided shocking details of how he and his colleagues allegedly pillaged depositors’ money, as well as the benefits that Vele derived from the scheme. He also provided evidence of the patronage network built to keep money flowing into the bank.
Madzonga said he doubted whether Mukhodobwane’s claims would be admissible in court as he was at the centre of the scheme and therefore lacked credibility.
“I deny that this evidence is admissible and, if it is admissible, that it is credible and reliable. I reserve my right to seek a striking out of Mukhodobwane’s affidavit.”
He said he had demonstrated his bona fides in coming forward of his own volition to participate in the investigation, including a request to be interviewed by the investigators.
“I deny that the applicant has set out a sustainable basis that I participated in the perpetration of the alleged fraudulent scheme [and] dispute that the applicant has established that it has a liquidated claim against me,” Madzonga said.
He said it was not true that he was “disposing of any of my assets for purposes of defeating any sequestration order” or that Rooplal had demonstrated any basis to hold such a belief – which formed the basis of an urgent application.
Madzonga said that Rooplal had the information before him as far back as April, but took up to 10 weeks to lodge an urgent application in court. He stopped short of calling Rooplal dishonest, saying he suspected the delay in the application was meant to secure his cooperation in another transaction to inject funds into VBS and thereafter target him.
I was rich before VBS
Madzonga said he had created his wealth before joining Vele, including his fleet of sports cars. He said that, for 15 years, he was “well remunerated” in performance bonuses and his salary at his former employer MTN.
“For some seven years I owned a successful motor dealership specialising in high-performance investment cars such as Lamborghinis, Porsches, Ferraris, Maseratis, Bentleys and Mercedes-Benzes. This was profitable for me. I have always had a love for sports cars.”
But he said some of the expensive cars referred to in pictures as part of his fleet where actually vehicles that belonged to friends.
VBS owes me millions
Madzonga said VBS had liquidity issues just before curatorship and Mukhodobwane approached him to assist with funds temporarily until the matter was resolved.
He then paid R3 million from his personal FNB account into a VBS account held by FNB. A request that these funds be transferred to a bond account he held with VBS had not been complied with and therefore “VBS remains indebted to me in this amount of R3 million”.
He said he had also arranged a R15 million loan from a friend for the benefit of VBS and “accepted responsibility for this loan”. He later wanted to have the funds transferred to his bond account, but the money ended up in the ordinary account instead.
He said another R4.5 million allegedly paid from a fictitious deposit into his bond account was part of the once-off payment due to him following his promotion from chief operating officer of Vele to CEO.
“At no stage was I aware that this credit may have emanated from fictitious credits created within VBS.”
Madzonga also denied that he was employed by VBS as chief operating officer, saying he was acting in that capacity for three weeks, but the planned appointment fell through when he “began insisting upon corporate governance steps being taken, which included requiring regular executive meetings, proper delegations of authority and the like”.