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VBS Mutual Bank has dismissed a report alleging impropriety on the part of the 100% black-owned bank in its dealings with the Passenger Rail Agency of South Africa.
The Sunday Times report said that the cash-strapped state-owned enterprise was going to “pump R1 billion into the bank that helped [Jacob] Zuma ‘pay back the money’.”
The Sunday Times said it had seen correspondence from Prasa’s former acting chief executive Lindikhaya Zide confirming the state entity’s commitment to a R1-billion investment with a return of 8.25% a year.
In a statement issued by VBS chairperson, Tshifhiwa Matodzi, the bank said the report was riddled with assumptions and inaccuracies about a specific deposit facility.
“It must be emphasised that while the details of all our transactions are confidential, we run a transparent and compliant financial institution. We welcome the opportunity to demonstrate how we have created a respectable entity that is nationally recognised and which is a formidable competitor to the old finance houses in the country,” said Matodzi.
The bank pointed out that contrary to assumptions, its licence qualified it to take deposits and investments from entities regulated by the Public Finance Management Act, including Prasa.
“VBS has been in engagement with Prasa since November 2017 which culminated in an engagement with National Treasury, of which engagement are still ongoing. We are concerned that this has been leaked to the media before National Treasury engagements and Prasa’s own board processes are completed.”
Matodzi said that a similar article was written in the Pietermaritzburg-based newspaper, The Witness, in which it was alleged that the uMsunduzi Municipality would invest R945 million with VBS, “which was never true”.
He said this happened after VBS representatives made an introductory presentation to the municipality.
“It is on record that to date we have not received any investment from the uMsunduzi Municipality. It is of concern that every time we introduce our services to prospective clients there will be elements crying foul as a result of them not wanting to compete,” said the bank’s chief executive, Andile Ramavhunga.
Ramavhunga said Prasa had R13 billion invested with the four major financial institutions and only R1 billion with VBS.
He added that the majority of VBS funding to small business was geared towards government and community projects which were meant to uplift previously disadvantaged communities that would not ordinarily receive support from traditional financial institutions.
“We will continue to offer innovative competitive products to the market, and continue to comply with all the laws and regulations of the republic,” Ramavhunga concluded.
Prasa has also publicly dismissed the report as unfounded.
