SAFTU condemns looting of money in VSB

The South African Federation of Trade Unions is angered that once again workers and the poor are set to be the main victims of the collapse of the Venda Building Society Mutual Bank (VBS).

The Hawks are now investigating allegations of fraud and corruption at the bank. Five dockets have been opened and will be investigated by its Serious Corruption Investigation unit.

At first VBS appeared to be a runaway success. Its financial report for 2017 revealed a big growth in total assets. From just R337m In 2015, they almost trebled to R1bn in 2016 and from there doubled to R2bn in 2017. Net profits rose from R1m in 2015 to R5.9m in 2017 while operating profit increased to R87m in 2017 from R28m in 2015.

But on 11 March 2018 SA Reserve Bank governor Lesetja Kganyago placed the bank under curatorship, after it experienced a severe liquidity crisis, which made it impossible for it to repay deposits by municipalities, amounting to R1.6 billIon, which the VBS had been lobbying them to entrust it with..

Treasury ordered the municipalities to withdraw these deposits because they are in breech of the Municipal Finance Management Act and Treasury instructions, that say municipalities may deposit money only in full commercial financial institutions, while VBS is a mutual bank, and not held to the same standard as a commercial bank.

These municipalities now stand to lose most of this R1.6billion. This is worsening their already desperate financial position and will force them to cut back spending on service delivery, which may well lead to community protests. As always, the main victims of this alleged looting of the bank will be the poorest South Africans.

Co-operative Governance and Traditional Affairs Minister Zweli Mkhize has warned these municipalities that their best hope is to receive back only about 10% of their deposits after five to seven years.

He urged them, and provincial departments of co-operative governance and traditional affairs, to work on recovery plans to avert service delivery protests, but insisted that the government would not provide bail-outs and called for consequences for those municipalities who might have broken the law by making municipal deposits into a mutual bank and the municipalities.

The municipalities and the three affected provinces are investigating officials and political office-bearers who were responsible for placing funds with VBS about allegations that about R20m was paid in commissions for soliciting these deposits.

Documents obtained by City Press show how, in one case, a municipal manager ordered a subordinate to deposit R50-million into a VBS account within 30 minutes. This was reportedly done in the middle of the bank’s first “liquidity stress event” last year.

The main allegations related to VBS are directed against its biggest shareholder, a company called Vele Investments. It is alleged that Vele’s founder, Tshifhiwa Matodzi, its CEO, Robert Madzonga and Vhavenda king, Toni Mphephu Ramabulana, used hundreds of millions in depositors’ funds to pay for their lavish lifestyles.

It has been alleged that money was looted from the bank and used to shower the Venda king with gifts, including a helicopter, luxury apartments, designer clothing, and sports cars, which was financed by a series of vehicle finance deals, mortgage bonds and complex inter-company loans between VBS, Vele Investments and its subsidiaries. About R900m is said to be unaccounted for.

SAFTU demands that the Hawks leave no stone unturned to investigate all these allegations and that any who are found guilty must face trial and severe punishment if found guilty. Corruption and fraud are always serious but especially so when the money being syphoned into people’s pockets was supposed to provide schools, hospitals and houses for poor communities .

Corruption will be on the agenda of the Working Class Summit (WCS) to be held on 21- 22 July 2018 at the University of Johannesburg Soweto Campus.

It aims to unite civil society formations, employed and unemployed workers, those in the informal sector and in more secure work, the students and the landless, the homeless and those fighting against the scourge of violence against women and children, into a struggle for a truly free, corruption-free, democratic and equal society.

We call on all those interested in participating in the WCS to contact us.

Please follow and like us:

Be the first to comment

Leave a Reply

Your email address will not be published.