JOHANNESBURG - Prospects of salvaging VBS Mutual Bank diminished yesterday, following the South African Reserve Bank’s (Sarb’s) application to have the corruption riddled institution liquidated.
The central bank’s Prudential Authority (PA) which regulates banks in the country filed an application for the final winding up of VBS with the North Gauteng High Court, charging that there was no prospect of saving the embattled institution that was grounded by the looting of R2billion from its coffers.
The PA said in its application that the liquidation of VBS was not avoidable.
“VBS is hopelessly insolvent and massive frauds have been perpetrated against it.
“There is no prospect of entering any resolution plan in respect of VBS,” the PA said.
“It will serve no purpose to grant a provisional winding-up as the conclusion of the hopeless financial position and the conduct of those who managed VBS is unavoidable.”
Finance Minister Tito Mboweni said in his Medium-Term Budget Policy Statement two weeks ago that funds lost by municipalities in deposits to VBS illustrated how greed and corruption impacted the achievement of developmental objectives.
Forensic investigator advocate Terry Motau revealed how R1.8billion was looted from VBS by politicians, the bank’s executives and a former partner of auditing firm KPMG during his explosive report titled The Great Bank Heist.
The report was scathing on the conduct of KPMG’s lead auditor for the bank, Sipho Malaba. Motau said the financial services firm should be forced to take responsibility for its role in the collapse of VBS.
The Sarb placed VBS under curatorship in March against a backdrop of a serious liquidity crisis at the mutual bank.
The curator found the bank’s liabilities had exceeded its assets and it was factually insolvent.
It also said that there was no possibility that VBS would be able to pay its debts and there was also no possibility or prospect of VBS becoming a successful concern.
The investigation by the curator also concluded that VBS and its main shareholder Vele and Associates (acted) in cahoots with erstwhile VBS chairperson Tshifhiwa Matodzi and “operated as a single criminal enterprise, with Matodzi firmly at the helm”.
The Mahikeng Local Municipality also launched an application of its own, in the Polokwane High Court, for the final winding-up of VBS.
The PA said in its court application that VBS had not functioned as a repository of funds since the curatorship in March nor could it act as a financial intermediary.