$130m fraud causes South African bank’s collapse

Oct 11, 2018

A bank in South Africa collapsed after scores of people and companies looted 1.9 billion rand ($130 million) over three years, an investigation revealed Wednesday, in one of the country’s latest corruption scandals.

VBS Mutual, which collapsed in March, granted then president Jacob Zuma a 7.8 million rand loan for him to repay taxpayers for security upgrades to his private Nkandla homestead in 2016.

The investigation, commissioned by the central bank, released its damning report titled “The Great Bank Heist”. 

It detailed the graft that sank VBS and named the executives allegedly responsible, including former CEO Andile Ramavhunga, who denies any wrongdoing.

“Many of those implicated in the looting of VBS are chartered accountants and some attorneys. They are not fit and proper persons to fill those offices, which require utmost honesty and integrity,” report author Terry Motau wrote.

The investigation was launched after VBS, a corporate finance and retail bank, suffered a severe liquidity crisis and was put under curatorship earlier this year. The probe revealed malpractice including extending overdrafts to well-connected clients and issuing payments to individuals in exchange for deposits from state-owned companies.

“It is corrupt and rotten to the core. Indeed, there is hardly a person in its employ in any position of authority who is not, in some way or other, complicit,” the report said. 

Motau recommended criminal charges against those in charge at the bank, which had 23,000 retail depositors.

Previously, local media reports had revealed executives bought luxury cars and chartered helicopters with the bank’s money, and arranged huge illegal deals by Whatsapp messages.

Zuma was ousted from power in February amid multiple graft scandals during his nine years in office. 

A judicial inquiry is probing government corruption under his term, while his successor Cyril Ramaphosa has vowed to crack down on financial misconduct.

(AFP)

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