Justice slowly edges closer for VBS looters

There might be no prosecutions yet but the wheels of justice are slowly grinding in the VBS Mutual Bank saga with the latest development being a final sequestration order handed down by the Johannesburg High Court against the remaining two directors of the defunct bank. 

On August 23 the court ordered the final sequestration of the estates of former VBS chief operations officer and group executive officer of Vele Investments Robert Madzonga and the joint estates of former VBS chief executive (CEO) Andile Ramavhunga and his wife Zanele. 

VBS was placed under curatorship by the South African Reserve Bank (Sarb) in March 2018. This was followed by a forensic investigation led by Advocate Terry Motau whose report revealed that over 50 people, including the bank’s executives, board members, auditors, politicians and their friends, were part of a scheme to facilitate the illegal deposit of municipal money into the bank with the intention of defrauding it. 

The false deposits were used to pay the overdrafts of the perpetrators, buy immovable properties, luxury vehicles and even a helicopter.

In his preliminary investigations, VBS liquidator Anoosh Rooplal found that at least R1.5 billion was defrauded from 14 municipalities and 20 000 retail depositors due to the wide-scale fraud which involved siphoning money through fictitious deposits at VBS.

“The final sequestration orders will enable the trustees of their respective estates to intensify the recovery of assets, which ultimately can accrue to the benefit of the estate of VBS,” said Rooplal in a statement. 

Vele Investments 

The judgments by Judge Elias Matojane reaffirm the provisional sequestration order given by Judge Moroampholo Tsoka against the three on August 3, which they opposed and asked the court to set aside.

Both Madzonga and Ramavhunga denied being involved in any wrongdoing at VBS, which Matojane has rejected while describing their denials as “improbable”. 

Rooplal previously referred to Madzonga and Ramavhunga as being part of the group whose members were the leading minds behind the fraudulent scheme, which also included the chair of VBS board Tshifhiwa Matodzi, former financial officer Phillipus Truter and head of treasury Phopi Mukhodobwane

Final sequestration orders were handed down against the last three individuals in November 2018

It was Mukhodobwane’s affidavit that lays out the roles played by each party played in the scheme that Rooplal based his case against Madzonga and Ramavhunga on, both of whom have rejected it as “hearsay”. 

Read: How VBS looted municipalities

Madzonga said that he was not aware of the fraud or knowingly benefit from the scheme saying he only became aware of it after reading the founding affidavit. 

“His denial of not knowingly participating in the fraudulent scheme is just not credible, and is inconceivable in light of his close association the perpetrators and entities that benefited from it,” said the judgment against Madzonga. 

Madzonga was COO and later CEO of VBS’s majority shareholder Vele when the fraud took place. He also sat on the board of Vele Financial services with Matodzi and served as the director of  Insure Group Managers, Black Label Telecoms and Bonulong. 

“All these entities benefited directly from the fraudulent scheme,” says Matojane.  

Vele is said to have fraudulently acquired an R80 million stake in VBS  in March 2017. The deposit was made by a company called Insure but in two weeks the money was withdrawn by the same company meaning Vele never paid for the acquisition. 

Madzonga links 

Matojane’s judgment is based on several suspicious transactions linking Madzonga to corruption at VBS.  For example, on October 5 2017 fictitious credit of R350 million was generated on Vele’s account and on the same day, payment of R5 million was deposited to an entity called Foxburgh Capital.

Madzonga then received a payment of R3.93 million from Foxburgh. 

Madzonga denied having knowledge of the R350 million to Vele, saying it was hidden from him. 

Matojane said another “strong” indication that he was aware of the scheme was his own admission that he was pulled aside in March 2018 by Mukhodobwane who sought his advice on whether he should delete the false contract finance assets he had created to make the false impression that VBS had those facilities as assets in its books. 

Madzonga never disclosed this to the Sarb, which Matojane said was “telling”. 

Matojane said considering that Madzonga’s defense was littered with contradictions and as an attorney with more than 23 years of experience in the commercial and corporate financial business areas plus his high positions in these entities made it “inconceivable” that he was ignorant to what was going on. 

Ramavhunga 

Similarly, judge Matojane found that Ramavhunga’s defense that he was never a participant in the fraudulent scheme perpetrated at the bank and had no personal knowledge of the details of the fraud was “untenable and demonstrates a lack of bona fides on his part”.

Ramavhunga, who was CEO of VBS at the time and is a chartered accountant by profession, “must have known that VBS paid for and purchased a helicopter for an amount of R12.8 million,” said Matojane. 

“He must have also known that Matodzi purchased a Ferrari for an amount of R6.5 million.”

Ramavhunga was also involved in trying to conceal Vele’s fraudulent acquisition of shares in VBS and he was one of the five people that received “bonus” payments on that day that Vele received the fictitious payment of R350 million in its account. Vele paid him R15 million. 

Ramavhunga was also aware of the bribes that were paid to two former Public Investment Corporation (PIC) executives and VBS board members Ernest Nesane and Paul Magula who both confessed to receiving money to keep silent 

More to come 

Rooplala, who was appointed the final liquidator of VBS this month, said that this would allow him to call a second meeting with creditors who have claims against VBS, allowing for more people to prove their claims. 

The liquidator’s team was also pursuing a number of people who have outstanding overdrafts, mortgages and other non-performing debts with VBS, some individuals have already entered into payment arrangements with the liquidator.  

“We are aware of the growing impatience of South Africans who want to see the perpetrators of the VBS crime being held criminally liable. My civil remit is to collect all monies owed to the Bank, as dictated by the Insolvency Act,” Rooplal said in the statement.

 “I am also legally compelled to co-operate and provide information to enforcement authorities, who are pursuing their criminal investigations. We have provided relevant information as requested and will continue to do so,” he ended. 

Source: moneyweb.co.za