Azra Hoosen | ah@radioislam.co.za
17 July 2024 | 14:30 CAT
3 min read

The VBS Mutual Bank scandal has resurfaced in the headlines as former chairman Tshifhiwa Matodzi receives a 15-year prison sentence for his role in the bank’s collapse. The scandal, which involved the looting of millions, resulted in countless poor individuals losing their hard-earned savings while politicians and bank executives enriched themselves at their expense.

National Treasury has detailed the steps it took to end unlawful investments by municipalities into VBS Mutual Bank, defending former director-general Dondo Mogajane amid allegations from the bank’s former chairman, Tshifhiwa Matodzi. Matodzi, recently sentenced to 15 years for his role in the bank’s collapse, accused Mogajane of impropriety, which Treasury dismissed as baseless.

According to investigative journalist Pauli van Wyk, Dali Mpofu, Floyd Shivambu, and Julius Malema of the EFF have consistently denied receiving any funds over the years. However, their story has evolved over time. “They have completely denied receiving anything and that was the truth over many years,” she said.

In Floyd Shivambu’s case, she noted that he initially claimed the funds were consulting fees. It later emerged that it was a loan he never repaid but now has to. The narrative shifted again to being a donation when Matodzi’s affidavit was aired six years later.

National Treasury highlighted its actions, including opposing court applications by VBS and enforcing regulations against municipal investments in mutual banks.

“There are questionable circumstances, this particular strand of allegations of Matodzi should be closely investigated. This is South Africa’s money, we have to be very careful with what Mogajane has oversight on because of his position, if these allegations are true,” said van Wyk.

She explained that there are cases against Malema and Shivambu that are still under investigation. Afriforum will need to avoid duplicating existing charges while adding new ones. “They must carefully frame a series of charges that will be thoroughly investigated and have a strong chance of holding up in court,” van Wyk added.

The scandal, involving corruption and theft, led to the collapse of VBS, affecting many poor citizens and resulting in significant financial and legal repercussions. Investigations are ongoing.

Background

In August 2017, VBS Mutual Bank faced a crisis that led to its eventual downfall. The bank had been illegally receiving multimillion-rand deposits from municipalities, diverting much of this money to various individuals, including the bank’s management, municipal employees, commission agents, and political power brokers. National Treasury intervened, instructing municipalities to withdraw their funds from VBS and forbidding further deposits, which initiated the bank’s collapse.

VBS attempted to challenge this directive in court but eventually abandoned the effort. According to an affidavit by former VBS chairperson Tshifhiwa Matodzi, who was later sentenced to 15 years in prison for fraud and other crimes, there was a Plan B to bribe Treasury officials to stall the enforcement of the directive. Matodzi claimed to have paid a bribe to then Treasury director-general, Dondo Mogajane, though Mogajane has denied these allegations.

Matodzi’s affidavit detailed several meetings with Mogajane, during which a payment of R1 million was allegedly arranged to be deposited into a non-profit company, Baphilile Foundation, which had connections to influential political figures. Banking records corroborate some of Matodzi’s claims, showing payments to the foundation from VBS accounts.

Despite these alleged corrupt activities, VBS continued to struggle and eventually went into curatorship. Investigations revealed extensive fraud and theft, implicating many individuals in the collapse of the bank. National Treasury has maintained that its actions were necessary to protect depositors and end the illegal practices at VBS.

The fallout continues to impact the involved parties and the broader financial system.

LISTEN to the full interview with Ml Junaid Kharsany and investigative journalist, Pauli van Wyk, here.