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The ‘Great Bank Heist’ and the BIG names

Publish date: 11 October 2018
Issue Number: 4563
Diary: Legalbrief Today
Category: Banking

A long list of prominent people and organisations have been tainted by the SA Reserve Bank’s report on ‘Great Bank Heist’ at VBS Mutual Bank, from which close to R2bn was looted. Among the casualties, notes Legalbrief, are the Jacob G Zuma Foundation and its chair Dudu Myeni; KPMG; the PIC and its CEO, Dan Matjila; and the EFF and its deputy president Floyd Shivambu. There have been some firm denials, especially from Matjila, but the EFF and its leaders have taken refuge in a bunker of silence in the face of allegations in media reports that the party, and Shivambu in particular, benefited financially from the looting spree. According to the Daily Maverick, Shivambu benefited through his younger brother Brian. What the DM describes as a ‘tame media statement’ was released by the EFF last night, reiterating the party’s position ‘that all who are responsible and illegally benefited from the fraud must be criminally prosecuted immediately’. According to the DM report, which quotes three unnamed sources, the EFF has allegedly received R1.3m illegally flowing from VBS into the party’s bank account. And Brian Shivambu allegedly funnelled around R10m through a company called Sgameka Projects into Floyd’s personal bank account, the same sources claimed. Brian is the sole director of Sgameka Projects. The damning investigative report into VBS, commissioned by the SA Reserve Bank (SARB) and released yesterday (see separate report below), found that Brian received more than R16m in ‘gratuitous payments’. ‘We don’t exclude the fact that there were more money flows from VBS through other fronts to the EFF and Shivambu,’ the DM quotes 'a well informed source' as saying. The forensic report, investigated by Advocate Terry Motau SC and law firm Werksmans, found that more than 50 people unjustifiably and illegally received R1.89bn between 2015 and 2018.

Full Daily Maverick report

Shivambu has refused to answer any questions about his brother’s alleged involvement in the VBS saga – an institution that he and his party have repeatedly defended, notes a TimesLIVE report. Last night’s EFF statement said it ‘noted’ the release of the report, but made no specific mention of Shivambu. Instead, it reiterated that ‘all who are responsible and illegally benefited from the fraud must be criminally prosecuted immediately’ and ‘blacklisted’. ‘Above all, the law enforcement agencies must do all they can to ensure that all the money that can be recovered must be paid back in full, including attaching properties of the individuals who benefited from the defrauding of the VBS,’ the statement read. Responding to TimesLIVE by text, Shivambu reportedly declined to refute that his brother had indeed been implicated in the VBS report. And the EFF’s Mbuyiseni Ndlozi reportedly told TimesLIVE: ‘The EFF position is unequivocal from our statements, both before and tonight: whoever is involved and stated as having defrauded or looted VBS must be criminally prosecuted, PERIOD!’ The report adds the party’s leader Julius Malema did not respond directly to questions about whether the EFF was aware of the connection between Shivambu and VBS when it attacked the Reserve Bank over its decision to place VBS under curatorship. At the time, the EFF said VBS was being ‘victimised’ by the Reserve Bank, and suggested that this was driven by racism. In its statement last night, the party again criticised the bank over its handling of the VBS scandal, and argued that it had failed to exercise proper oversight over the bank.

Full TimesLIVE report

News24 notes that Brian Shivambu was on a list of 27 people and companies who received the largest amounts of looted VBS funds. Motau’s report is not clear on the reason for the cash payments to Shivambu. Elias Shivambu – a director in a company called Sunshine Hub alongside Brian Shivambu – reportedly confirmed to News24 that he is Brian’s and Floyd’s father. ‘Yes (I am their father), but I don’t know anything about the R16m,’ he said. A Twitter profile for Brian found yesterday morning was deleted within hours of the release of the report. The account had been active since November 2010. According to the biography on the Twitter profile, Brian Shivambu is employed at the EFF headquarters and is the MD of Mabyeni Trading and Projects. Company records for Mabyeni show that Brian Answer Shivambu has been the sole director since 2011. Further searches revealed that Brian provided his employer details as ‘provincial legislature’ as late as August this year and, previously, the EFF. News24 says it has established that Brian was co-director in Sunshine Hub with three other individuals who share the Shivambu surname – Hlegani Elias, Mujaji Constance and Fumani Innocent Shivambu. According to CIPC records, Sunshine Hub’s address is in Malamulele in Limpopo. Floyd Shivambu is from Malamulele and his parents are named as Elias and Constance. The EFF has been adamant in public statements, on Twitter or via the media, that VBS should – as a black bank – be protected. ‘I think we should picket at #SARB in defense of our bank attacked and we fold our arms. We must defend #VBSBank, the only bank that gives mortgage to black rural people with PTO’s,’ Malema tweeted in March.

Full News24 report

Former President Jacob Zuma and the Passenger Rail Agency (Prasa) have also been linked to the scandal in the forensic report. Included in the 148-page document is testimony from VBS CEO Andile Ramavhunga, who was asked whether a commission of R1.5m had been paid to a group of South African Transport and Allied Workers Union (Satawu) officials to solicit a R1bn deposit from Prasa. Ramavhunga replies: ‘It could have been … I know for a fact that we were asked to put money into the Dudu Myeni Foundation.’ According to BusinessLIVE, he further stated that the request for the donation surfaced at the same time they were soliciting the deposit from Prasa. The investigators concluded Ramavhunga meant to refer to the Jacob G Zuma Foundation, of which Myeni is the chair. The report also explores the EFF connection, noting the party lambasted the Treasury for putting VBS under curatorship and said the bank was being victimised because it had given Zuma a loan to pay for the non-security upgrades to his Nkandla home. BusinessLIVE points out the EFF has recently backed dubious characters such as suspended SARS boss Tom Moyane, controversial Transnet CEO Siyabonga Gama as well as the embattled leadership of VBS – this, while the party called for the head of former Finance Minister Nhlanhla Nene in relation to his state capture inquiry testimony and his interaction with the Guptas, as well as his involvement in the PIC.

Full BusinessLIVE report

The report reveals R5m was stolen from the bank, allegedly to bribe PIC boss Matjila, says a City Press report. During his cross-examination by investigators, the bank’s former head of Treasury Phophi Mukhodobwane testified that in April last year the bank’s former chairperson Tshifhiwa Matodzi had ordered him to fetch R5m from the bank’s Makhado branch. The report said ‘Mukhodobwane was directed by Matodzi to take the cash by helicopter from Makhado to Lanseria airport where he was met by Matodzi. Upon his arrival at Lanseria, Mukhodobwane asked Matodzi what the money was for and Matodzi responded that the money was required to be paid to ‘Dr Dan’ to obtain his co-operation in facilitating the funding of VBS’ requirements by the PIC. ‘Mukhodobwane understood that as a reference to the chief executive of the PIC.’ However, Mukhodobwane told investigators that he was unaware of whether or not the R5m was indeed paid to ‘Dr Dan’ by Matodzi as the R2bn line of funding was not forthcoming from the PIC. In a News24 report, Matjila responded: ‘I emphatically reject any suggestion that I may have received R5m to facilitate further funding for VBS Mutual Bank. In fact, the portfolio management committee of the PIC, turned down an application to put more money into VBS Mutual Bank, two days before VBS was placed under curatorship,’ he said. ‘Such allegations are without merit and no facts or evidence could be placed before Advocate Motau's panel of investigation to substantiate these allegations, which I regard as malicious. However, should an investigation be instituted into these allegations, I am willing and ready to subject myself to the process.’

Full City Press report

Full News24 report

The report also puts KPMG back in the dock. The auditing firm whose reputation was gutted by associations with the Gupta family and a flawed report that helped weaken SARS amid state capture allegations, is facing claims of millions following the Reserve Bank report finding that its former partner had signed off falsified audits, notes a Business Day report. The scandal-scarred KPMG has lost high-profile clients in the past year, including the auditor-general, the Gauteng government and the SA arm of German insurer Munich Re. Former KPMG partner Sipho Malaba, who approved the 2017 financial statements, received R34m from VBS, according to the forensic report. ‘He received vast sums, and he was required to do as his paymasters required of him,’ Motau says in the report. Malaba resigned in March along with another partner, Dumi Tshuma. KPMG said it had noted the publication of the report and would co-operate fully with any investigation that flowed from it. ‘Lessons have been learned and decisive action has been taken since’ the scandal broke, KPMG executive chair Wiseman Nkuhlu is quoted as saying.

Full Business Day report (subscription needed)

A practical example of the rampant VBS corruption is illustrated in a WhatsApp exchange. A Cape Argus report says Limpopo ANC provincial deputy chair and Vhembe Mayor Florence Radzilani has emerged as one of the key political beneficiaries of the looting. It says the Vhembe District Municipality has been revealed as one of the municipalities that controversially made deposits amounting to millions in the bank. According to a WhatsApp communication of ‘VBS fixer’ Kabelo Matsepe, a former ANC Youth League leader in the province, Radzilani protested when she was given only R300 000 for ensuring that the R200m the municipality had deposited was not withdrawn from the bank. In a recorded discussion, Matsepe tells Matodzi that Radzilani was unhappy about the kickback she received. ‘The mayor of Vhembe is crying, she says we must give her and the speaker a Christmas because they are the ones who are making sure that we keep that money for six months. We gave her 300k and she cried and said we gave juniors R1.5m and we give her 300k,’ the text from Matsepe reads. ‘If we can let’s give her 1% or 2% on a level of trust because she did keep her promise that she will block the money from being withdrawn,’ Matsepe’s text continues. Matodzi is recorded in the report as having replied: ‘Go ahead… But she must know the formula… If we do the formula we are going to do 2% of R200m for two months and thereafter 2% of R150m for four months because they withdrew R50m and it will play around R2.3m. My thinking is that let’s do it half and promise to give her more when she brings back the R50m they withdrew.’ Motau said while there were many other conversations that cast light on Matsepe’s ubiquitous role in VBS, that between him and Matodzi on Radzilani was the most telling.

Full Cape Argus report (subscription needed)

The ANC has welcomed the report, adding heads must roll where there was any wrongdoing. ‘The 'Great Bank Heist' report is alarming and highlights the roles of a range of individuals and institutions in these heinous events,’ said ANC spokesperson Pule Mabe, according to News24. ‘The report points towards grave abuse of authority and office as well as worrying instances of corruption.’ Mabe said SARB was now expected to act decisively and with speed to process the recommendations in the report. ‘The ANC maintains that where there (has) been wrongdoing by individuals and institutions, heads must roll, and the law must take its course without fear or favour. The manner in which authorities process this report, will be an important indication on our nation's commitment to renewal and ethical leadership.’ In a statement yesterday, the SARB said the evidence in the report was not a reflection of the innocence or guilt of any party, as not all parties had been given the opportunity to respond to the evidence. The PIC also welcomed the report and said it had already taken a number of steps against its two delegated directors on the VBS board, Ernest Nesane and Paul Magula. PIC spokesperson Sekgoela Sekgoela said they were no longer employed there. Maqula was dismissed for incompetence in April and Nesane resigned. The Financial Sector Conduct Authority debarred the men after the PIC applied in terms of the Financial Advisory and Intermediary Services Act. The PIC was in the process of applying to have them declared delinquent directors and, in consultation with the Prudential Authority, will lay criminal charges against them. With Nesane, the PIC was in the process of applying to have him struck from the roll of attorneys.

Full News24 report

Opposition parties have called on new Finance Minister Tito Mboweni and President Cyril Ramaphosa to take swift action against those implicated, says a Business Day report. DA co-operative governance spokesperson Kevin Mileham said the report implied there were more people involved than originally thought, including politicians and officials. ‘The DA … calls on the newly-appointed Minister of Finance, Tito Mboweni, to move swiftly with authorities to take action against all those implicated, especially the politicians and those close to politicians, such as Brian Shivambu, who is implicated in the scandal.' UDM president Bantu Holomisa called on Ramaphosa to appoint a task team to ensure those implicated were held responsible, particularly those employed by the PIC. ‘The PIC seems to be sinking deeper and deeper in the quagmire of corruption,’ he said. ‘The UDM wants to see these people charged, and the Asset Forfeiture Unit must not dilly-dally, and get to work.’

Full Business Day report