Ghosts of VBS haunt Malema and Zuma

EFF leader Julius Malema has spent the past week brushing aside allegations that he fired a gun at a political rally (‘If they want to charge, they must charge and we will speak in court) and that he attacked a security guard at Winnie Madikizela's funeral (‘I wish I’d assaulted the guard properly’). But it is the third matter – his role in the alleged heist of VBS Bank – that could be giving him sleepless nights. Legalbrief reports that a damning investigation reveals that his lavish lifestyle was partially funded from R16m robbed from the defunct institution – and jarringly clashes with his self-propelled image as a champion of the poor. And former President Jacob Zuma – Malema’s friend-turned-foe – also has reason to worry as his legal challenges and financial woes mount. On Tuesday, he learned that he has to cough up R7.3m to pay back his bond from VBS or he could lose his infamous Nkandla property.

The Daily Maverick Scorpio investigation into the bank statements of VBS-beneficiary and slush fund Mahuna Investments show how the life savings of the poor and vulnerable VBS-depositors, as well as municipalities around the country, were transformed into school-related expenses for Malema’s sons, and were used to pay for designer suits and the EFF. Scorpio has revealed details of how at least R5.3m in VBS loot was siphoned off to Mahuna Investments, and how the bank card linked to this account followed Malema around the country, maintaining his personal lifestyle. In July 2018, when hundreds of panicked clients queued for days at the headquarters of VBS Mutual Bank in Thohoyandou, Limpopo, in an attempt to extract their money from the failed bank, Malema was on a spending spree. Without calculating tax implications, the VBS-sourced millions are about four times Malema’s annual salary as an MP. CIPC documents show that Malema’s cousin, Matsobane Phaleng, is the official owner of Mahuna Investments and its banking account. However, Scorpio's investigation shows that Malema used the Mahuna Investments account ‘as his personal slush fund and alter ego’.

The exposé by journalist Pauli van Wyk, which fingers Malema as a willing participant in one of the single-biggest thefts from poor people in SA history, has been described as a devastating blow to Malema and his party. Apart from the many laws that were broken, a Daily Maverick editorial says 'the exposé has blown to smithereens the myth of a corruption-fighter and exposed a naked hypocrite who’s in it for power and money'. It also alleges Malema has broken at least four laws:

* He received fraudulently acquired monies, taken from the poorest of the poor, which he clearly knew about.

* He disguised the fact that he was the recipient of the money by hiding behind his cousin, Matsobane Phaleng, a clear case of money laundering.

* He used the bank card of the company that was not in his name, which is fraudulent.

* Every time he made a purchase with the stolen money, he committed a crime (as in Jacob Zuma’s 783 counts).

Malema claims he is not overly concerned about the revelations, says a report in The Citizen. Responding to academic Nomboniso Gasa, who said Malema should sue Van Wyk if she was lying, or that he should be charged if she was telling the truth, Malema told her she was ‘welcome to open a case’. ‘No one will stop you,’ he added. Malema answered DA MP Ghaleb Cachalia, who called on him to ‘answer these documented allegations and accusations,’ with even less concern. ‘A mere apology won’t do. Let’s hope a prosecution awaits,’ Cachalia tweeted, to which the EFF leader responded with only four smiley emojis and one of a person shrugging. Requests for comment from the EFF have not yet been forthcoming

The DA intends reporting Malema to Parliament after finding no sign of his declaration of interest in Mahuna Investments, says a News24 report. DA MP John Steenhuisen said there was no sign that Malema had declared an interest in the company, as required for MPs' interests for 2017 and 2018. ‘Mr Malema does not declare Mahuna Investments in any form for either of these years – not under Shares & Financial Interests, nor under Gifts & Hospitalities, nor even under Sponsorships or Benefits,’ stated Steenhuisen. ‘Members of Parliament take an oath of office swearing to uphold the Constitution and all other laws of the Republic,’ said Steenhuisen. ‘If the allegations that are being reported on turn out to be true, then Mr Malema would have broken the law not once but many times over, and would have acted against the very spirit of our Constitution which strives to ensure dignity and equality for all the people of SA.’

Meanwhile, court papers filed by VBS Mutual Bank’s liquidator, Anoosh Rooplal, show that Zuma has defaulted on the multi-m i l l i o n loan extended to him by the bank in 2016, says a News24 report. Rooplal and VBS are asking the court to grant an order forcing Zuma to pay up, or give an order that will allow VBS to execute on the property – a section of land owned by the Ingonyama Trust named ‘Nxamalala Farm’, and on which Nkandla is built. Zuma secured a much-publicised bond from VBS which he used to pay R7.8m to the Reserve Bank in September 2016, as part of what he owed for the cost of extensive upgrades to his Nkandla homestead after he became President in 2009. The upgrades cost taxpayers R250m. In March 2016, the Constitutional Court confirmed that the report by former Public Protector Thuli Madonsela into the Nkandla saga was binding. She found Zuma was personally liable for some of the costs. According to the court papers, Zuma fell behind on the repayments of the VBS loan for the first time in August 2018, when he was in arrears for R109 568. VBS and Rooplal sent Zuma a letter of demand for the arrears around the same time. Following the letter of demand Zuma ‘effected sporadic repayments all of which were less than the agreed monthly instalments’. According to the loan agreement attached to the court papers, Zuma’s monthly instalments were R69 000 over 240 months (20 years) on a total loan amount just shy of R8m. All told, he would have paid VBS R16m. Zuma has until Saturday to file a notice to state whether or not he will defend the summons, and 20 days after that to file papers in response to the summons.

The application by the liquidator of VBS Mutual Bank has revealed how the bank was reckless while conducting its business before it collapsed, notes a Cape Times report. Other than taking a huge financial gamble in 2016, by lending money to a man beyond his working age (Zuma was 74 at the time), the bank also took a gamble by giving out the home loan with a rural property as a guarantee. The R7.8m loan was met with outrage and the bank was accused of reckless lending, but it stood its ground saying it conducted thorough due diligence on Zuma’s affordability. More outrageous, suggests the report, was how the bank, according to papers that have since been leaked to the public, used Zuma’s Nkandla rural home, as collateral even though the home was built on communal land that is owned by the controversial Ingonyama Trust. Accounting analyst Khaya Sithole is quoted as saying nobody knows how the liquidators hope to get the law to back it to attach the Zuma homestead as it is sitting on communal land. ‘Everybody is just speculating that maybe the lawyers will find a loophole.' Sithole said VBS was engaged in reckless lending and one of the ways Zuma may get out of this loan agreement was to argue that they were reckless to lend him money. ‘The key question here was whether he could afford to service the loan,’ he said.