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Address by Thandi Tobias ANC (MP) on the debate of the VBS Mutual Bank Report in the National Assembly

23 October 2018

VBS Mutual Bank is regulated by the South African Reserve Bank (SARB) through the Mutual Bank's Act of 1993. The mutual banks were created to encourage a culture of savings from the working class and poor in South Africa. VBS was established in 1982 as the Venda Building Society. It became a mutual bank in the early 1990's and most of VBS' clientele are in the Limpopo province. VBS clients are mainly owners of small-to-medium business owners and members of stokvels; thus it was a small bank with a liquidity of only R1.2bn. A number of municipalities from the North West, Limpopo and the Free State deposited their monies with VBS, which led to the bank's books suddenly growing from R1.2bn to R2.4bn.

These municipalities placed deposits amounting to R1.5bn into VBS. This was in contravention of the Municipal Finance Management Act (MFMA) that requires that municipalities deposit their money with a commercial bank. A number of councils withdrew more than R1 billion from the VBS bank after National Treasury gave an order instructing municipalities to stop investing with VBS. This led to reports that the bank was facing a liquidity crisis.

The objective of the MFMA is to ensure that municipal funds are safe and readily available for spending on its budgeted priorities. National and provincial departments generally bank with the SARB, whilst only municipalities and all public entities (national, provincial and municipal) bank with private banks. Non-commercial banks like mutual banks are typically small, relatively lightly regulated, and cannot offer immediate liquidity. It is for this reason that the ANC calls for further investigations into those municipalities who deposited money meant for service delivery. His Excellency, President Cyril Ramaphosa has been very firm in matters relating to service delivery and the use of public funds. During the State of the Nation Address of February 2018, he stated: "Infrastructure investment is key to our efforts to grow the economy, create jobs, empower small businesses and provide services to our people".

The majority shareholders of VBS are the Public Investment Corporation that has 25.26% in shares, and Dyambeu Investments (Pty) Ltd which has 25.22% in shares. The "other" shareholders make up 48%, comprising at least 300 shareholders whom individually holds 3% or less, all black African.

In placing VBS Mutual Bank into curatorship, the SARB acted within its mandate and the law and independently of special interests. The primary purpose of placing a bank under curatorship is to protect depositor's money and the national financial system, while the business is placed on a sound footing. The collapse of a bank - no matter how big or small - often results in those who can least afford it losing access to their money, and harms business, consumer and investor confidence in the country. South Africa cannot afford this.

Advocate Motau undertook a five-month investigation which included the review of documents seized from VBS and Vele Investments, VBS' largest shareholder, and conducted extensive interviews with the role players. The primary objective of the forensic investigation was to establish whether:
* Any business by VBS, was conducted with the intent to defraud depositors or other creditors of the bank?
* If VBS's business conduct involved questionable and/or reckless business practices or material non-disclosure, with or without the intent to defraud depositors and other creditors.
* If there had been any irregular conduct by VBS's shareholders, directors, executive management, staff, stakeholders and/or related parties.

The report presented by the investigator, Adv. Motau, points to massive fraud, with an estimated R 1.9bn looted from the bank. The ANC welcomes the final investigative report into this large-scale fraud at VBS Mutual Bank, and is determined to see those implicated held accountable.

As the ANC Spokesperson, Cde Pule Mabe, stated on the 11th October 2018: "The 'Great Bank Heist' report is alarming and highlights the roles of a range of individuals and institutions in these heinous events". The ANC takes this as a matter of public importance, affecting the most vulnerable of our people, who invested their hard-earned monies in the VBS Mutual Bank. President Ramaphosa called on all of us to "act together in unity, unite our movement and country around one goal of making South Africa great, corruption free, and getting rid of greedy people and corrupt people". The ANC's stance on this matter is informed by our conviction that those who have been found guilty of any wrong-doing must be processed by our law enforcement agencies.

The ANC applauds the government for moving with speed to place the bank under curatorship and for implementing an investigation. This is in line with the call from President Ramaphosa during the State of the Nation address, when he said: "We are one people, committed to work together to find jobs for our youth; to build factories and roads, houses and clinics; to prepare our children for a world of change and progress; to build cities and towns where families may be safe, productive and content. We are determined to build a society defined by decency and integrity, that does not tolerate the plunder of public resources, nor the theft by corporate criminals of the hard-earned savings of ordinary people".

Honourable members I thank you.

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