Sarb commissions forensic investigation into VBS Mutual Bank

One of the things the investigation is meant to determine is whether any of the business at VBS was conducted with the intent to defraud depositors or other creditors of the bank.

The South African Reserve Bank (Sarb) has commissioned a forensic investigation into the affairs of VBS Mutual Bank.

In a statement issued today, the Sarb said its deputy governor and chief executive officer (CEO) of the Prudential Authority (PA) Kuben Naidoo has appointed Advocate T Motau SC as an investigator in terms of section 134 of the Financial Sector Regulation Act 9 of 2017 in this matter.

The Sarb said the primary objective of the investigation that will be conducted by Advocate T Motau SC is to establish whether:

Any of the business of VBS was conducted with the intent to defraud depositors or other creditors of the bank, or for any other fraudulent purpose;
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; and
There had been any irregular conduct by VBS ’s shareholders, directors, executive management, staff, stakeholders and/or related parties.

The reserve bank said that based on the findings of the forensic investigation, the CEO of the PA will take appropriate follow-up action.

On March 11, the minister of finance appointed Sizwe Ntsaluba Gobodo Advisory Services (Pty) Limited, represented by Anoosh Rooplal, as the curator of VBS Mutual Bank (VBS).

Sarb governor Lesetja Kganyago said at the time that VBS would immediately be placed under curatorship due to the severity of its liquidity crisis.

The weekend before the announcement to place VBS under curatorship was made, it was reported that the bank – which shot to prominence in 2016 when it lent former president Jacob Zuma R7.8 million to reimburse the state for the nonsecurity upgrades made to his private homestead in Nkandla – faced the possibility of crashing after National Treasury instructed municipalities to stop investing with the institution.

The order to municipalities was reportedly made early last year and it stated that the Municipal Finance Management Act (MFMA) forbade municipalities from investing in mutual banks.

This resulted in a number of councils withdrawing more than R1 billion from the bank, causing a serious liquidity crisis.

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