EXPOSED: The power struggle rocking VBS Mutual Bank’s main shareholder

A power struggle between two central figures in Vele Investments, the company which may have become beleaguered VBS Mutual Bank’s majority shareholder through fraudulent means, has led to claims that one has illegally fired the other.

Details of a spat between Robert Madzonga, the bank’s previous chief operations officer - who says he is the group chief executive officer of Vele Investments - and Maanda Manyatshe, who says he is Vele’s executive chairman, are contained in court documents. It has also been alleged in these documents that Vele Investments fraudulently obtained shares in VBS.

Bank lost R1.5bn 

VBS Mutual Bank is at the centre of a massive and ongoing fraud saga. At least R1.5bn was allegedly looted from it and used by executives who bought, among other items, luxury vehicles. Vele Investments allegedly also benefited from the fraud committed, and an application by VBS to try and have Vele placed under final winding-up is set to go ahead.

On March 11 VBS was placed under curatorship, and SizweNtsalubaGobodo Advisory Services (Proprietary) Limited, represented by Anoosh Rooplal, was appointed to deal with this. In a founding affidavit dated July 5, Rooplal revealed details about the spat rocking Vele, which he said had been left in "parlous financial circumstances" due to fraud.

'Ongoing power struggle'

"I have since established that there is an ongoing power struggle that seriously impacts upon the governance of Vele," said Rooplal. "This is particularly relevant in as far as the positions of Madzonga and Mr Maande Manyatshe are concerned."

Madzonga claimed to be Vele’s executive chairman and, according to Rooplal, had suspended Manyatshe.

"Their dispute and power struggle continues at the expense of Vele’s governance; and the objects of the company are tainted with illegality and fraud connected therewith. Vele has been a central figure in so far as the benefits associated with the fraudulent scheme are concerned."

An email by Manyatshe to several individuals, dated May 18 and forming part of the court documents, said: "As an Executive Chairman and sole shareholder of Vele Investments, I have terminated the services of Mr Robert Madzonga with immediate effect.

"You are thus advised to take due care on further interactions with Madzonga on company related matters."

An email from Madzonga, sent four hours after the one by Manyatshe, meanwhile, then apologised for the "confusion" created by Manyatshe’s mail.

'Illegal termination'

"As you are aware, I am the Group CEO of Vele Investments and Group COO of Vele Financial Services Group and my services in both institutions can only be terminated by the Boards of those institutions," Madzonga’s email said.

"Accordingly, the alleged termination of my services is illegal and it therefore should be ignored."

Madzonga said that it had come to his attention that there were individuals "taking instructions from the Non-Executive Chairman".

Anyone found guilty of this, he said, would be violating company policies.

'Majority shareholder via fraud'

In his founding affidavit Rooplal alleged that Vele became VBS’s majority shareholder fraudulently.

According to another affidavit by Rooplal, in March 2017 Vele had fraudulently acquired shares valued at R80m in the mutual bank.

"Through this fraudulent transaction, Vele became VBS’ majority shareholder…

"Documents were generated in order to create a paper trail that lent credence to this fraudulent acquisition of shares in VBS.”

Rooplal also said he established that a R90m payment into VBS for Vele share uptake "was made from the R350 million fictitious payment into Vele’s account".

"Consequently, the shares purportedly purchased by Vele in VBS were obtained fraudulently."

On July 24, in the Johannesburg High Court, VBS plans to apply for an order to see that Madzonga’s estate is placed under provisional sequestration.

Provisional sequestrations will also be brought against Tshifiwa Matodzi, the former chair of VBS’s board of directors and also the director and chairman of Vele; Malusi Ramavhunga, VBS’s chief executive officer; Phillip Truter, the bank's chief financial officer; and Phophi Mukhodobwane, VBS’s general head of treasury and capital management.

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