Gungubele: Rescuing VBS would send message that 'criminals can steal' and state will bail out

Deputy Finance Minister Mondli Gungubele has cautioned against a bailout of VBS Mutual Bank, saying rescuing the bank would send a message that “criminals can steal” and the state would pay, according to a Sunday Times report.

Some MPs in the African National Congress (ANC) caucus have argued that government must step in to save the beleaguered bank, just as it did with African Bank in 2016.  

“What costs were incurred by government on the African Bank situation? It’s zero. But on the VBS it is R336m,” said Gungubele.

VBS Mutual Bank was placed under curatorship in March, amid a liquidity crisis and allegations of fraud by the bank’s executives.

According to the report,  Gungubele said the decision of whether to wound up VBS or not, would be taken once the liquidation process is concluded.

READ: VBS looting: KPMG and former exec under fire in report about ‘bank heist’

This month, the South African Reserve Bank’s report showed that the Venda-based bank was fleeced of nearly R2bn by executives and other prominent figures, in what has been termed the “Great Bank Heist”.

Most of VBS depositors were poor rural people and stokvel groups. A number of municipalities also banked large amounts of money, in contravention of the Municipal Finance Management Act, which prohibits investment of public funds in mutual banks.

Individual depositors have since been able to access their funds at Nedbank brances, following a partnership initiated by SARB.

Last week, new Finance Minister Tito Mboweni called for accountability from those who have been implicated in the VBS scandal, including auditors who signed off on the bank’s books.

“We can do on-sight inspection of all financial institutions all the time. In this case I think we have failed. External auditors were clearly in cahoots with others as part of this heist,” Mboweni told the Parliament’s Standing Committee on Finance.

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