Naidoo: VBS bank's purpose obliterated, crippled by pillaging, looting and extensive frauds

2018-10-30 17:46
Kuben Naidoo is the newest deputy governor of the Reserve Bank. (Supplied)

Kuben Naidoo is the newest deputy governor of the Reserve Bank. (Supplied)

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The wide-scale looting of nearly R2bn from VBS Mutual Bank has stripped the bank of the very reason for its existence.

The fraud and looting coupled with a failure by executive management to properly manage the bank's growth led to the severe liquidity crisis and as a result, it must now be wound up.

This is according to an affidavit by Prudential Authority (PA) chief executive officer and South African Reserve Bank deputy governor Kuben Naidoo.

READ: Banking authority files for liquidation of VBS

Naidoo's affidavit was filed as part of an application by the PA, formerly the Registrar of Banks, on Monday to the North Gauteng High Court in Pretoria seeking the final winding up of VBS.

Naidoo states that VBS is factually and commercially insolvent in that its liabilities significantly exceed its assets.

Forensic investigation

VBS was placed under curatorship in March this year and Anoosh Rooplal of SizweNtsalubaGobodo was appointed to oversee the curatorship.

Subsequently, advocate Terry Motau and Werksmans Attorneys were appointed to conduct a full-scale forensic investigation.

Motau's final report, titled "The great bank heist", was published by the Reserve Bank earlier this month. It revealed a massive fraud and corruption scheme involving ANC-led municipalities in Limpopo, Gauteng and the North West.

The municipalities made "investment" deposits with the bank at inflated interest rates totalling roughly R1.5bn, after VBS was warned by the Reserve Bank to stop the deposits.

As a result of VBS being placed under curatorship and the preceding fraud and theft of funds, many of these taxpayer funds meant to be utilised for service delivery will likely never be recovered.

Liquidation option

Rooplal expressed his belief that liquidation was the only viable option in a letter to the PA dated October 8.

There is "no reasonable probability that the continuation of the curatorship will enable VBS to pay its debts or meet its obligations and become a successful concern", Naidoo's affidavit reads.

"The winding up of VBS will bring to an end the curatorship of VBS, which has been ongoing since 10 March 2018. This is necessary and will be beneficial to the creditors of VBS bank and in the public interest, as it will enable a liquidator to utilise the mechanisms provided by the insolvency and company law legislation to recover monies inter alia from recipients in terms of void and impeachable transactions," he adds.

ALSO READ: Wolves at VBS bank's door: Mahikeng wants its R84-million back

Naidoo also recommends that Rooplal be appointed the liquidator, as his extensive knowledge of the workings of VBS would ensure a speedy resolution to the matter.

"The liquidity challenges faced by VBS emanated from the failure of the board of directors and executive management to manage VBS' rapid growth as well as its funding and liquidity position and, as it has since transpired, massive frauds which were perpetrated," Naidoo continues.

"Aside from the pillaging and looting of VBS funds and the extensive frauds that have been perpetrated, the purpose and object of VBS no longer exists."

It is understood that the matter will be set down for hearing on November 13.

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Read more on:    vbs  |  sizwentsalubagobodo  |  banking  |  corruption

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