Financial Sector Conduct Authority believes millions may have been channelled out of Namibia’s SME Bank through Johannesburg and on to unknown destinations as physical cash
An investigation by the Financial Sector Conduct Authority (FSCA) has found “worrying” indications that a possible money laundering scheme in Johannesburg may have funnelled money out of the now liquidated Small and Medium Enterprises (SME) Bank in Namibia through South Africa.
Some of the money from this bank was moved through accounts at VBS Mutual Bank, while VBS also apparently provided fake bank statements to hide the disappearance of the money, according to court papers filed by the liquidators of SME.
Other money was moved through a network of intermediaries in South Africa and, ultimately, to a number of cash delivery companies, according to payment trails documented in the FSCA report.
The latest court case in the ongoing saga involves the liquidators of SME suing a local cash-in-transit company called Rens Kontant in Transito for more than R60 million.
In court filings this month, the liquidators of SME said that most of the missing money from SME that was moved around Johannesburg seemed to have been delivered to a local businessman in the scrap gold sector, called George Markides.
In responding papers, Rens claimed that its cash deliveries were normal everyday transactions tied to scrap gold delivered to a refinery belonging to a company in Springs called Dedrego, which belongs to Markides.
It denies all wrongdoing and said that any case the liquidators should rather “at the very least, instituted proceedings against Markides” instead.
Liquidators have been pursuing the SME money for more than a year and held a commission of inquiry in South Africa last month, following a similar process in Namibia last year.
This has led to the latest court case.
Markides said last week he could not comment because the inquiry was ongoing.
The allegedly suspect scheme has now been separately referred to the Financial Intelligence Centre for further investigation, the FSCA told City Press.
The only role player the FSCA can directly punish within its jurisdiction is Mauwane Kotane, a childhood friend and benefactor of former VBS CEO Andile Ramavhunga.
Kotane’s company, Mamepe Capital, had received money from VBS and SME, according to the court papers and the FSCA report.
When approached for comment, Kotane asked for the questions to be emailed to him, but he did not respond to them.
The FSCA said that Mamepe’s licence to operate as a financial services provider had been revoked, that Kotane had been debarred for 10 years and he had to pay back R10 million he had received from SME.
The FSCA report, dated December 18 and marked as confidential, followed an investigation after Namibian authorities asked for South Africa’s assistance in tracking about R216 million that went missing from SME.
Some of that went through Mamepe, it found, while a significant amount apparently went through a number of “nominee” companies in Johannesburg. The money would ultimately be delivered to unknown destinations as physical cash.
In their court papers, the liquidators of SME indicated that at least some of the intermediaries might have been unwittingly receiving and on-paying money to the companies that would make the money allegedly disappear as physical cash.
Everyone interviewed by investigations and cited in the FSCA report says these were innocent transactions and that whatever fraud occurred must have been completed somewhere else in the network.
“We have a sense of discomfort regarding the funds received by the nominee companies,” said the FSCA report.
“We are concerned that there was no, alternatively not sufficient, compliance with the provisions of the Financial Intelligence Centre Act ... by the nominee companies.
“We are particularly concerned about the movement of funds from SME Bank to South Africa specifically relating to anti-money laundering processes and policies.”
The companies involved moved millions for SME directly and between themselves.
SME’s former CEO, Tawanda Mumvuma, is heavily implicated in the initial transfers of funds out of SME.
The cash deliveris where the money trail ends were almost all done at the telephonic instruction of Markides, according to interviews with these companies cited i the FSCA report and court papers.
In their court filings, the SME liquidators said that Markides and one of his business partners would soon be subjected to another court case aimed at recovering SME’s money.
Companies the FSCA and the SME liquidators looked at include:
- Asset Movement and Financial Services (AMFS), a cash delivery company in Benoni that, according to bank records analysed by the FSCA, received R51.2 million from SME and R12.4 million indirectly from SME nominees. AMFS then delivered this money as physical cash to various addresses in Johannesburg after receiving telephonic instructions from Markides.
Daryl MacGillicuddy, an accountant from Benoni, owns two of the nominee companies and is a business associate of Markides. According to company records, he is also a director of Dedrego Trading, the company that received the cash from the cash delivery company Rens.
- Rustic Stone Trading 10, which has since been deregistered, was another cash delivery company that allegedly received R8.3 million from SME directly and indirectly.
Like AMFS, it then delivered cash to an unknown client, according to the FSCA report.
“At its simplest, the scheme involved the SME Bank paying monies from its own bank account [to] ... service providers,” claim SME’s liquidators. This would then “be transferred to cash-in-transit companies”.
“Those companies would then deliver or electronically transfer the stolen cash to various other persons and entities. This scheme is well known and well documented in the media in Namibia and South Africa, and has ties to the VBS Mutual Bank scheme here in South Africa,” said the liquidators.
Earlier court papers from the liquidators in the same case cited wildly contradictory bank statements provided by VBS showing that it held R175 million or R155 million for SME.
These then inexplicably disappeared in later statements and VBS claimed it didn’t have the money to begin with.
The inference is that the VBS statements were faked to create the impression that the SME money was safe.
Disgraced KPMG auditor Sipho Malaba, who received payments from VBS while auditing the bank, even produced a “report on factual findings” that claimed to confirm the large transfers of SME money that did not exist. This report is also contained in court papers.
This was after Malaba had supposedly looked at “evidence of the transaction flows included in the schedule of transactions provided against Swift transfers [a type of international transfer sent via the Swift international payment network] and supporting documentation as at December 31 2016”.
The initial VBS statements were the reason the liquidation of SME was postponed.
A report in 2017 by the Namibian central bank’s supervision department also looked into the supposed VBS deposits related to SME and thought they were in order because VBS was regulated by the SA Reserve Bank.
After it was found that there was, in fact, no money at VBS, SME was put under curatorship.
The FSCA found that at least R60 million had really moved through VBS.