A letter requesting the “urgent intervention” of the SA Reserve Bank in VBS Mutual Bank was sent to the central bank in September 2016 by the chairperson of VBS minority shareholder Dyambeu Investments, David Mabilu.
On the same day, Mabilu met Neil Maree, then acting deputy head of the central bank’s banking supervision division, and asked him to appoint an investigator into VBS’s affairs, Mabilu told City Press on Saturday.
This was before the bank was used to steal almost R2 billion from depositors, mostly impoverished municipalities.
“Had something happened then, we would not be in this situation,” said Mabilu.
The letter, a copy of which is in the possession of City Press, was addressed to Maree.
The letter was accompanied by an investigation report into the early irregularities at the bank, as well as complaints about the then emerging plans by VBS to irregularly issue shares to allow Vele Investments to seize control of the bank.
Among the details that were brought to the Reserve Bank’s attention at that point were:
- That VBS was on the cusp of extending an enormous R136 million loan to Vele Petroport, a subsidiary of Tshifhiwa Matodzi’s Vele Investments, which later seized control of VBS.
- At the time, before large deposits were systematically procured from municipalities, this would have equalled 22% of all deposits in the bank. Despite consuming much of the bank’s capital, this loan was not brought to the board, according to the report.
- VBS allegedly convened its 2016 annual general meeting (AGM) illegitimately, without giving Dyambeu notice. Only after Dyambeu heard about it elsewhere and complained did it get an invitation.
- Matodzi had seemingly engineered the removal of Dyambeu’s representative on the VBS board, MJ Mavuso. At the allegedly illegitimate AGM, a motion was tabled not to reappoint him over his non-attendance of AGMs. The report notes that Ernest Nesane, the Public Investment Corporation’s (PIC’s) representative, was reappointed – even though he had a worse attendance record than Mavuso.
Vele Investments ultimately took control of the bank and looted it into the ground through a rights issue that was irregular.
Mabilu said he and his partners in Dyambeu did everything they could to stop the rot at VBS, even though they had no idea about the true nature and scale of it at the time.
Mabilu said he met with the PIC on July 20 2017 to raise concerns as well.
The PIC, like Dyambeu, was a 26% shareholder in VBS before the allegedly fraudulent issuing of shares to Vele.
According to Mabilu, he met with Lindiwe Toyi and Dudu Hlatshwayo, both independent non-executive directors of the PIC. At this meeting he “explained how compromised Paul [Magula] and Ernest [Nesane] were”, he claims.
Magula and Nesane were both on the PIC board and represented the PIC on the VBS board.
City Press revealed earlier this year how both of them received millions from VBS through front companies – a set-up confirmed by the recent Great Bank Heist report by Advocate Terry Motau.
READ: PIC duo's shady payouts
Mabilu stressed that no one knew about these alleged bribes at this point, but that it was clear that the two PIC representatives were simply going along with whatever VBS chair Matodzi said.
“We were not happy with them,” said Mabilu.
The combined shareholding of the PIC and Dyambeu at that point was 52% – enough to remove the board, said Mabilu.
“We never got support from the PIC,” he said.
Dyambeu also hired four different legal firms to address countless letters to the VBS board, none of which were ever responded to, said Mabilu.
City Press reported last week that minority shareholders had also warned then deputy president Cyril Ramaphosa of goings-on at VBS.
READ: VBS:'Cyril knew'
However, Mabilu said he never spoke to Ramaphosa about it.
“I never discussed it with the deputy president, now president,” said Mabilu.
Mabilu’s involvement in VBS started in 2013, when Matodzi and the Venda king approached him for money to help buy 26% of VBS, then just a small, struggling mutual bank.
Mabilu provided R3 million and Matodzi’s company, Brilliant Telecommunications, another R3 million. They formed Dyambeu with the king’s VhaVenda Heritage Trust getting a 51% stake for free.
Not long afterwards, the partners fell out because Matodzi “was not a team player”, said Mabilu.
Matodzi repeatedly tried to run VBS’s affairs by himself and was “expelled” from Dyambeu as a result, he said.
Matodzi then evidently set in motion a plan to take control of the bank through his new company, Vele.
Motau’s report into how VBS was looted has revealed that Vele does not legitimately own any shares in VBS, despite having “bought” a 53% interest.
This happened through irregular rights issues – sales of shares to existing shareholders. As Vele was not an existing shareholder, its participation in rights issues made no sense.
More importantly, the money Vele had used to participate in the rights issue was fake – the company simply misrepresented a deposit made by a Vele-controlled company, Insure, as payment for the shares.
Dyambeu did initially participate in the first VBS rights issue and paid R10 million to retain its shareholding.
Three months later, however, VBS said it was doing yet another rights issue.
“The point was to dilute us,” said Mabilu.
“They had rights issues, but would not say what they needed the money for.
“We did not subscribe for shares in that issue, and then Vele came in.
“We heard in the news that they were now the majority shareholder.”
When he heard about VBS being put under curatorship early this year, it was a relief, said Mabilu.
Dyambeu saw its 26% share diluted to 6%.
Mabilu expressed the hope that Dyambeu could have its 26% shareholding in VBS restored now that Vele’s shareholding had been shown to be bogus.
“We are not even sure what we own now,” he said.
“VBS must be saved; we cannot let it go. We need transformation in banking.
“It would be a sad day if VBS went under.”