VBS fraud case: Here's what the State's 'ace witness' Phillip Truter admitted to

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Former VBS official Phillip Truter.
Former VBS official Phillip Truter.
Christopher Moagi, Son
  • Former VBS CFO Phillip Truter will serve seven years in prison after entering into a plea agreement with the State.
  • Truter made several admissions, including how he manipulated the bank's financial statements.  
  • He also admitted to submitting false returns to SARS.

Former VBS Mutual Bank chief financial officer Phillip Truter was sentenced to an effective seven years in prison in the Commercial Crime Court sitting in Palm Ridge, Johannesburg, on Wednesday.

Truter - who will be the State's "ace witness" in the VBS matter - pleaded guilty to several charges, including money laundering, corruption and the contravention of tax laws, News24 previously reported.

He entered into a plea and sentence agreement with the State after admitting he knew his actions were wrong and punishable by law.

News24 earlier reported Truter was the eighth accused in the case, alongside former VBS chairperson Tshifhiwa Matodzi, CEO Andile Ramavhunga, former VBS treasurer Phophi Mukhodobwane, as well as former non-executive VBS board members Ernest Nesane and Paul Magula.

According to the plea and sentence agreement in terms of the provisions of section 105a of the Criminal Procedure Act 51 of 1977, Truter admitted to the following after being asked to plead to one count of racketeering, two of fraud, one of corruption, one of money laundering and one count of failure to submit an income tax return: 

  • Count 1: Racketeering

He admitted that he was unlawfully and intentionally employed by VBS and participated in its affairs through a pattern of racketeering activities.

  • Count 2: Fraud 

Truter admitted that he unlawfully and falsely prepared annual financial statements, handed them to VBS, its shareholders, creditors and Registrar and made as though the statements were a fair presentation of the bank's financial position as at 31 March 2017.

He admitted that when handing out the financial statements he knew they were false and that the assets described as "cash and cash equivalents" amounting to R802 427 245 were falsely inflated by an amount of R690 326 847 and that the assets described as "loans and advances" of R1 081 831 081 were falsely inflated by an amount of R351 956 095.

In actual fact, the bank's financial standing as at 31 March 2017 was that it was insolvent, with total assets amounting to R1 037 194 164, while the annual financial statements reflected its total assets as R2 102 039 406.

The bank's total liabilities in actual fact amounted to R1 556 494 122, whereas the annual financial statements reflected its total liabilities as R1 863 460 154. Its total equity amounted to the negative amount of R519 299 958, whereas the annual financial statements reflected it as R238 579 252. 

  • Count 3: Fraud

The plea agreement also states that Truter admitted that from 1 April to 27 July he unlawfully, falsely and with the intention to defraud, prepared and submitted to the Registrar Form DI Return, which set out VBS bank's monthly balance sheet as of 31 March 2017 in the manner required by Regulation 19 ("the DI 100 Return").

This gave an impression to the Registrar, VBS, its shareholders and creditors that the DI 100 Return was a fair presentation, in all material respects, of VBS bank's monthly balance sheet as at 31 March 2017 in the manner required by Regulation 9.

  • Count 4: Corruption

Truter admitted that on 5 October 2017, he unlawfully and intentionally, directly or indirectly, accepted gratification amounting to R5 million.

According to the agreement, the gratification was from another person and would benefit him or another person in order to act, personally or by influencing another person to, among other things, act in a manner that amounts to illegal, dishonest, unauthorised, incomplete or biased exercises. 

  • Count 5: Money laundering

He admitted that the cumulative amount of R2 million was paid to the Shangri La account during the period 20 November 2017 to 15 December 2017. The cumulative amount constituted or formed part of the proceeds of unlawful activities or theft of monies from VBS.

"Now therefore, the Accused [Truter] is guilty of the offence of contravening Section 4 read with Sections 1 and 8 of POCA, as amended," the agreement reads.

  • Count 6: Failure to submit an income tax return

Truter also admitted that from 1 November 2018 at or near Pretoria in the Regional Division of Gauteng, he unlawfully, wilfully, and without just cause neglected and failed to submit an income tax return for the 2018 tax year to the South African Revenue Service in respect of his own income tax affairs on his income tax registration number.

According to the plea, Truter was legally obliged to submit the said return in that he was below the age of 65, and had for the relevant period a gross income in excess of R75 750.

"The gross taxable Employment Income (code 3699) of the accused was R 1 198 760. The accused further to the aforesaid amount received two bonus payments of R1 000 000 each in this tax year."

In admitting guilt, Truter told the court he knew his actions were wrong and punishable and he did not have any excuse in law for his actions.

The accused therefore knew his actions were wrong and punishable by law.

- Compiled by Sesona Ngqakamba

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