VBS saga: Motau should have ensured rule of law and given Msiza right to respond - High Court

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South Africa Reserve Bank deputy governor Kuben Naidoo, author of the forensic report into VBS Mutual Bank advocate Terry Motau, and Treasury deputy director general Ismail Momoniat.
South Africa Reserve Bank deputy governor Kuben Naidoo, author of the forensic report into VBS Mutual Bank advocate Terry Motau, and Treasury deputy director general Ismail Momoniat.
Jan Gerber, News24
  • Advocate Terry Motau SC should have allowed ANC Limpopo treasurer Danny Msiza to respond to comments about him in the report of looting at VBS, the High Court in Pretoria ruled. 
  • The court set aside the paragraphs referring to Msiza.
  • The South African Reserve Bank, who commissioned the report, was ordered to pay the costs. 

An investigator like advocate Terry Motau SC, who investigated the looting at VBS Mutual Bank, was "obliged to ensure that the rule of law and the rules of natural justice" were observed, Judge Vivian Tlhapi of the Gauteng High Court in Pretoria ruled.

In a ruling handed down on Tuesday, Tlhapi reviewed and set aside Motau's findings against ANC Limpopo treasurer Danny Msiza.

Motau's report titled "The Great Bank Heist" painted Msiza as a kingpin, who allegedly used his political influence to convince mayors and municipal officials from at least 10 Limpopo municipalities to invest hundreds of millions of rands in the now collapsed bank.

Msiza, the applicant, asked the court to declare the findings, remarks and conclusions in the report unconstitutional and expunged from the record. Motau and the South African Reserve Bank, who commissioned the report, were the respondents. Arguments were heard on 27 February 2020.

Msiza based his application on the argument that Motau's failure to allow him to respond to the allegations against him, which he denies, was unlawful.

"In our new constitutional order, where individual rights are entrenched in the Constitution, an individual would have the right to insist upon such right being applied and recognised in as far as it relates to him or her," Tlhapi found.

"It is therefore trite that both the Constitution and PAJA [Promotion of Administrative Justice Act] protects the individual against unfair administrative action".

She said from the relevant case law it was evident that public power was reviewable and that it entailed a requirement of fair procedure, including the right to be heard.

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She said an investigator like Motau was, in her view, "obliged to ensure that the rule of law, the rules of natural justice were observed".

"In my view where an investigator knows or is expected to foresee that his findings, remarks and conclusions will have consequences for the party on whose behalf an investigation is conducted and for the party against whom findings will be made, he is obliged to listen to both sides and, the party who is likely to be affected by adverse finding is entitled to demand the right to be heard before an adverse remark or finding or conclusion or decision is made against him or her."

Tlhapi found it would be problematic to expunge the impugned findings.

"An order reviewing and setting aside should suffice," she ruled.

The following paragraphs from "The Great Bank Heist" report are set aside:

72 - During the course of further questioning on this topic, on 22 May 2018, and following the publication of a news report in The Citizen on that date, (former VBS Mutual Bank treasuer Phophi) Mukhodobwane testified that the kingpin in the so-called "commission agent" scheme is the Provincial Treasurer of the African National Congress ("the ANC") in Limpopo, Danny Msiza ("Msiza"). Mukhodobwane was extremely reluctant to reveal that name and he expressed fear about his personal safety as a result of making this disclosure.

73 - Mukhodobwane named several other persons involved in the solicitation of municipal deposits, including (former ANCYL Limpopo leader Kabelo) Matsepe. He handed up a transcript of WhatsApp messages between himself and (Former VBS CEO Andile) Ramavhunga on 19 and 22 December 2017 where specific reference was made to "Kabelo", "Bra Danny" and "Bauba" in relation to municipal deposits. It was subsequently established that "Bauba" is a reference to Matsepe. "Bra Danny" is a reference to Msiza.

80 - Nemabubuni testified that he was instructed by Matodzi to attend at the event at the Ranch. He stated that he met Matsepe at the event. Matsepe was accompanied by Msiza. According to (VBS sales general manager Sasa) Nemabubuni, Msiza "did most of the talking". Matsepe, on the other hand, has denied that Msiza played any significant role in VBS' affairs. However, it is clear that Msiza intervened on numerous occasions when his political influence was required. I have little doubt that Matsepe, despite his self-importance and bluster, in fact works for Msiza. Nemabubuni colourfully, and I believe accurately, described his impression of the relationship between Matsepe and Msiza in the following terms:

"He was obviously working for Danny, and its just that Danny didn't want to be working on this thing on a daily basis, so he just appointed this small boy to run around."

81 - In the course of his evidence, Ramavhunga testified that Matsepe had been introduced to VBS by Msiza. He denied, however, that municipal deposits had been sourced through Msiza. He stated that Msiza had become involved at a stage as a result of a complaint made by Matsepe that he had not been paid some commissions due to him. Ramavhunga was unable to explain a WhatsApp message that he had sent to Mukhodobwane in which he said "Also let me know if the R50 million from Makhado doesn't come through. Will take this up with Danny".

90 - Matodzi agreed to that, but on 16 January 2018 Matsepe reported that Msiza was most displeased by the outcome: "Chair please get in touch with Danny and sort out this Vhembe thing, he is seriously unhappy and disappointed on how we are treating it and him and it might come back to bite us. He feels there is a level of mistrust towards him based on how we are treating this Vhembe thing. He says him and the mayor have been dealing with this thing of the maturity of Vhembe together and the mayor has been keeping her promise as far as stopping withdrawals and notifying us on time and finding out if we will be able to give funds should they need them like they did with the R50M of water affairs and the R20M of salaries in December. She went to the extent of managing investments from her office just so she can have our back covered and protected from officials, what hit him is when I conveyed a message to him from Phophi that he wants an official roll over and the mayor must send an invoice directly to Sassa. He feels that he has put his neck and both of the mayor on the block to protect us and we seem not to be trusting him. Please get in touch with him because I don't want this to backfire on us".

She noted that she was not called upon to determine the truthfulness of the facts in the VBS report.

"It cannot be denied that the evidence unravelled might most probably give answers to the impropriety at VBS or give credence to impropriety as presented to the second respondent, which might culminate in processes against those found to be involved," her ruling read.

Msiza also asked the court to order that he received an apology.

"The request for an apology is not one, that in my view, can be considered in review proceedings," Tlhapi found.

Msiza also asked the court to rule it unlawful that the Reserve Bank provided him with redacted records, but Tlhapi dismissed this prayer.

Tlhapi made the following orders: That paragraphs 72, 73, 80, 81 and 90 were reviewed and set aside; that Motau's "failure to afford the applicant the right to procedural fairness" was unlawful, unconstitutional and violated Msiza's rights; and that SARS paid the costs.  

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