About a third of R2.3bn looted from VBS Mutual Bank recovered

VBS Mutual Bank was placed in final liquidation in November 2018

Nearly R730m has now been clawed back from the wreckage of VBS Mutual Bank, the South African Reserve Bank’s Prudential Authority (PA) said in its latest annual report.

A figure confirmed by VBS Mutual Bank liquidator Anoosh Rooplal, this is almost a third of the about R2.3bn plundered through fraud and theft.

Advocate Terry Motau’s 148-page report — “VBS Mutual Bank: The Great Bank Heist”, released in October 2018 — blew the lid off the looting, leading to 29 criminal cases, with nine matters currently now before the courts.

VBS Mutual Bank was placed in final liquidation in November 2018.

“Collection efforts on the loan book are ongoing, with significant progress achieved to date,” the report states. “The current focus is on securing further recoveries for the benefit of the proven creditors.”

Rooplal has already made payments to creditors since taking over the bank’s affairs. In 2022, he paid R159m — amounting to 7c in the rand to proven concurrent creditors. In December last year, he paid R458m, which constitutes 20c in the rand.

Asked when he will make the next payment, Rooplal said on Monday that it was an ongoing process, “but the significant dividends have been paid”. The second dividend distribution in December brought the total payments to creditors to R617m, he said at the time.

There is no court date yet for the liquidation application of Ithala SOC Limited (Ithala Bank), the PA said in its report.

“The liquidation application is still being ventilated,” the Reserve Bank clarified on Monday.

“The matter will only become ripe for hearing after all parties have filed their respective papers. As such, there has been no communication from the court regarding the outcome of the application.”

Lack of co-operation by Ithala

In January, the PA filed an application for the provisional liquidation of the entity, alleging that it was unlawfully accepting deposits.

Ithala Bank, the Ithala Development Finance Corporation and KwaZulu-Natal’s MEC for economic development are opposing the matter.

This follows the PA’s appointment of a repayment administrator to help transfer the deposits held by Ithala to a registered bank.

“However, the progress was hindered by a lack of interest from registered institutions and co-operation by Ithala,” the PA says in its report.

“The PA and the repayment administrator have since held regular engagements with relevant stakeholders to find a solution for transferring the deposits as quickly as possible in parallel to the liquidation application,” it said.

After the PA filed for Ithala’s provisional liquidation, the entity’s deposit accounts were frozen — according to the Reserve Bank, “to preserve the funds and prevent it from using depositors’ funds for other operational purposes”.

But Francois Rodgers, the DA MEC for finance, told Business Times last week that they wanted to interdict the Reserve Bank’s liquidation efforts.

“We are in a situation where some depositors have hundreds of thousands that they cannot access due to the liquidation, which is wrong,” he told the paper. 

Business Day reached out to both Rodgers and his spokesperson but received no response.

Business Day previously reported that finance minister Enoch Godongwana approved a R2bn guarantee to Ithala Bank’s 223,166 retail depositors. The guarantee would facilitate payments to the depositors by one or more banking institutions to ensure the accounts of depositors can be migrated timeously and funds can be made available.

Current risks to the banking sector

In her overview, Reserve Bank deputy governor and CEO of the PA Fundi Tshazibana noted that as macroeconomic conditions improved and inflationary pressures subsided, South African banks were likely to see an improvement in their credit risk profiles over the short to medium term.

“However, geopolitical tensions and increased conflicts continue to pose uncertainties and risks to the sector,” she said.

“Globally, there appears to be a growing trend towards deregulation, with an emphasis on reducing capital and other regulatory requirements for banks. As we look ahead, it will be crucial for South African banks to remain vigilant, ensuring strong governance and risk management practices to safeguard the banking system.”

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