The Directorate for Priority Crime Investigation (Hawks) has pounced on eight suspects allegedly behind the plundering and collapse of the Venda Building Society (VBS) Mutual Bank.
Four suspects were arrested when the Hawks descended on 10 properties in Gauteng and Limpopo on Wednesday morning. While the further three are expected to hand themselves over to the investigators, the warrant of arrest on the eighth suspect is yet to be effected, as he is in COVID-19 isolation.
The seven are expected to appear before the Johannesburg High Court, sitting at the Palm Ridge Magistrates Court.
The arrests are a culmination of a two-year marathon investigation. The bank was placed under curatorship in March 2018 after it experienced liquidity challenges over 18 months. Problems included a failure of the board of directors and executive management to manage the bank’s rapid growth funding and its liquidity.
Advocate Terry Motau, in his investigative report titled ‘The Great Bank Heist’, uncovered massive fraud amounting to R1.9 billion, which was looted from the bank.
Addressing the media on the development, National Hawks head, Advocate Godfrey Lebeya, and the National Director of Public Prosecutions (NDPP), Advocate Shamila Batohi, said more arrests are expected to be made, as investigations unfold. Lebeya said the eight face 47 ranging criminal counts.
“These are five counts of Patterns of Racketeering Activities, in contravention of the Prevention of Organised Crime Act 121 of 1998, POCA; 12 counts of theft; seven counts of fraud; 15 counts of corruption, in contravention of the Prevention and Combatting of Corrupt Activities Act 12 of 2004, and seven counts of money laundering [POCA],” he said.
The Hawks began investigating the case in 2018 after the South African Reserve Bank, through the Chief Executive Officer of the Prudential Authority, reported a criminal case.
“The complainant in this case formed an opinion in his then capacity as the Registrar, that VBS Mutual Bank was in financial difficulties and as such, would be unable to repay deposits made with VBS when legally obliged to do so,” said Lebeya.
On 13 November 2018, upon the application of the Prudential Authority, VBS was put under compulsory winding up by the High Court of South Africa, Gauteng Division, Pretoria. A provisional liquidator was appointed on 14 November 2018.
Lebeya said an investigation revealed that as at 11 March 2018, there was a general deficiency in the monies received by VBS amounting to R2.2 billion.
Uncovering a scam
The scam, he said, was hatched on 4 July 2017 when the board of directors for VBS approved financial statements for the year ending 31 March 2017, making VBS to look richer while it was in fact insolvent.
“The financial statements were shockingly inflated,” he said.
It is also alleged that the bank’s chairman and CEO signed the directors’ responsibility statement to the Annual Financial Statement that was prepared by its Chief Financial Officer.
Lebeya said the Hawks’ investigation has revealed that the 10 men, who are the suspects, either unduly directly or indirectly benefitted from at least R122 million that was not due to them.
He commended the investigation team, which comprised the Hawks’ Serious Corruption Investigation Unit, the National Prosecuting Authority (NPA) and the South African Reserve Bank (SARB), Financial Intelligence Centre and the Liquidator, for their key roles in the investigation.
Batohi said the arrests mark a mammoth step in the progression of the case.
“This gives assurance that the team is hard at work and has been since this matter commenced in August 2018.
“It gives assurance that indeed, the relevant authorities are making headway in key cases. While today’s developments are an important milestone, we all know that a lot of work still lies ahead.”
She said while it is imperative the matters are expeditiously concluded, the team has to be meticulous in probing each detail of evidence.
“We have to do this to ensure that justice does prevail and the rule of law prevails as well. We owe it to the investors of the bank, in particular, the elderly men and women of Limpopo and beyond, who lost their hard earned money and lifetime savings. We have an obligation to all South Africans to deliver justice in this matter, as they have in many ways been victimised by this crime,” Batohi said. – SAnews.gov.za