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DA seeks commission of inquiry into VBS Mutual Bank

May 07 2018 21:14
Tehillah Niselow

Johannesburg - The Democratic Alliance (DA) wants Registrar of Banks Kuben Naidoo to establish a commission of inquiry into VBS Mutual Bank and the municipalities which deposited funds in it, allegedly in contravention of the Municipal Finance Management Act (MFMA).

“The dire state of affairs at the institution necessitates an urgent and thorough investigation to ascertain the full extent of the problems at the institution, given the increasing number of allegations and the potential loss of billions of rands of municipal deposits,” Kevin Mileham, DA spokesperson for cooperative governance and traditional affairs, said in a statement on Sunday.

The DA said the commission should be similar to the Myburgh Commission which was established to investigate African Bank’s collapse in 2014.

Among the issues the DA believes should be probed further are the municipalities which deposited funds with VBS Mutual Bank in breach of MFMA rules; reports that lawyers were paid commission to secure these deposits; and the fact that VBS continued to accept the loans, despite apparently being advised in August 2017 that they were unlawful.

VBS was placed under curatorship by the South African Reserve Bank (SARB) on March 11 citing these reasons.

Subsequently the curators, auditing firm SizweNtsalubaGobodo, found that the bank used short-term deposits (from municipal funds) to finance long-term loans and entered into loans with bank officials, shareholders and related individuals/entities.

The 2016/2017 financial statements will need to be restated and two audit partners involved in signing off on them resigned from KPMG, as they had failed to declare their loans with VBS.   

The SARB in April commissioned a forensic investigation into the Limpopo-based bank, which made headlines in 2016 when it agreed to give former president Jacob Zuma a R7.8m bond to pay off his Nkandla debt.

SARB was not immediately available for comment.

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