R900 million is missing from VBS, the bank that gave Jacob Zuma a loan – and a columnist says it looks like 'major fraud'
- The curator for VBS Mutual bank has reportedly been unable to confirm R900 million out of the bank's R2.9 billion deposit book.
- There may have been "fraudulent transactions" to extract money from the bank.
- "It looks as though the bank has been subject to major fraud," wrote a columnist.
The curator for VBS Mutual Bank has been unable to confirm corporate deposits worth R900 million – out of a total deposit book of R2.9 billion – Business Day columnist Stuart Theobald said on Monday.
VBS shot to prominence after it extended then President Jacob Zuma a loan to repay the state for improvements to his Nkandla homestead. It was placed under curatorship in March after it couldn't meet its commitments.
SizweNtsalubaGobodo director Anoosh Rooplal was appointed to take over its running.
Rooplal has found significant problems with VBS' books, Theobald said – with startling implications.
"It looks as though the bank has been subject to major fraud," Theobald wrote.
Read the full Business Day column:
STUART THEOBALD: VBS money trail to related parties is in a class of its own in banking collapses
When it was placed under curatorship, the bank had R24 million in liquid funds, despite its R2.9 billion in total deposits. The difference raised eyebrows, and now the first hints are emerging of how it could have come about.
"There may have been fraudulent reporting and fraudulent transactions conducted in order to extract money from the bank in order to further the personal interests of certain key individuals and companies related to the bank," Theobald reports Rooplal saying.
Even the possibility of such insider looting comes as a shock in a banking sector that is famously well regulated. But though the scale of the potential fraud at VBS is unusual relative to the size of the bank, it remains insignificant in the greater scheme of things, says Momentum Securities banking analyst Brian Mugabe.
"Fraud happens in banks every day, wether it is a teller doing a funny or someone involved on the loan side approving loans they shouldn't."
For the big four banks, he says, such fraud is small enough to not come to public notice. Similarly, fraud on a large scale at VBS means little when it comes to the banks most South Africans deal with.
"The size of VBS relative to the sector, this is not going to have flow-through risks to other banks," says Mugabe.
- 18 months ago VBS gave Jacob Zuma a loan – and municipal deposits started pouring in. The Reserve Bank just put VBS into curatorship because it could not pay back the money.
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