Two KPMG partners with a combined 26-year history at the firm have quit amid the growing VBS Mutual Bank scandal

Business Insider SA
The SA Communist Party protests state capture outside KPMG’s offices in Johannesburg, October 2017. (Felix Dlangamandla / Gallo)
  • KPMG South Africa on Saturday announced the resignations of long-standing partner Sipho Malaba as well as long-time employee (and more recently a partner) Dumi Tshuma.
  • Both had left before they could face disciplinary proceedings "connected to VBS Bank".
  • VBS Mutual Bank was placed into curatorship after what the Reserve Bank has described as chaotic financial management.

Two of its partners, Sipho Malaba and Dumi Tshuma, had resigned, KPMG announced on Friday afternoon.

Between them, the two had been at KPMG for more than a quarter of a century.

Malaba had been a partner at KPMG for more than 11 years according to his LinkedIn profile. Tshuma had been with KPMG for 15 years in various positions, the last three years as a partner.

KPMG said disciplinary cases against both had included "failure by the partners to comply with the firm’s policies and procedures regarding the disclosure of relevant financial interests" related to VBS Mutual Bank.

Since VBS was placed into curatorship and its books effectively opened it has emerged that some R900 million of its supposed deposits could not be traced.

There have also been allegations that insiders benefitted, and that some were extended loans despite conflicts of interest.

There has been no evidence that such benefits or loans flowed to the bank's auditors, either KPMG or (since dismissed) internal auditors PwC.

But there has been extensive evidence that the VBS books – signed off by its auditors – were in a terrible state.

In mid 2017, legal papers filed by the Reserve Bank show, VBS had a shortfall of R250 million. It turned out that VBS had accidentally paid that money out "due to internal control failures in a branch".

There had "inept risk management functions and practices" the Reserve Bank said.

And sometimes VBS had managed hundreds of millions of rands using consumer-grade desktop software.

Before it was placed in curatorship, regulators pointed out the VBS relied on one specific area of its business to drive profits: its fuel-guarantee and contract-finance business.

Once the books were opened to its new curator, the details of how those business lines were managed came to light.

"Excel spreadsheets are used to manage the contract finance and fuel guarantee books of the bank," the Reserve Bank told the high court in a filing. "In addition to these being susceptible to manipulation, it is highly unusual for a bank to manage these contracts by means of an Excel spreadsheet."

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