Reserve Bank launches forensic investigation into VBS

The South African Reserve Bank has launched a forensic investigation into VBS Mutual Bank, following reports of possible fraudulent activity at the group.

This week, minister of finance Nhlanhla Nene appointed SizweNtsalubaGobodo Advisory Services, represented by Anoosh Rooplal, as the curator of VBS Mutual Bank (VBS).

“After a thorough assessment of VBS, Mr Rooplal recommended that an independent review of the business conduct of VBS be undertaken. Consequently, the deputy governor of the South African Reserve Bank and CEO of the Prudential Authority, Mr Kuben Naidoo, has appointed Advocate T Motau SC as an investigator to conduct a forensic investigation into the affairs of VBS,” the SARB said.

The primary objective of the investigation that will be conducted is to establish whether:

  • Any of the business of VBS was conducted with the intent to defraud depositors or other creditors of the bank, or for any other fraudulent purpose;
  • VBS’s business conduct involved questionable and/or reckless business practices or material non-disclosure, with or without the intent to defraud depositors and other creditors; and
  • There had been any irregular conduct by VBS’s shareholders, directors, executive management, staff, stakeholders and/or related parties.

Based on the findings of the forensic investigation, the CEO of the PA will take appropriate follow-up action, the bank said.

VBS has come under fire this week after reports emerged that the bank had severely mismanaged its financial affairs. Among the many concerns that were flagged, almost R1 billion could not be accounted for.

As a result, KPMG, which had handled the group’s auditing, suspended the lead partner on the account, pending further investigations into the matter.

VBS was put under curatorship in March 2018, after it became apparent that the group would not be able to meet its debt obligations. It was found that the bank had loaned out money on a long-term basis, after taking short-term deposits from a number of municipalities.

Read: What happens to Zuma’s loan now that VBS is under curatorship?

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Reserve Bank launches forensic investigation into VBS