Worries over taxpayer-funded bailout for VBS: report

Deputy finance minister Mondli Gungubele has warned ANC MPs against pushing for a taxpayer-funded recapitalisation of VBS Mutual Bank, reports the Sunday Times.

Speaking at a closed ANC parliamentary caucus meeting on Thursday (19 October), Gungubele said that a bailout for the bank would embolden other potential fraudsters and send a message that ‘criminals can steal’.

Deputy communications minister Pinky Kekana and labour committee chair Lemias Mashile are said to support the idea of offering a bailout to VBS, while Yunus Carrim, chair of the finance committee, said earlier in the week that the bank should be saved.

The Sunday Times reports that finance minister Tito Mboweni and Reserve Bank governor Lesetja Kganyago are also set to be called to a meeting about VBS’ future with the standing committee on public accounts.

While Gungubele declined to discuss the caucus meeting, he said that Treasury was not swayed by calls to provide a financial rescue package for VBS in the way that it did with African Bank in 2016.

“What costs were incurred by government on the African Bank situation? It’s zero. But on the VBS it is R336 million,” he said

“African Bank was solvent and VBS is insolvent,” he said.

“The source of the problem of African Bank was an unsustainable business model. If you go to the VBS, the source of the problem is fraud.”

Gungubele said that a final decision on whether to wind up VBS would be taken once the liquidation process was concluded.

Read: Government knew about the VBS looting – and did nothing