[ad_1]
VBS: A Dream Defrauded unravels the R2 billion fraud that had created the Vele Investment empire out of thin air and ultimately left the bank in an empty shell. The book explores how alleged mastermind Tshifhiwa Matodzi and his associates first took control of VBS, nurtured networks of political patronage, and operated under a nationalist cloak backed by Venda royalty. In this excerpt, read about the backstory of why the EFF fought the bank’s curator.
Although the VBS saga mainly involved ANC deployments in the municipalities, it was the EFF that fought most vociferously against the bank’s conservative and the SARB’s handling of the implosion. And the party doubled after the release of (attorney Terry) Motau’s report.
The reason was simple. Among those identified as having received free payments was Brian Shivambu, brother of EFF Deputy Leader Floyd Shivambu. Of all the people accused of profiting from the VBS fraud, he was arguably the most politically damaging. VBS may have been an ANC program, but it had not come that close to the most important national leadership structure of the ruling party.
On October 23, 2018, two weeks after the publication of the report “The Great Bank Heist”, Floyd Shivambu addressed Parliament. “We are going to state here categorically without fear of contradicting ourselves that the EFF and we as members of Parliament never benefited in any way from the looting of VBS Mutual Bank and the so-called robbery that occurred there,” he said.
However, VBS immediately became a political baton against the EFF. On November 6, President Cyril Ramaphosa answered questions about the bank in Parliament and promised that action would be taken against “those municipal officials, and in some cases they include political officials, who deposited council funds into VBS.”
In the same session, DA chief John Steenhuisen used VBS as a barrage against the EFF, calling the rival opposition party “the VBS bank looters,” to which Julius Malema replied, “No, no! You’re not calling me a VBS looter, you young white racist! “ The fight dragged on until the session the next day and Steenhuisen declined to withdraw comment.
On November 7, attorney Terry Motau was among a group that reported to the Parliament’s Standing Committee on Finance. The minutes note that EFF spokesman Mbuyiseni Ndlozi criticized the Motau report, saying that “it did not seem like a very good legal document” and that “there was a lot of fiction there.” It also “asked why certain people were interviewed before the report was published, but others were not” and “why some people were named in the report, such as Brian Shivambu.” Ndlozi and his fellow EFFs probably would have preferred the report to use the name of Shivambu’s company, Sgameka Projects, through which the money allegedly flowed. “What were the criteria used to identify some people in their individual capacities and others as companies?” he demanded.
Last but not least, he recovered from the party line adopted from the beginning. “Why was there such a quick call to liquidate VBS?” Ndlozi challenged. “It was very strange that the Reserve Bank did not want to save a black bank. Many other banks have been saved, so it is wrong not to save VBS. “He denounced that” the failure of VBS was not due to regulation, but because of the absence of a sentence to protect blacks. “
The day before this meeting, Floyd Shivambu launched an attack on Yunus Carrim, the then chairman of the standing committee who is also a high-ranking member of the SACP. At the time, there were reports that the SACP had received R3 million VBS for its 2017 national congress. In a formal letter, Shivambu challenged Carrim to declare that he was not in conflict “as he has benefited from a donation of three million rand (R3 million) from VBS Mutual Bank and Vele Investments. ” “We ask the president to respond with honor and honesty,” Shivambu wrote. “We also ask the President to quickly address the matter, given its urgency and sensitivity.”
Carrim responded the next day with a livid letter of his own, in which he accused: “Actually, it is your brother, not mine, who allegedly received around R16 million from Vele Investments or VBS … And it is you, not me, that he allegedly received money from his brother that could have come from Vele. And it is you, not me, who must appear before Parliament’s Ethics Committee to respond to allegations that he profited from VBS or Vele Investments. So if there is someone who may have a conflict of interest, it is you who is being accused of this. “
At the meeting that same day, however, Carrim seconded Ndlozi’s sentiments. “The collapse of VBS has reinforced racial stereotypes that blacks are corrupt and [can] do not manage banks ”, reports the minutes. “The bank must be revived and nurtured. The collapse of the VBS [is] a severe setback for the transformation agenda ”.
Political punctuation aside, VBS became a growing embarrassment to the EFF until 2019 and early 2020, as became clear from a number of journalistic exhibits, notably from Pauli van Wyk’s Daily maverick, that the money received by Brian Shivambu was anything but correct.
According to the bank records used by Motau for its report, Shivambu’s company, Sgameka Projects, channeled payments totaling 16 million rand from VBS, none of which was based on any loan agreement. As detailed in Chapter 13, most of the money went to Grand Azania and Mahuna Investments, two companies that, according to convincing evidence, are controlled by Floyd Shivambu and Julius Malema, respectively. Much of this money was also paid directly to the EFF and some directly to Floyd as well.
In addition to those payments, Sgameka’s VBS account paid R680,000 to purchase a Range Rover for Floyd Shivambu and other amounts that were clearly related to cars and property. The Range Rover was bought incidentally from the same dealership where the corrupt VBS accountant, KPMG auditor Sipho Malaba, bought his, also with VBS money.
This was just the money Sgameka took out of the bank without the backing of loan agreements. He also had two actual loans from VBS, which had the potential to put Brian Shivambu in serious trouble in early 2019. When the VBS liquidators launched their first wave of liquidation requests against companies that owed the bank money, they had Sgameka in look at it for the two loans. This was not good news for Shivambu or the EFF. If Sgameka were liquidated, the liquidators could launch a Section 417 insolvency investigation into the company’s affairs, allowing them to subpoena witnesses to make affidavits. It would possibly have been in the best interest of the FEP and its leaders to avoid this.
In January 2019, the VBS liquidators delivered a demand letter to Sgameka Projects. At that time, the company owed just under R4.4 million: R1 580154 on a 2016 mortgage and R2 785 781 on a 2017 credit line. The mortgage was to buy a house for the Shivambu brothers’ parents, while the loan was to apparently finance a wine bar.
Brian Shivambu called for freedom of action. Through his lawyers, he said that he had only fallen behind on his mortgage payments because he “did not know which account to use for such payments.” He also tried to argue that he was not obligated to repay the loan because it had been extended with the understanding that he would finance a business venture and repay his debt with the proceeds, but only once there were earnings. Apparently this had been a verbal agreement with an unidentified individual at VBS. He then asked Rooplal if he could pay off the loan debt at R5,000 per month, significantly less than even the accrued interest on the mortgage balances or terms, which required payment of R190,637 per month. “Our client can only pay this amount in the meantime,” Shivambu’s lawyers wrote on February 27 in a letter contained in liquidation court documents.
Even then, someone turned their back on him. Later that month, when he begged for his loan repayments to be reduced, someone identified in court documents as Musa Shivambu paid R180,000 into the mortgage bill, which Brian Shivambu’s lawyers said brought him up to speed with your refunds. Although the lawyers gave Musa’s last name as Shivambu, according to company records, his last name is actually Shibambu. He is apparently a cousin of the Shivambu brothers.
Rooplal rejected the payment plan of 5,000 rand per month and proceeded with an application for liquidation against Sgameka. A hearing was scheduled for September 12, 2019. Meanwhile, on August 5, the Johannesburg High Court dealt Brian Shivambu a further blow, holding him personally liable for the loan debt.
Fortunately for Shivambu, his fortune dramatically improved at this point. On the same day as the High Court order, his lawyers paid 1 million rand into the loan account. I asked Brian Shivambu and his lawyers where this windfall was coming from, but received no response. A month later, on September 9, unknown groups again came to Shivambu’s rescue. The total outstanding balance of the mortgage, which had already reached R1,657,589, was paid off overnight.
Then, on September 11, the night before the settlement request hearing, unknown parties paid R340,000 more to the loan account, leaving a debt of R1.3 million. The following week, September 20, the day the court was to make its order on the liquidation request, Brian Shivambu found another 1.4 million rand to pay off his entire debt. The little brother of the deputy leader of the EFF was saved from financial ruin and a possible investigation into the party’s source of funding was dropped.
The source of Brian Shivambu’s sudden wealth remains unclear. The payments were made through the trust account of his lawyers and it is impossible to deduce from the court documents whether a third party paid the debt or not. However, it seems likely.
However, this did nothing to address the looming problem of the other 16 million rand that had moved through Sgameka. VBS records show unambiguously that the money did not come from actual deposits. DM
