Based on the financial information contained in the “preliminary” restated 2017 financial statements of VBS, the curator was of the opinion that there was no reasonable probability that the continuation of the curatorship will enable the Bank to pay its debt and meet its obligations and become a successful concern.
Rooplal noted, “In my investigation into the Bank’s 2017 year-end financial statements, I found wide scale fraud and theft which had been perpetrated across VBS Mutual Bank leaving a related financial hole of some R1.8 billion. In the absence of a legitimate offer to salvage the Bank (as this in essence would be throwing good money after bad money to plug the financial hole), I had little choice but to recommend that the Bank be wound down”.
On 29 October 2018, the Prudential Authority (‘PA’) in consultation with the Governors of the Reserve Bank concurred with the curator and the findings in the Forensic Report published on 16 October that VBS Mutual Bank is factually and commercially insolvent and is unable to repay its debts against the background of massive frauds and the theft of depositor funds. In terms of the Banks Act and Mutual Banks Act, the PA is empowered to apply to a competent court for the winding-up of a bank. The PA has applied to the High Court to place VBS Mutual Bank into liquidation based on their findings. The application to have the Bank wound down will be heard in the High Court on 13 November 2018.
If successful, the winding-up of VBS will bring an end to the curatorship of VBS, which has been ongoing since 11 March 2018. This will be beneficial to the creditors and depositors of VBS Bank. Such depositors include municipalities that invested in VBS, legitimate corporate depositors and retail depositors, who have over R100 000 deposited in VBS Mutual Bank.
These creditors rank alongside one another in their claim on VBS Mutual Bank. All retail depositors who have deposits of less than R100 000 in the Bank, have had, and continue to have full access to their funds through the facilitation of Nedbank since 13 July 2018.
The Bank currently continues to collect monies due to it from loan account holders. Loan account holder contracts therefore remain valid and enforceable and loan account holders are urged to continue to pay their monthly instalments. This is required in order to avoid recovery action being taken against default payers.
He noted: “Should the Bank begin the process of liquidation, the loan contracts will continue to be enforceable”.
Rooplal and his team currently continue to recover assets resulting from the thefts and frauds that were discovered in the investigations. Specifically a liquidation order was granted for the Vele group, which was placed into liquidation on 3 August 2018.
Provisional sequestration orders were granted by Judge Moroa Tsoka in August 2018 on Mr. Andile Ramavhunga, Mr. Robert Madzonga, Mr. Tshifhiwa Matodzi, Mr. Phillipus Truter and Mr. Phopi Mukhodobwane.
Currently, their assets are being secured and effectively frozen, so as to prohibit dilution of their value. This is being attended to by the respective liquidators and trustees who were provisionally appointed to sequestrate the respective estates.
The next court dates to ascertain whether final sequestration is to be granted is set for 13 and 26 November 2018.
