After the Bell: Dondo Mogajane should stand down

The facts, as far as we know them, are as follows: VBS collapsed in March 2018, after which it was revealed that about R2-billion in the Limpopo-based bank had been stolen by its executives and shareholders in an elaborate fraud. Matodzi was convicted and sentenced to an effective 15 years in jail for his involvement in these crimes. 

In his detailed and sworn statement to the court, which normally forms part of a plea bargain, Matodzi made allegations regarding various people, including Mogajane. Mogajane responded by saying in a heartfelt video statement that he had accepted nothing from VBS. 

“I categorically deny that I ever [accepted] corrupt monies or bribes. I proudly served with distinction, honesty, loyalty and humility as a dedicated public servant for 23 years, the last five of which were as director-general of National Treasury. My record is clean in terms of how I ran my department and conducted myself as a member of the National Treasury.” 

In his statement, Matodzi said he met Mogajane, together with Treasury officials, five times as far as he could recall, but also once at the VBS offices in Rivonia, and once at Eagle Canyon, a golf estate. And then there was the meeting at the PedroPortia Cigar & Champagne Lounge in Fourways — it’s this meeting that’s the most important. Obvs.

VBS actually had a representative who knew Mogajane; he was among the five men and one woman who were, one presumes, puffing cigars and sipping Champagne at PedroPortia’s fine (if slightly garish) establishment. The person involved here was Ralliom Razwinane, who had been appointed as a “commission agent” by VBS, but who also had other interests in the fund management space. 

According to Matodzi, while discussing VBS’s bigger problems, Razwinane whispered to Matodzi that he should pay Mogajane R1-million. There was then whispering and nodding between Mogajane and Razwinane. 

Matodzi asked for a bank account in which to deposit the money, and the details were scribbled on a piece of paper and handed to him by one of the other people at the meeting. It was apparent that this was the only purpose of the meeting, so Matodzi left, he said. Subsequently, the R1-million was paid over — not, as it happens, into an account directly associated with Mogajane. 

This all sounds very real (the cigar lounge detail is reminiscent of, you got it, the Saxonwold Shabeen). But if you think about it, Matodzi has many reasons to lie and is, after all, now a convicted felon. Particularly pertinent here is that the whole reason VBS was in trouble was because Mogajane had written to municipalities in August 2017 pointing out that they were not permitted to invest in VBS because at that stage it was a mutual bank, and to do so was contrary to the Public Finance Management Act. 

Mogajane points out in his defence that this letter was never withdrawn by the Treasury. On the other hand, VBS was hurriedly trying to convert itself into an ordinary bank and presumably it wouldn’t want the Treasury blocking that. However, since this letter precipitated the start of VBS’s decline, you can imagine Matodzi was, how should we say, a little pissed off.

Both the Treasury and the GEPF come out in favour of Mogajane, at least in the sense that the Treasury points out that none of the allegations against Mogajane has been proven or tested in any court. The GEPF says there is a legal process under way, so it’s not going to say anything. (The GEPF had other investments in VBS at the time of its collapse and former GEPF employees were working for VBS.)

https://www.dailymaverick.co.za/article/2024-07-15-vbs-corruption-central-national-treasury-throws-its-weight-behind-former-director-general-dondo-mogajane/

So, let’s assume that this will all be investigated in a court of law, at which point Mogajane will either stand down or he won’t. But what about in the interim?

The law here is complicated. The King Code is only mandatory for public companies and state-owned enterprises, so technically it doesn’t apply to the GEPF, which operates under its own law passed long before governance became a thing. But it is possible to voluntarily sign on to the King Code and, in practice, the GEPF has historically followed the code in applicable respects. 

As it damn well should. This is not a voluntary investment fund that people can deposit into or take money out of at will. It’s an obligatory fund for the retirement savings of civil servants. The GEPF has about R2.3-trillion under its umbrella, most of which is run by the Public Investment Corporation. This sounds like a lot of money — it is a lot of money. The primary responsibility of the fund is to make sure that the few cents put away by civil servants are there when they need the money in their dotage. This is not a responsibility to be trifled with.

In addition, since half of the GEPF board is appointed by the government and the chair (Mogajane, as it happens) has the casting vote, it’s in all but formal legality a state institution. Furthermore, it’s a financial institution, which normally has (and should have) much higher governance requirements even than listed companies. 

If this was the only issue here, I think I would be on Mogajane’s side: standing aside would inevitably be seen as a kind of admission of guilt and that would reflect not only on him but on the Treasury, which has so far managed to remain on the side of the angels in the State Capture stakes.

But sadly, it is not. After Mogajane left the Treasury, he joined the Moti Group as CEO. And would you believe it? The group has most of its investments in Zimbabwe and is allegedly involved in money laundering. And would you believe it (Part 2)? The group had investments in VBS at one stage. These were long before Mogajane joined, but you have to ask: Why does a former Treasury official choose to join a dodgy Zimbabwean company involved in thumping cross-border financial transactions? 

On balance, I think the GEPF should ask Mogajane to stand down. Obviously, there is a process here, but the GEPF does not have to prove its case beyond reasonable doubt. It does, however, need to take allegations that are serious seriously, and fraud and dishonesty at a public financial entity are pretty serious. DM