Disgraced former VBS chairperson accepts 495-year sentence, effectively reduced to 15 years of imprisonment — and sings like a canary for 70 pages.
In an explosive 70-page “witness statement”, former VBS chairperson Tshifhiwa Matodzi has laid bare the corruption that rotted the bank from within.
Although he does preface his statement with an apology to all those affected, including depositors, stakeholders, shareholders, staff, members of the public and taxpayers, the statement is devoid of emotion. As early as page six, he flatly states: “We engaged in a web of corrupt activities.”
All the information in this article has been sourced directly from Matodzi’s statement. If he is to be believed, the people in the very top chain of management were all in cahoots, setting up shelf companies through which to facilitate fraudulent payments to themselves and remunerating one another for a conspiracy of silence.
A grenade less than 10% into Matodzi’s statement is the mention of the former director-general of the National Treasury Dondo Mogajane. Mogajane is no longer in that position, but is now the chairperson of the Government Employees' Pension Fund, which has significant assets.
Gundo Wealth, owned by Ralliom Razwinane, was appointed as an agent to source investment deposits for VBS. In 2017, municipalities started voicing complaints, on the grounds that the National Treasury had asked them to withdraw their investments from VBS because the Municipal Finance Management Act prohibits investments with a mutual bank.
Matodzi says Razwinane offered to facilitate a meeting between himself and Mogajane, and “at least five” such meetings transpired. He says one meeting took place at the PedroPortia Cigar Lounge in Fourways near Johannesburg, another at VBS’s Rivonia offices, and a third at Eagle Canyon. The venues for the remaining two meetings are not clear. Matodzi simply writes: “The other meetings we had Treasury and Reserve Bank [sic].”
Matodzi alleges that a payment of R1-million was made for Mogajane to intervene, facilitate the withdrawal of the National Treasury letter, and grant VBS a special 18-month dispensation to continue accepting municipal investments. The plan was that by the end of the 18 months, VBS would be a commercial bank.
Approached late on Thursday night for comment, Mogajane dismissed the allegations as “nonsense” and “hogwash”. “There is no shred of evidence to prove that I took the money,” he said.
He admitted that he had privately met Matodzi on a few occasions — once at Matodzi’s home and also at a restaurant (referred to in Matodzi’s statement).
But Mogajane vociferously denied having received any unlawful payments.
“I would never do that. At the time, when I was fighting this guy … my approach was the same from day one: you have flouted the law.”
- Mogajane sent a full statement on Friday morning - we have added it to the end of the article.
Matodzi believed that municipalities withdrawing their investments would cause a run on the bank. That may not have been entirely without merit, but the bank’s balance sheet should have been able to handle the withdrawals.
The fly in the ointment was that Matodzi had fed “loans”, “donations”, “commissions” and gratuitous pay-offs to his staff who had to keep the secret, and to “commission agents” to divert state money to the bank.
It was in essence a typical Ponzi scheme in which Matodzi struggled to inject more money into the bank than he was paying out to himself and his cabal. In any case, Matodzi knew if the municipalities withdrew their money, his game would soon be up. That is why he butted heads with officials at the Treasury, including Mogajane.
A former colleague in the Treasury who knows Mogajane well and worked with him for years told Daily Maverick that Mogajane never wavered in his commitment to the investigations into VBS.
Co-conspirators
Matodzi names VBS CFO Philip Truter, CEO Andile Ramavhunga, Solly Maposa and treasurer Phophi Mukhodobwane as his co-conspirators. They have all been charged in connection with VBS corruption.
Mukhodobwane bought a flashy Porsche Cayenne GTS with his share of the VBS loot. In an unrelated case, he was arrested in 2020 for culpable homicide and reckless and negligent driving after he crashed into another car, killing a 24-year-old man.
Read more in Daily Maverick: Ex-VBS treasurer bought Porsche with some of the loot – after two crashes in succession a young man was dead
Below are the roles Matodzi alleges that the men at the top of VBS Bank played in its demise and unabashed looting.
Former CEO Andile Ramavhunga apparently:
- Approved loans for the Leratadima digital decoder migration project, although the PIC had ring-fenced the facility in question for fuel transactions;
- Approved loans and facilities that he was not authorised to approve, such as a R100-million loan for Leratadima;
- Issued irregular orders to staff verbally so they could not be traced back to him;
- Appointed staff to senior positions without following HR processes;
- Did not report large exposures and fraudulent transactions to the board or regulatory authorities;
- Approved falsified documents for funds to be released from the PIC fuel finance facility;
- Signed and handed over false information to the PIC for the October 2017 rights issue; and
- Was linked to Dambale Holdings and Munyai Investments. Both companies were recipients of irregular, corrupt payments.
Ramavhunga has denied involvement in the VBS corruption.
Read more in Daily Maverick: Four VBS Bank, two PIC executives, KPMG auditor and SAPS lieutenant general arrested in R2.7-billion VBS robbery
Former chief financial officer Philip Truter:
- Manipulated returns so that the South African Reserve Bank would have a false impression of VBS’s level of capitalisation;
- Created irregular deposits and manipulated the VBS suspense accounts;
- Forged records and customer documents to release funds from the PIC fuel finance facility;
- Enabled the breakdown of controls by backdating transactions;
- Accepted money in return for manipulating the VBS suspense accounts;
- Misled auditors by falsifying the bank’s annual financial statements; and
- Was linked to a company called Shangri La and accepted payments via Shangri La for his fraudulent actions.
Truter was the first to turn State witness in 2020 and entered a plea bargain in exchange for a seven-year sentence.
Read more in Daily Maverick: Former VBS finance boss Philip Truter strikes deal with NPA
Treasurer Phophi Mukhodobwane is named as participating in all the activities outlined above involving Truter and Ramavhunga. He was linked to a company called Lemawave, through which he was paid for his fraudulent actions.
General credit manager Solly Maposa allegedly:
- Did not report large exposures and fraudulent transactions in the credit department;
- Processed and approved irregular requests and credit applications from VBS executives, board members and others without following the bank’s credit application processes;
- Used his family and associate companies to channel money; and
- Regularly processed transactions from clients’ accounts without their permission or knowledge.
General manager of sales and marketing Sasa Nemabubuni is accused by Matodzi of having:
- Actively pursued investments for VBS and facilitated dodgy payments and kickbacks to municipal officials; and
- Delivered cash as gratuity payments to VBS commission agents, who in turn paid off municipal officials.
Fraudulent acquisition
Matodzi says Avhashoni Ramikosi, a non-executive director and chairman of the audit committee, set up a shelf company — Zanoware — in March 2016. Money was then transferred to Ramikosi via Zanoware.
Curator Anoosh Rooplal in 2018 claimed that Vele Investments became the majority shareholder in VBS through the fraudulent acquisition of R80-million worth of shares.
https://www.dailymaverick.co.za/article/2024-07-11-ex-vbs-chair-lifts-the-lid-on-how-julius-malema-and-floyd-shivambu-grabbed-r16-1m-from-dying-bank/
According to Matodzi, Paul Magula, who represented the PIC on the VBS board, demanded shares and was allotted convertible preference shares in Vele in 2015 through his company Parallel. Irregular payments were then made to Magula by Vele and channelled through Parallel.
Chief operating officer Robert Madzonga allegedly received irregular payments from Vele subsidiaries. Matodzi claims that after VBS went into curatorship, Madzonga illegally claimed money from a company called B3 Funeral and Insurance, which had received a R10-million loan from Vele. Madzonga then transferred R10-million from Vele into his attorney account, Tshivhase Attorneys. He paid Matodzi R2-million for his “unpaid Vele salary and legal fees”.
Former ANC Youth League leader Kabelo Matsepe is named by Matodzi as an “agent sourcing investment deposits for VBS”. He says he first met Matsepe around 2016, when a journalist started asking questions about deposits from Capricorn municipality that were in contravention of the Municipal Finance Management Act.
“I managed to convince them that this was all legitimate and I informed them that the SARB was aware of this strategy,” says Matodzi.
This is also when Matodzi was introduced to Danny Msiza, who was then treasurer for the ANC in Limpopo. “I knew that Matsepe and Danny were well connected politically and that they would be able to use their political influence to secure investments from municipalities, especially in the Limpopo province,” says Matodzi.
- Mogajane sent this statement on Friday morning in addition to the response he gave on Thursday night when approached:MEDIA STATEMENT BY DONDO MOGAJANE Johannesburg, 12 July 2024: I received an affidavit yesterday made by Tshifhiwa Matodzi, the former chairperson of VBS Mutual Bank and a convicted felon who defrauded South Africans, who made some baseless allegations against me.
To be very clear, in my position as then Director-General of National Treasury, I was one of the people who stopped Matodzi in his tracks, and prevented VBS from pilfering South Africa any further. With this in mind, I would like to set the record straight.
I met with Matodzi several times during my tenure. These meetings followed a circular issued by National Treasury in August 2017 warning municipalities that deposits made at a mutual bank contravened municipal finance regulations, and were not allowed.
Matodzi sought to have the circular withdrawn. But each time, I gave him the same answer, refusing to withdraw the circular, and refusing his requests to allow VBS to conduct any further investment deals with municipalities.
Matodzi’s affidavit conveniently excludes the many meetings held in the presence of other people, including with VBS management, the Public Investment Corporation (PIC) as a VBS shareholder, the South African Reserve Bank (SARB), and other National Treasury representatives.
As can be evidenced by minutes of these meetings, we made it very clear that legally, VBS Mutual Bank was not allowed to continue conducting investment deals or receiving deposits from municipalities. In fact, my colleagues and I became so alarmed by the actions of VBS Bank that I filed an answering affidavit against it in November 2017, wherein I confirmed National Treasury’s stance against the intentions of VBS in continuing to take municipal deposits. Later, I made another statement with the Hawks in support of their investigation into the bank.
In terms of the regulations governing municipalities, the law is very clear. Municipalities cannot make deposits with institutions that are not regulated as per the Banks Act. As a mutual bank, VBS was established under the Mutual Banks Act. As such, any municipal deposits with the bank were illegal, which I reiterated to Matodzi at every meeting.
It was on this basis that we met with Matodzi to discuss regularising VBS as a bank. During these engagements, we warned Matodzi and VBS to stop taking deposits until such time as it had been established and regularised as per the Banks Act in accordance with the South African law.
During these discussions in 2017 and early 2018, we were not aware that VBS was essentially a scam, and simply viewed these as engagements with a black-owned bank.
I categorically deny that I have ever received 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 National Treasury.
As evidence of the stance that both myself and National Treasury took against Matodzi and VBS, all filed affidavits, statements, minutes of meetings, circulars, and general records dating as far back as 2017, are with the relevant authorities.
I will not be trialled by corrupt individuals or those driving their own agendas, and I will not allow anyone to tarnish my name.
The same moral fibre and values that I demonstrated throughout my 23 years serving the state and the South African public, guide me today. These values are in my DNA. My principles and values continue to govern my business dealings and remain exactly the same.
Ultimately, I am proud to have been part of the team that stopped Matodzi and VBS’ corrupt and pilfering activities.
ENDS/
For the complete video interview, please click on the following link: https://we.tl/t-3hcL2GyaEH
On behalf of Dondo Mogajane
Distributed by Shannon Henning / PR Worx
Matodzi’s 70-page statement took around three weeks to draft and is packed full of incriminating details naming numerous cogs in the wheel. Daily Maverick received the document late on Thursday night, and will update this article with comments from the individuals named as soon as they can be obtained. This is a developing story. DM
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