Desperate and frustrated - VBS depositors want to revive the bank to recoup their money, but lack funds

VBS Minority Shareholders Committee members at a press conference in Thohoyandou. (Photo: Rudzani Tshivhase)

By Rudzani Tshivhase

25 Jul 2024

Desperate VBS depositors who lost most of their cash believe the institution can be revived. But the Reserve Bank has made it clear that they will have to reapply for a banking licence.

Six years after VBS Mutual Bank was placed under curatorship, aggrieved depositors and minority shareholders are still fighting to get their money back and believe that reviving VBS, with a commercial banking licence rather than as a mutual bank, might be the answer.

According to the VBS Shareholders Forum, which includes individual depositors and businesses who deposited millions into the bank, many were not allowed to withdraw even a cent after a curator was appointed. Some have since died from ill health while others say the consequences of losing their money damaged their health.

vbs depositors VBS Minority Shareholders Committee members at a press conference in Thohoyandou. (Photo: Rudzani Tshivhase)

Many of the broke and desperate VBS depositors who lost their hard-earned cash have not recovered from the depression that followed losing their money.

Businessman Aubrey Mulaudzi, who invested R2-million in the bank, said after it was liquidated he had no money and had to cut the workforce at his panel beater workshop in Tshisaulu village from 34 to five.

Randitsheni Marothi, a teacher who had invested R1.8-million in VBS, managed to withdraw R282,000 after its closure.

“I am now suffering from high blood pressure and [had a] mild stroke which affected my eyesight. This problem [with VBS] badly affected my health and the wellbeing of my family,” said Marothi.

‘Our money was in VBS’

The VBS Shareholders Forum held a press conference in Thohoyandou on Tuesday, 23 July 2024. The forum spoke two weeks after former VBS chairperson Tshifhiwa Matodzi was sentenced to 15 years in prison for defrauding the bank of almost R2-billion.

In a “witness statement”, Matodzi admitted to allegedly facilitating the irregular payments of hundreds of millions of rand to various individuals, political parties and politicians in the ANC, EFF and SACP.

While criminal cases against several people allegedly linked to the looting continue, there have been repeated calls to hold the politicians involved accountable.

Read more: How VBS monsters ate the poor – the boys’ club, ‘Christmas money’ and anguish of victims

Minority shareholders and depositors have welcomed Mutodzi’s conviction, but they remain determined to find a way to get their money back.

VBS Shareholders Forum chairperson Madambi Muvhulawa, who co-founded VBS, said they would like to submit an application for a commercial bank, but they don’t have enough money.

“The thing is we don’t have money as our money was in the bank,” said the 86-year-old.

Muvhulawa is in poor health and his wish is that by the time he dies, the matter should be resolved. He said the bank was liquidated after the scam was exposed when municipalities, which accounted for a large portion of deposits, were told by National Treasury they could not deposit money with a mutual bank.

“Municipalities withdrew R1.5-billion and the bank became broke, leading to the liquidation. Government should have assisted the bank like they did with the African Bank,” said Muvhulawa.

African Bank was placed under curatorship in 2014 due to its bad debt pile. The SA Reserve Bank covered R7-billion of its bad loans while other banks provided billions in capital injection.

Read more: African Bank CEO takes up audacious challenge to restore lender’s original legacy

Another member of the VBS Shareholders Forum, Aubrey Mulaudzi, complained about what he termed a lack of formal communication between the office of the liquidator and depositors. Mulaudzi invested millions of rands in VBS. He said he received information about VBS via the media.

“We have tried everything to get information from that office but they don’t talk to us. We hear stories about VBS such as the arrest of Matodzi from the media,” said Mulaudzi.

The shareholders also accused Parliament of not taking them seriously when they appealed for assistance and to hold public hearings in Thohoyandou.

Lobbyist and investment facilitator Mabetsela Malefane, managing director of MK Malefane Ventures, said he approached Parliament’s standing committee on finance in 2019 to visit Thohoyandou to discuss the matter, but this was in vain.

The CEO of the Doctor Tshenuwani Farisani Foundation, Kenny Mathivha, said the story of VBS was sad, illustrated by the deaths of two municipal workers who were against the Vhembe District Municipality’s decision to invest R300-million into VBS. They had been shot and killed in Thohoyandou.

Four suspects have been arrested, but they have not disclosed who hired them to carry out the attack.

SA Reserve Bank dismisses calls to revive bank

Responding to calls to revive VBS, the SA Reserve Bank was quick to indicate that it had ceased to exist as a bank. If VBS stakeholders want a new commercial bank licence they have to apply and go through a complex process that requires capital, which they do not have.

SA Reserve Bank spokesperson Thoraya Pandy said the VBS Mutual Bank was dead and it had no banking licence. Pandy said VBS could not be revived and while shareholders and depositors could apply for a new commercial banking licence, it was a lengthy procedure.

Pandy said the criteria to apply for a banking licence included that the application should be in the public interest; there should be financial and other resources available to the applicant; and there should be risk management and internal controls in place.

Pandy also said the applicant should be able to comply with prudential requirements as stipulated in various financial sector laws.

Repayments

In 2018, retail depositors were advised by the VBS curator and the SA Reserve Bank to open accounts at Nedbank. The SA Reserve Bank committed more than R300-million to pay depositors up to R100,000 each, but any further claims from depositors, which included individuals, stokvels, funeral schemes, burial societies and savings clubs, would need to come from money recouped during the bank’s liquidation.

Louise Brugman, spokesperson for VBS liquidator Anoosh Rooplal at the SNG accounting firm, said they would brief the media when there was an update about the liquidation process. Brugman said they had recovered R159-million, which had been disbursed to the relevant creditors, by February 2022. The recovery process was ongoing.

There was a R2billion total shortfall that had been pillaged from the bank.

Responding to claims that depositors had not been updated on the criminal cases against Mutodzi and others, she said that wasn’t their role “The liquidator has a civil remit and that is to trace and collect monies of the benefit of the depositors,” said Brugman. DM

This article was amended and updated on July 28, with additional details and clarity about the liquidation process.

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‘Our money was in VBS’