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Publication

CITY PRESS BFN

Page

1-2

Date

Sun 14 Oct 2018

AVE (ZAR)

140540.06

VBS: 'CYRIL KNEWSIPHO MASONDOsipho.masondo@citypr ess.co.za

resident Cyril Ramaphosa knew about thewidespread looting at VBS Mutual Bankearly last year, but allegedly failed to takeany action.

City Press has learnt that Ramaphosawas informed of widespread corruption

and looting involving bank executives at a meeting inJohannesburg very early last year.

Sources close to a major VBS shareholder said theshareholder personally informed Ramaphosa about whatwas going on.

"I know that the shareholder met with Ramaphosa,who was not president at the time. The shareholderbriefed him about the outrageous corruption at VBS,"said a source.Another said: "During the meeting, Cyril had apparently

raised serious concerns about VBS. He promised to dosomething about it, but he didn't do anything."

Khusela Diko, Ramaphosa's spokesperson, saidyesterday: "We have no record of such a meeting."

The shareholder, whose name is known to City Press,began blowing the whistle from 2016 about what wasgoing on at the bank. He declined to comment.

On Wednesday, Advocate Terry Motau SC released hisdamning report, The Great Bank Heist, into how 50individuals and companies, including many of the bank'sexecutives, received "gratuitous payments" amounting toR1.8billion from the bank.

However, Ramaphosa was not the first person theshareholder went to for help.

City Press has learnt that in June 2016 - more thansix months before he met with the then deputypresident last year - the shareholder reportedwhat he knew to the SA Reserve Bank andthe then Financial Services Board (now theFinancial Sector Conduct Authority, orFSCA).

Then, in about June last year, aftermeeting Ramaphosa, the shareholderappealed to a "former politician atTreasury, who facilitated a meetingbetween the Public InvestmentCorporation (PIC) and the whistle-blowing shareholders".

"No action resulted from the PICand the shareholder," said anothersource. "Nobody was willing to doanything. Had they respondedearlier, these guys would not havelooted this much."

The PIC has a 27% stake in VBS.The report found that two of its

former executives, Paul Magula andErnest Nesane, who representedthe PIC on the VBS board, werepaid R7.6million andR7.2 million,respectively, for

Sourcesallege that aVBS shareholderbriefedRamaphosaabout looting 'early lastyear' - andeven beforethen, informedthecentral bankand FinancialServices Board

Nobodywaswilling to do

anything.Hadthey responded

earlier, theseguyswould not have

lootedthismuchTALK TO US

What couldRamaphosa, as

deputypresident, havedone to make

sure that actionwas taken?SMS us on

35697 using thekeyword VBS

and tell us whatyou think. Please

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DID HE KNOW?Cyril Ramaphosa

their silence.In September 2016, City Press reported that the

whistle-blower asked the FSCA to investigate how VBSlent R136million to Vele Investments, a company inwhich the bank's former chairperson, Tshifhiwa Matodzi,and its former chief operating officer, Robert Madzonga,had undeclared interests at the time.Vele subsequently became VBS's main shareholder on

the basis of a fictitious deposit, Motau found.In the same report, City Press broke the news of how

VBS lent R7.8million to then president Jacob Zuma tocover his portion of the upgrades to his Nkandla home,in line with the report by former public protector ThuliMadonsela. This week, sources said the loan to Zumawas an attempt to buy political insurance.

"Whenever other shareholders raised the issues atVBS, the bank's executives would run to Zuma and tellhim that they were under attack from shareholdersbecause they had given him a loan. The shareholderswho were against looting at VBS had become the enemyof the state," said a source.

Meanwhile, another shareholder, businessman DavidMabilu, who has also been fighting corruption at VBS,said he was glad the report had vindicated him andothers who were unhappy with how VBS was run.

"Let the law take its course," he said this week. "Thisis what we have been calling for from day one."

Motau's report confirms a series of articles in CityPress, run since February, which detailed the unfoldingplunder that involved more than R1billion in deposits by15municipalities.

Motau, assisted by Werksmans Attorneys, wasappointed by the Reserve Bank to investigate after thebank was placed under curatorship in March, hours afterCity Press reported that VBS was bankrupt.Motau found that the "payment of very large sums of

money was made to the various perpetrators of thescheme of looting, as a reward for their participation,and substantial bribes were paid to certain of VBS'sdirectors and other related parties in order to buy theirsilence and to look the other way while the looting wasgoing on".

FIERCE FIGHTBACK LOOMSHowever, several people cited in Motau's report have

launched a series of individual court actions to challengeits findings.

Kabelo Matsepe, who allegedly acted as an agent torecruit municipalities and convince them to depositfunds at VBS, has hired experienced criminal lawyersBDK Attorneys to fight his case.

Matsepe's company, Moshate Investment Group, deniedall the allegations against him. His attorney, Mariq van

der Westhuizen, said she planned to attack theconstitutionality of Motau's investigation.

Continued on page 2

Who got what from VBS?In his report, The great bank heist, advocate TerryMotau found that among the biggest direct and indirectrecipients of 'gratuitous payments' made by VBS were:

VBS majority shareholder Vele InvestmentsQVELE and its associates

Op _RG3G569111Vele chairperson Tshifhiwa Matodzi

R325 896 831

The Free State Development Corporation

' BR nio4130932Politically connected Limpopo businesspersonKabelo MatsepeRR R35400105Former KPMG director Sipho Malaba

NJ rss 978379Former VBS treasury headPhophi MukhodobwaneNMJR30572296Paul Makhavhu, legal advisor to Venda KingToni Mphephu

RS] R3046178sFormer VBS chief operating officerRobert MadzongaNMJr3o372282Former VBS chief executiveAndile RamavhungaNMJr2s925934VBS retail managing director Solly Maposa

BO] R2444l877Gundo Wealth Solutions directorRalliom Razwinane

IM r2s 224198A company called Firmanox

W r17748384King Toni Mphephu

W r17729758Former VBS spokesperson Ndivhuwo Khangale

W ris s30091Accountant Sechaba Serote

IW ris s53458Former Public Investment Corporation (PIC)legal head Ernest NesaneIW nis sasossBusinessman Brian Shivambu, brother to EFFdeputy president Floyd Shivambu

W ris 148569A company called Foxburgh

BJR15104100Former PIC risk and compliance executive headPaul MagulaN Riasis oosInsure Group Managers executive Charl Cilliers

N R12683947Tiisang Private Capital

N r12489230Suspended Vele Investments chairpersonMaanda ManyatsheI R11279242VBS employee Sasa Nemabubuni

|J ro 169288A company called Sabicorp

I| rs 453585Former SA Police Service chief financial officerAvhashoni Ramikosi

|| Rs972288Matodzi's assistant, Takalani Mmbi

| r4 404178VBS branch manager Phillip Tshililo

"'* | R2039990Source: VBS Mutual Bank - The great bank heist Graphics24

'CYRIL KNEWABOUT VBS

VBS BankGOES BUST

The only hope is for the PublicInvestment Corporation

Continued from page 1"The inquiry offended various

constitutional principles. This willbecome evident when we lodge thereview application. We will illustratethat some of the evidence cannot beused or admitted as evidence," shesaid, adding that Moshate had signeda contract with VBS and thecompany was paid accordingly.Banks often contractagentsto tout

for business for them, and this"contract was nothing out of theordinary," she said.

Danny Msiza, the ANC's Limpopotreasurer, whom the report accuses ofplacing political pressure onmunicipalities in the province to bankwith VBS, hit out at Motau for injuringhis reputation, dignity and family.

"What Advocate Terry Motau didwas to convict me in absentia and[he] left me to be castigated by thecourt of public opinion, as it ishappening now," he said in astatement to City Press.

"It goes without saying that myconstitutional right to dignity hasbeen seriously infringed. I havealready instructed my lawyers toinstitute legal proceedings in theHigh Court to review and set asideportions of the report whichimproperly and falsely insinuate anywrongdoing on my part."

Msiza said he had "voluntarilydecided to submit myself to theauthority of the ANC's integritycommission", which he will ask to"prioritise this matter".

Sipho Malaba, a former partner at KPMG,which was VBS's external auditor, is alsoexpected to launch a court challenge to setaside the report which implicates him infraud.

Malaba, who will be represented byEconomic Freedom Fighters chairpersonand senior counsel Advocate Dali Mpofu, isaccused of not declaring more thanR30 million of VBS loans he received.

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ust18monthsatershootingtoprominence,¥B5MutualHankficsthepossibiltyofaspectacularcash,followingTreasury'sinstructiontomunicipalites

e

thesingamajorliquidcrisis.

PresscanrevealthatVBSscasharesolowthatsexecutessaidi dit

p whenitgranteda278millonloantoformer

t JacobZumatosetdebtotheupgradestohisMandla

OnFriday,VBSchairpersonTshithwaabroadsideatthSatbandusingthemof creatingan

1incompetentandnoncomptInastronglywordedlete,seenby CityPress,toSahregistrarRubenNaldooandTreasitydirectongeneralDondoMogajanc,Matodwrote:"Nomatterwhathappenstothebankanditsdirectionpoingforward,wewillevethespocewithourheadsheldhighk we achievedwhatwascor

ie"in theen sithawelk

organisedandpowerfulsystemthatdoesnottoleraterowingbckbanksandblack

ank

"Tobeontherightsideo thef, inMarch2077,VBSdecidedtoapproach

wasfollowedbyaleteraccountantgeneral,whodid

not"ThehankwassurprisedaroundAugust. whee200,whenoneofourmunicialicesinformedustherewasaleverfrom

informingthemnott insestimvis.

uc atconciedtheSithtoassistustoengageTreasy.TheSatbsaifcamebackaroundSeptember201,butthirresponsewasinconclusiv eMatodeianguedthatall YBwantedwas. in

torequestTreasurytowithdrawis

to injectR1.5bn

99In the end we

were facedwith a| ifs iiswell-organisedand powerfulsystemthat didnot tolerate

growingblackbanksandblack

excellence

ruiningthebank,

"tyJamary2018,theliquiditystwationatthebankwasbecomingdireduetomunicipalitieswithdrawingtheircashandI urgedtheDG[Moyajane]toreacha

shouldrecumnalmontesinvestedbymunicipalities"Ao,throughoutthe furmonthsofhe acont owithdrawand,inmany cases,tirestenedthemtodoso.Bythethebank'sreservesweredangerousylow

fandthis forcedtheSarbtostartterMavodtsidthatalterarecentmesting

realisedtacthfateofthebankwasactuallyalreadydecidedfromAugustandi oa hereithadnochoicebuttoficecurstorship"Itbecameclearthattheir"greatestsins"hadbeentoge Zumaaloanandruming

nodsadthie

underatackfromVieers .recent,butdid nothing he"mediaatached"BSaboutits decisiontogrant

inVBS,couldsil savethebank."weneed tooperate

u davanltyprofectsandlost incredibleamountsofmoney:Why wouldtheynot

ManagementAct,MEMAandFinancialInteligenceCentreAct.TheMFMAdoes

t allowmunicipalitiesto bankwthamutualbank,butallowsthemto doso

nis

Venda King Toni Mphephu%_ Ramabulana were implicated.

A 63-year-old hawker from Maninivillage, who has been banking with

I VBS since 1990, said she "still cannot' believe that the bank has been killed

by educated people all because ofgreed".

"We had put our hope in them,thinking that they will lead us wellas VhaVenda, but it was not to be,"she said.

Ntanganedzeni Masidwali's burialsociety deposited RMG000 with VBS.It has managed to recover R100 000

S from Nedbank, which was appointedby the Reserve Bank to facilitate thepayments to clients.

The stay-at-home mother of threedoes not hold out much hope for therecovery of the remaining R16000.

"We were told that we would1 receive it after three years because

VBS would, by that time, alreadyhave sorted out its issuesand berendering services again to itsclients," she said.l A 66-year-old pensioner said the

I Venda king and all others implicated

' shouldbedealtwith."No one is above the law. All these

people who stole our money should1 account for their wrongdoings

because they are not special," hesaid.

The chartered accountant is also accusedof signing off the bank's financials when heknew that they were misstated by morethan R700 million.

THE POOR COUNT THE COSTA sombre mood prevailed in

Thohoyandou, Limpopo, this week as newsof Motau's report spread. Stunned clientssaid they hoped the bank could still besaved, but were reluctant to reveal theirnames becausepowerful figures such as

Ntsieni Mbulungeni, chairperson ofthe Thulamela Business Forum, said

it was time those implicated "faced theconsequences".

"Also quite disheartening is the fact thatthey stole from the poor, and as the public,we never got to see how that benefited ourpeople," he said.

"Closing VBS doors has already starteddisadvantaging local people. For instance,the majority of hawkers can no longer savemoney the way they used to and stokvelshave also declined in numbers."- Additional reporting by RolivhuwaSadiki of Mkurukuru Media

Dodgy dealings as thebank declinedA WhatsApp exchange onDecember 22 last yearbetween former VBS chiefexecutive Andile Ramavhunga(pictured) and the bank'sformer treasurer, Phophi Qt

Mukhodobwane, provides aglimpse into how the bank secured hefty deposits.This was done, the exchange suggests, with thehelp of ANC Limpopo treasurer Danny Msiza andpolitically connected businessman KabeloMatsepe, who are now consulting their lawyers tochallenge the findings of advocate Terry Motau'sreport into the wide-scale looting of VBS MutualBank. The exchange, attached to a tranche ofdocuments City Press received earlier this year,took place three months before the SA ReserveBank placed VBS under curatorship

Mukhodobwane: Ndaa Andile, can we firstpush Kabelo to bring in the deposits he hadpromised us. I am worried about our positionleading into year end, we have halted mostdisbursements & payments in order to ensurethat we settle over year end.I'm worried about this trend whereby we areJust paying these commissions and nothingcomes in especially whilst we have liquiditypressures like theseKabelo had saidwe would get funds fromSekhukhune, Ephraim Mogale & Makhado[municipalities] since the start of the month

Ramavhunga: I've made a commitment toBra Danny, he was the one asking not Kabelo

Mukhodobwane: None of these have happened

Ramavhunga: Let's just do it my chief, thenthe ball will be on their side

w

Mukhodobwane: I will push the invoice yaBra Danny, I have raised the issue ya thedeposits with Kabelo directly. Just wanted tolet you know so that if he says anything youknow where the issue come from. The guys areloading the payment for the 1.5m as we speak.

Ramavhunga: Continue pushing him, I willraise the same with him. At least this one BraDanny called and if they don't keep to their endof the bargain, I will then call him directly...Also let me know if the R5Om from Makhadodoesn't come through, will take this up withDanny. Let's hold them accountable now.

An hour and 46 minutes later ...

Ramavhunga: This deposit must comethrough today. Pls send Kabelo proof ofpayment, these guys are panicking now

w

Mukhodobwane: Sure I told the guys tosend it through ASAP

Ramavhunga: Thanks