Thembi Simelane’s lender fined R3m, barred for 10 years for VBS dealings

The man who brokered the VBS Mutual Bank deal for the Polokwane municipality and gave justice minister Thembi Simelane a loan that has since landed her in hot water has been fined R3m and barred from providing financial advice for 10 years.

The Financial Sector Conduct Authority (FSCA) said its investigations revealed Gundo Wealth Solutions and its appointed representative Ralliom Razwinane did not render financial services honestly, fairly and with due skill, care and diligence. 

The FSCA also found Gundo Wealth and Razwinane advised two clients, the Community Schemes Ombud Services and Polokwane local municipality, to invest surplus funds in deposits with VBS Mutual Bank.

“The FSCA found the advice to be inappropriate because it circumvented the Public Finance Management Act, Municipal Finance Management Act and Treasury regulations.

“Moreover, it was found the advice was not based on a demonstrable analysis of the clients’ risk profiles and financial or investment needs. Thus, Gundo Wealth and Razwinane contravened the General Code of Conduct for Authorised Financial Services Providers and Representatives.”

Daily Maverick and News24 investigations revealed when Simelane was Polokwane mayor, Razwinane brokered a deal that saw the municipality invest R349m in the now-defunct VBS.

The publications also said forensic investigations found VBS paid a kickback, worth R24.2m, to Razwinane for brokering investments from municipalities and state entities through allegedly corrupt transactions and breaches of the Municipal Finance Management Act.

They also revealed in August that Simelane, who is now minister of justice and constitutional development, had used a “commercial loan” of R575,600 from Gundo Wealth to buy a coffee shop in Sandton.

The FSCA said Razwinane and Gundo Wealth were found to have contravened the General Code by failing to disclose to their clients the fees and commission they earned from VBS as a result of rendering the advice.

The financial body said Gundo Wealth and Razwinane failed to fully co-operate with the investigators, thereby contravening the Financial Sector Regulation Act of 2017.

“Taking all relevant facts into account, the FSCA concluded Gundo Wealth and Razwinane no longer meet the fit and proper requirements relating to honesty and integrity and therefore contravened the Financial Advisory and Intermediary Services Act.

“The FSCA has imposed an administrative penalty of R3m on Razwinane and debarred him for 10 years. Razwinane is accordingly prohibited from providing or being involved in the provision of financial services, acting as a key person of a financial institution, and providing specified financial services to a financial institution, whether under outsourcing arrangements or otherwise.”

The FSCA said it had previously communicated its intention to withdraw Gundo Wealth's licence and impose an administrative penalty of R2m on the company. “However, in the meantime and before making final decisions, information came to the FSCA’s attention that Gundo Wealth was liquidated on August 17 2021.

“Gundo Wealth’s licence has lapsed as a result of its liquidation. It is therefore not authorised or licensed to render financial services effective from the date of its liquidation.”

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