DA wants probe into VBS Mutual Bank and municipalities that deposited funds with it

The Democratic Alliance (DA) has written to the registrar of banks‚requesting that he immediately establish a commission of inquiry into VBS Mutual Bank and municipalities that illegally deposited funds with the bank.

“The dire state of affairs at the institution necessitates an urgent and thorough investigation to ascertain the full extent of the problems at the institution given the increasing number of allegations and the potential loss of billions of rands of municipal deposits‚” the DA’s Kevin Mileham said on Sunday.

The DA urged the registrar of banks, Kuben Naidoo, to establish a similar commission to that set up when the African Bank was placed under curatorship.

Mileham‚ who is the DA’s shadow minister of cooperative governance and traditional affairs‚ said the call followed a series of scandals which had drawn attention to the institution’s dubious conduct:

- Municipalities illegally deposited funds at VBS Mutual Bank;

- Lawyers were paid “commission” to induce such deposits;

- VBS was advised that they were acting illegally in taking such deposits in August 2017‚ and continued to do so;

- The bank recklessly utilised short-term deposits (from municipal funds) to finance long term loans; and

- The bank entered into high-value loans with bank officials‚ shareholders and related individuals/entities.

The terms of reference for this commission should follow similar processes taken by the registrar in the African Bank instance‚ Mileham said.

“The DA cannot sit by idly‚ while municipal officials‚ lawyers‚ auditors‚ and bank staff‚ shareholders and directors squander the resources of municipalities through illegal or risky financial activities.

“We will relentlessly continue to hold all individuals and entities who nonchalantly abuse public funds accountable.

“The DA will not permit corruption or financial maladministration to cripple service delivery to people on our watch‚” Mileham added.