Reserve Bank commissions forensic probe into VBS

The Reserve Bank has commissioned a forensic investigation into the affairs of VBS Mutual Bank to determine‚ among other issues‚ whether any of its business was conducted with the intent to defraud depositors. 

The Reserve Bank placed VBS under curatorship in March after withdrawals by municipalities‚ from which VBS was unlawfully accepting deposits‚ led to a cash crunch.

“After a thorough assessment of VBS‚ [curator Anoosh Rooplal] recommended that an independent review of the business conduct of VBS be undertaken‚” the Reserve Bank said in a statement on Friday.

Rooplal was unable to confirm the existence of R900m in deposits and has flagged related-party transactions.

The Reserve Bank deputy governor and CEO of the Prudential Authority had appointed advocate Terry Motau to conduct a forensic investigation‚ the Bank said. 

Motau was part of a 2012 inquiry panel‚ headed by Judge Jake Moloi‚ which found then national police commissioner Bheki Cele unfit to hold office.

The primary objective of Motau’s investigation was to establish whether:

1. Any of the business of VBS was conducted with the intent to defraud depositors or other creditors of the bank‚ or for any other fraudulent purpose;

2. VBS’s business conduct involved questionable and/or reckless business practices or material non-disclosure‚ with or without the intent to defraud depositors and other creditors; and

3. There had been any irregular conduct by VBS’s shareholders‚ directors‚ executive management‚ staff‚ stakeholders and/or related parties.

Based on the findings of the forensic investigation‚ Naidoo would take appropriate follow-up action‚ the Reserve Bank said.