NEWS
08/05/2018 06:49 SAST | Updated 08/05/2018 06:49 SAST

DA Asks Registrar Of Banks For Commission Of Inquiry Into VBS Bank

The DA says there needs to be an investigation into municipalities which deposited funds into VBS unlawfully.

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The DA has called for a commission of inquiry into VBS Mutual Bank and the municipalities which deposit funds with it, Fin24 reported. The deposits allegedly happened in contravention of the Municipal Finance Management Act (MFMA).

VBS Bank was placed under curatorship by the Reserve Bank in March due to a "severe liquidity crisis". In an affidavit, Registrar of Banks Kuben Naidoo said there was evidence of fraudulent reporting at the bank, and that it had been "severely mismanaged".

The DA reportedly says a commission should also probe reports that lawyers were paid "commissions" to secure deposits by municipalities into VBS accounts, and that VBS continued to accept the loans despite being advised in August last year that they were unlawful.

On Monday, Vele Investments, which has a 53% shareholding in VBS, was raided by the Reserve Bank, according to Business Day. The Reserve Bank reportedly obtained a warrant under the newly adopted Financial Sector Regulation Act.

Vele Investments dropped its challenge to the Reserve Bank's decision to place VBS under curatorship.

"Although the case to challenge the curatorship had merit, we have decided on advice of the board to engage with National Treasury, the Reserve Bank and the Public Investment Corporation to chart the way forward and recapitalise VBS," said acting chairperson Maanda Manyatshe told Fin24 in March.

Vele is reportedly VBS' largest shareholder, followed by the Public Investment Corporation and Dyambeu Investments.

According to TimesLive, the DA wrote to Naidoo requesting the commission of inquiry on Monday.

The DA's Kevin Mileham reportedly said,

""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."