VBS. Dewald van Rensburg
walked over, since the two had offices in the same nondescript Metropolitan Office Park in Rivonia on the outer fringes of Johannesburg’s economic hub, Sandton.
Madzonga’s starting salary of R300 000 per month as COO was soon hiked to R500 000. Even Tshifhiwa Matodzi admits that Madzonga was an employee with expensive taste. ‘When I grew up, Madzonga was always ahead, he had all these fancy cars and all that, Lamborghinis and all that,’ the VBS mastermind told me.16
Madzonga may not have been the right man to run operations at VBS, but he was a good client. Between starting his consulting work for the bank and moving to Vele, he racked up R4.6 million in vehicle finance debt. In 2017, he borrowed another R5 million, buying a Porsche 911 GT3, an Audi R8 and a few more modest vehicles such as a BMW X5, a Ford Ranger and a Porsche Cayenne. Later, when VBS lay in ruins, he would tell the court he had always been an avid collector of high-end vehicles.
At VBS, the idea for a mass-based church product never went away. In 2018, as VBS was circling the drain, Ramavhunga wrote to the SARB setting out plans to bring the bank back from the brink. Among other things, he promised that ‘VBS is developing a membership system which will serve the Stokvel market and large membership groups such as churches’.17
The apparent architect of all these post-Shembe plans was Bhekwayinkosi Gift Manyanga, whose company Bhekwam Holdings signed a ‘Consultancy Agreement’ with VBS in March 2017.18 He would play a role in one of the largest VBS scandals near the end of the saga, but in the main he tried to push VBS into mass retail banking using ‘captive’ markets of employed people, such as members of unions and taxi associations. ‘Experience has taught me that church-related banking transactions amount to nothing, as we have seen with all banks trying to be banking partners with ZCC [Zion Christian Church] and other large church bodies,’ he told me in July 2020 via email.19
Among the deals Manyanga says he struck for VBS were ones with the South African Transport and Allied Workers Union (SATAWU) and the KwaZulu-Natal National Taxi Alliance for taxi finance and drivers’ private banking.
Meaningfully, he also got VBS a deal with the South African Municipal Workers’ Union (SAMWU). It was to last eight years and would see VBS become the exclusive or preferred provider of certain financial services to SAMWU’s members, including microloans secured by salaries and cheque accounts.
‘The Union shall to the best of its ability market the Services of the Bank to Union Members through various means, including, but not limited to, union meetings, newsletters and website,’ read the agreement.20 Ramavhunga and SAMWU president Pule Molalenyane signed the deal in August 2017.
VBS’s relationship with SAMWU went further. On 6 November 2017, the union re-mortgaged its headquarters in Johannesburg to VBS for R11.8 million. SAMWU had owned the building since 2007 and had given it to VBS as security for a loan. Manyanga told me the loan is being repaid to this day. Coincidentally, SAMWU’s senior financial officer, Bheki Maphisa, got a R1.4 million bond from VBS two days before SAMWU got its one.
Manyanga authored a five-year plan for VBS based on all the new business it could theoretically gain from these kinds of deals. Revenues would grow tenfold by 2022 and profits twentyfold.
Despite the SAMWU, Shembe and other deals being signed and looking like a big deal on paper, VBS failed to get much done in practice.
‘The Bank and its internal employees would have to then have to operationalise the deal therefore I cannot be held accountable for whatever inefficiencies that might have happened,’ said Manyanga.21
More to the point, had VBS actually got its act together and enlisted a new mass base of depositors, the scandal could have been infinitely more tragic. Compare VBS’s roughly 13 000 retail depositors to the Shembe church’s numbers or the membership of SAMWU. With the latter, there would have been a deeper implication: VBS could have lost both the money of municipalities and their employees.
In the end it is almost lucky that dreams like the Shembe Unyazi bank made way for the project that would consume VBS over the next two and a half years: building Vele Investments.
And it started with diesel.
5
Fuel on the Fire
When Robert Madzonga walked into Vele Investments in mid-2016, his first job was to put together a grand new project dubbed Vele Petroport. It was a planned merger of a fuel wholesaler called Mmampilo Petroleum and a trader called Belton Park Trading 134. The plan was then to buy another, larger company – Afric Oil – and create a serious integrated fuel supply group with a set of large clients, access to cut-price diesel and a proper distribution network.
Going into the fuel business seemed like a perfect fit for Vele for a very simple reason: VBS was already in the fuel business. There would be, as they say, extremely fortuitous synergies.
When VBS first set out to transform itself from a small-fry mutual bank in 2014, CEO Andile Ramavhunga had a great plan. To fund it, he turned to the bank’s 26 per cent shareholder, the PIC, which had lots of money to spend and skin in the game.
As the single largest asset manager on the continent, the state-owned corporation invests a portion of its vast resources in economic development, including small business support. While it wants a return on its investments, it is far more accommodating than a commercial bank would be if the investment bombed.
Fuel is big business and generally the preserve of big businesses. In South Africa, that usually means long-established and white-owned. Ramavhunga’s idea was to provide working capital to small, primarily black-owned fuel companies that would deliver diesel to huge state-owned clients like Transnet and Eskom. These small companies would not have the cash on hand to fill large orders. VBS would step into the breach to provide that cash. The bank would lend them money to buy the fuel, they would deliver it to the client and, when they got paid, they would repay VBS with a fee on top.
To provide this service, VBS needed more cash. It applied to the PIC for a R350 million revolving credit facility specifically intended for funding fuel contractors. A revolving facility is ‘revolving’ in the sense that the client (VBS) can draw down, for example, R100 million to use, pay it back and then use it again. It’s a little like a massive credit card for a corporation. It just comes with rules about what it should get used for, in this case fuel contract finance. VBS would earn interest and fees from the contractors and pay back the PIC with interest. Ultimately, VBS was helping the PIC fulfil its mandate to promote small black-owned businesses. This plan gelled with a new government policy to move away from the established major fuel distributors. It was a good strategy all round.
As luck would have it, the PIC facility was approved in July 2015, just as Matodzi came in as a director of VBS and then chair. It is probably not a coincidence that Matodzi immediately set up a company called Vele Petroport. It didn’t seem to do much at first except demonstrate the man’s foresight.
The deal between VBS and the PIC was to have a paper trail and clear line of accountability. Companies would come to VBS with signed supply agreements they had with, for example, Eskom proving their contracts and would indicate the amount of money they needed to fulfil them. VBS would collate these applications and the PIC would release the money once it received this documentation.
That was not how it played out. When the PIC fuel facility was approved, VBS immediately made the first drawdown of R100 million. The forensic investigation commissioned by the PIC in 2019 couldn’t work out how that money had actually been used.1 The system of accountability had been completely abandoned. There were sometimes no contracts on file to justify payouts or the payouts were completely at odds with the terms and conditions of the facility. The investigators could not figure out to whom that first R100 million was destined because no one at the PIC could produce any paperwork around it.
The PIC fuel facility became the first known site of outright fraud at VBS. Where paperwork did exist, it was not necessarily real.
VBS would inflate apparently real deals with existing fuel companies through secret amendments to justify larger drawdowns from the PIC. The key person here was Tshepiso