VBS. Dewald van Rensburg
was happening with Nesane’s Parallel Property Holdings and Parallel Capital, but with a less obvious connection to further questionable dealings. Nesane’s suspected stand-in as director of Parallel Capital was Lufuno Godfrey Mudau, a man with no obvious link to VBS or Vele, but chairperson of a company from Limpopo called Rengani Group.
Another Nesane company sharing the address of both Parallel companies, Dzata Group, listed Emmanuel Masala Ramadi as its director. Ramadi was also a director of Rengani Group, alongside Mudau. Nesane paid on R1.35 million to Rengani Group, the same amount Magula paid to Lot Magosha. Rengani coincidentally also got money from Magula: R500 000. I was not able to figure out what Rengani did to earn this money. When I tried to question Mudau about it back in 2018, he said he couldn’t talk because he was driving and then turned off his phone. A year later, that was seemingly still his approach to journalists when asked about Rengani.17
Simply lending your name to a company for fronting purposes paid way less than what Rengani and Magosha got. A good example is Parallel Property’s director, Rudzani Nndwammbi, who got paid fairly pitiful amounts of R5 000 per month, totalling R72 600 over almost two years. He too is not talking about it.18
Despite the mountain of evidence against him, Magula insisted that he was innocent and the victim of a witch-hunt at the PIC after he had raised uncomfortable questions that Matjila did not approve of. In 2019, he gave a passionate speech to the Mpati Commission of Inquiry: ‘I want to use this opportunity to clear my name and on the issues that were reported in the media as a former board member of VBS Mutual Bank representing PIC. I take responsibility that what happened at the bank was wrong. But also there is no way I could have known what was happening beyond the misrepresentation made to the board through audit reports that were presented to me as a board member and also as an Executive Head of Risk within the PIC … I have never participated in any illegal and fraudulent activities during my tenure as a VBS board member. Some of the things like fictitious deposits, fraudulent withdrawals, bribes, etc. that are said to have happened at VBS I got to know about when I went before the Prudential Authority’s forensic investigators. I’m willing and ready to subject myself and cooperate with the law enforcements agencies.’19
I met Magula once and the overwhelming impression I got was nervousness. Long before anyone knew what had happened at VBS, he was fighting for his career at the PIC after dramatically falling out of favour with Matjila.
On 7 February 2018, the PIC told Magula that he was being demoted to head of regulatory compliance because the ‘PIC has become very concerned about the overall management of the Risk function’.20 This was before anyone had an inkling that VBS was going to collapse. A month later, the week before VBS imploded, Magula was facing a disciplinary hearing. On 18 April, he was summarily fired. VBS fell during his disciplinary process, but it was not the original reason for it.
‘I would like to categorically and emphatically state that the PIC took issue with me and on VBS Mutual Bank after I already had issues with the CEO and the CFO and the Executive Head of HR of the PIC,’ Magula told the Mpati Commission. ‘I was this young man who had ambition to … like any young man you like to arise from the bottom to the top and you probably, in hindsight, you realise that, no, hey, people do have some ulterior motives and you become usable … I was a usable boy, truly, if I would put it that way, and the more you grow, you grow to the role, you then realise, you know, there are things that you wouldn’t have loved to happen and when you have that you become a stumbling block to the powers that be and I probably, as I grew, I started questioning what needs to be questioned and the more you question that the more you become an easy victim to get out, you become like a person who has seen the light and then you are disturbing what you probably have been employed for and hence I was a victim of the circumstances that I’d gone through.’21
This was his story exactly a year after VBS collapsed.
Magula was not wrong that Matjila wanted to get rid of him. When he testified at the same commission, Matjila laid into his former head of risk: ‘People like Magula … all of a sudden there was a lack of cooperation. Remember, this is a person that I personally thought they could run Risk. And indeed, in the beginning, I saw potential. They were quite obedient. Quite enthusiastic. Quite willing to learn. Quite willing to be guided. We put them on the board of VBS, as we all know … We know we may not have powers to instruct VBS how to go about conducting their business, but at least, as a bigger shareholder, we need to be consulted and at least have a view on how some of these matters of reputations can be managed … But anyway. What I saw is, is different people now in Magula. Very disobedient.’22
The arbitrator in Magula’s disciplinary hearing at the PIC found that he ‘[f]ailed to take care of his duties as the Executive Head: Risk in relation to his failure to disclose the financial sustainability of VBS Bank and to advise of a material change to risk.’23
Matjila said that Magula’s performance had been sub-standard from as far back as May 2017. One could speculate that he might have taken his eye off the ball at that point because his second salary from VBS was already far more important to him than his PIC pay. ‘Matjila [is] of the view that Magula is susceptible to influence,’ the Nexus report noted.24
As for Nesane, at least some of his subordinates thought the world of him. The PIC’s legal advisor, Boitumelo Leroke, described Nesane as a true professional respected by practically everyone: ‘I respected Mr Nesane, I mean I relied on his experience so he was at the PIC for a very long time when I got there so I really, he really depicted a picture of a respectable man, a professional, an individual who knew his work … So you wouldn’t even have thought he’d do something, like he’d do anything untoward, he was even respected throughout the company. He was respected throughout in the field so it was just not at the PIC only, like outside PIC he was respected.’25
The apparent bribery of Nesane and Magula was part of a far more extensive patronage machine around VBS. It was only one part of the process of knocking down the checks and balances that should have made the whole thing impossible. But it was an important one.
7
A Detour to Namibia
The problems at VBS were not confined to its own grand fraud or even South Africa. One episode drew the bank and especially Ramavhunga into an almost equally convoluted scandal north of the border. On 1 March 2017, almost exactly a year before VBS was put under curatorship, a small bank in Namibia, the Small and Medium Enterprises Bank (SME Bank), collapsed.
The proximate cause of SME Bank’s demise was that a supposed deposit at VBS of R150 million turned out not to exist. How this fictitious deposit came about is a complicated story involving a vast money-laundering network based in and around Johannesburg, a Zimbabwean banking cabal and a presidential candidate from that country who runs an asset management business from South Africa.
VBS got involved thanks to Ramavhunga’s old friend and RAU alumnus Mauwane Kotane. The two were close. Not only did they have several business ventures together, Kotane was a trustee of Ramavhunga’s family trust. When he became CEO of VBS in 2014, Ramavhunga almost immediately appointed Kotane’s company Mamepe Capital to source business for the bank.1
Kotane was on a winning streak with small banks. On 7 January 2014, he had seemingly also signed a ‘Memorandum of Agreement for the Provision of Financial Services’ with SME Bank.2 I have to say ‘seemingly’ because the subsequent mind-bending events make even this uncertain.
What is known is that on 27 July 2016 the two banks were brought together in a new arrangement brokered by Kotane. A memorandum of agreement was signed by all three parties (SME, VBS and Kotane’s Mamepe Capital). In terms of the deal, VBS would be the ‘custodian of the portfolio of assets under investment by Mamepe Capital’ and generally a banker to SME.3 But what assets was Kotane managing for SME?
From 2013 onwards, the leadership of SME were pulling off a bank heist of their own using techniques so crude they would have made the VBS crew blush. Like VBS, rogue shareholders had captured SME Bank and begun running it like their own personal piggy bank. First among the suspects was Zimbabwean banker Enoch Kamushinda, who ever since has been employing a ‘Stalingrad’ legal strategy to stay