VBS. Dewald van Rensburg
them was to buy two new VBS shares for every one share they already owned. For the PIC and Dyambeu that would mean R12 million each. The general body of about 400 smaller shareholders would have the same opportunity.
Something strange happened in the run-up to this rights issue. On a single day, 27 November 2015, the bank extended massive vehicle loans to Matodzi, VBS CEO Andile Ramavhunga, the bank’s supposedly independent director Ernest Nesane from the PIC, the king and his advisor Paul Makhavhu, and a company called Venmont Holdings, owned by Matodzi. Collectively, the loans were worth R11.5 million.
It was less than three weeks before the new rights issue was announced, although it is speculation that the two are connected. Whatever the case, this mass loan to VBS bosses and shareholders was the first discernible case of major conflicts of interest. Furthermore, just three days before the rights issue was announced, the bank extended Nesane a R1 million mortgage, which he never declared. He also seemingly didn’t have any misgivings when his employer was asked to put more money into VBS.
The VBS corruption machine had been modestly born.
The rights issue was not well received by Dyambeu, but both they and the PIC pitched in the R12 million. If they hadn’t, they would have ended up with smaller shareholdings in VBS.
But there had been a sleight of hand. Somehow, without anyone knowing it at the time, Vele Investments had crept into the mix and emerged from the rights issue apparently owning about 4 per cent of the bank. The PIC and Dyambeu didn’t have a clue what was happening, and they still don’t understand how Vele could even participate in the rights issue when it was not a shareholder to begin with.
According to Matodzi, this was achieved in the same way he had become chair of VBS: mobilisation on the ground. After organising the VBS Shareholders Forum, he became the go-to guy for the ordinary small shareholders. ‘Since I was very active with this forum, there would be people who for various reasons would be selling shares. Small shares … and I would buy that,’ he told me.8 Collecting small shareholdings on an ongoing basis set Vele up to legitimately participate in the rights issue, he said.
This is not entirely true. Vele’s route into VBS’s share register was not properly explained until much later. Matodzi collected the 4 per cent shareholding in the bank, but only transferred it to Vele after the rights issue. He allegedly backdated the paperwork long after the fact.9 This set him up for the daring scam that followed.
Much later, when the PIC’s affairs came under scrutiny at the Mpati Commission of Inquiry set up in October 2018, one of the portfolio managers, Khaya Zonke, would testify how they were caught off guard and later demanded answers from VBS: ‘The issue around Vele was very problematic to us in that we asked for a registration of shareholders from the company. We wanted to find out exactly how this entity came from zero shareholding to, I think at the time they held about 4 per cent after the first rights issue, and after the second rights issue they were majority shareholders in the business. We expressed our concerns and management actually never responded to our concerns.’10
Matodzi now had a foot in the door as a direct shareholder of the bank while he built Vele Investments. It wouldn’t be long before Paul Makhavhu, the king’s man, showed up as a director of this new company. It was seemingly a way of getting both Matodzi and the king out from under Dyambeu’s thumb. Matodzi’s trick, however, was pointless unless he already knew how things were going to unfold. To some extent it didn’t matter whether he was a shareholder or not at this early stage. It was not clear how a 4 per cent shareholding helped anyone.
What Matodzi did have was a growing hold over the management and board of VBS. His Venmont Holdings had started playing a role behind the scenes. On 9 February 2016, it paid VBS CEO Ramavhunga R50 000. It did the same the next month. And the next. Ramavhunga was seemingly getting a top-up second salary from Matodzi.
The capture of the bank continued apace. The 2015 AGM had led to Matodzi becoming VBS chairman. The 2016 AGM gave him even more sway.
Manelisa Mavuso, Dyambeu’s pick for chair in 2015, had stayed on the VBS board as their representative and was keeping David Mabilu in the loop about potentially shifty credit decisions.11 The 2016 AGM was set up to oust him.
According to Matodzi’s ex-partners, Dyambeu was made to miss the AGM. Instead of getting twenty-one days’ notice and time to prepare, Mabilu claims Dyambeu got wind of the meeting scheduled for 29 July 2016 less than a day beforehand. He immediately had their lawyers send a letter to VBS demanding that the AGM be postponed. They didn’t get a response and the meeting went ahead without them. This had one immediate consequence: Mavuso was shown the door.
A number of positions on the VBS board were once again open to a vote from shareholders. Three directors were at the end of their terms, but had made themselves available for re-election. They were Mavuso, the PIC’s Ernest Nesane and Phalaphala Avhashoni Ramikosi, the CFO of the South African Police Service (SAPS). Ramikosi would later be suspended from his position amid a tender-fraud investigation on top of the charges he faced in relation to VBS.
At the AGM, Azwindini Kwinda, chairman of the VBS Shareholders Forum, tabled a motion to get rid of Dyambeu’s man, Mavuso.12 Without Dyambeu present, the other shareholders unanimously voted for the motion on the basis that Mavuso never attended AGMs. They weren’t wrong, but Dyambeu argued that AGMs were for shareholders, so his attendance was not required.
Defensible or not, Matodzi now had an even more pliant board with Nesane already compromised by two large VBS loans that he never declared to his employer, the PIC. On top of that, Matodzi had a shareholding in VBS and a CEO he was apparently bribing.
Following the 2016 AGM that saw Dyambeu sidelined, VBS set about organising a second rights issue. This ratcheted up the tensions between Matodzi and his old partners to breaking point.
The notice to shareholders was dated 24 August, but apparently only reached Dyambeu on 7 September. Mabilu went on the offensive, instructing lawyers to demand sight of any resolution properly adopted by VBS shareholders to allow the new rights issue. Instead of providing this readily available document, VBS’s CFO Philip Truter wrote back, tersely demanding that the lawyers prove they worked for Dyambeu.
VBS eventually did produce the minutes of the recent AGM and, as suspected, there had been no resolution to exercise a new rights issue. Furthermore, it would later emerge that VBS had not even bothered to tell the PIC about the plan.
The rights issue went ahead without Dyambeu or the PIC. The inevitable consequence was that Vele’s ownership share in VBS grew in leaps and bounds. By March 2017, the official shareholding of VBS stood at 53.20 per cent Vele, 22.90 per cent individual depositors, 11.96 per cent PIC and 11.94 per cent Dyambeu.13 The appearance of Vele as the majority shareholder was mysterious, as no one had actually heard of the company before now. It participated in the second rights issue on the back of 5 110 VBS shares it had ostensibly bought from Matodzi on 1 April 2016. But as noted, the transfer date had been backdated to April to legitimise Vele’s participation in this second rights issue.14
Matodzi completely denies any underhandedness, saying the PIC was never diluted and that Dyambeu willingly let itself become a smaller shareholder by not taking up new shares. His argument is that the PIC was always intent on participating, but had lengthy internal processes.
The PIC’s internal forensic report prepared by Nexus and an official at the PIC say he is wrong. The PIC official, Brendah Mdluli, told the Mpati Commission of Inquiry that the PIC only received the notice months later, in May 2017. ‘The initial notice of the second rights issues was not sent to me and to the best of my knowledge was also not sent to anyone at the PIC,’ she said.15
According to Mdluli’s colleague Khaya Zonke, Truter evaded the obvious questions afterwards: ‘So we’d raise all these issues and he had all … manner of excuses on why we did not get the notification, ranging from sending it to wrong people and trying to correct that and trying to find out exactly who they should be sending such communiqué to [at] the PIC. So these issues were raised at various stages in both the first and the second rights issue.’16
In both Dyambeu’s and the PIC’s versions, Vele had become the majority shareholder