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Last of VBS Mutual Bank's executives now sequestered

The estates of the remaining two directors of VBS Mutual Bank were placed in final sequestration by the Gauteng High Court on Friday 23 August, which will assist the liquidator, Anoosh Rooplal of the Limpopo-based mutual bank in his efforts to recover over R1.5 billion on behalf of creditors. Some 14 municipalities and over 20,000 retail investors were left out of pocket when VBS was placed into curatorship last year as a result of wide-scale fraud that was perpetrated against the Bank.
Last of VBS Mutual Bank's executives now sequestered
© Sergii Gnatiuk – 123RF.com

Judge Keoagile Matojane ordered the final sequestration of the estates of Robert Madzonga, (previous chief operations officer of VBS and group executive officer of Vele Investments), and the joint estates of Andile Ramavhunga (VBS CEO) and Zanele Ramavhunga. The estates were provisionally sequestrated on 3 August 2019. All three parties opposed their provisional sequestrations and asked the Court to set aside the provisional orders.

In a strongly-worded ruling, Judge Matojane also ordered the three respondents to pay all costs, including the costs of senior counsel and all previously reserved costs.

Pleas of ignorance found to be improbable

Judge Matojane found that Ramavhunga’s defence that he was never a participant in the fraudulent scheme perpetrated at the bank and had no personal knowledge of the details of the fraud was “untenable and demonstrates a lack of bona fides on his part”. As a chartered accountant and CEO of VBS, Ramavhunga must have known about the purchases of various high-end motor vehicles by the bank for executives, fraudulent payments, fictitiously created accounts and payments made to bribe influential persons.

The Judge ruled that since VBS has proven a liquidated claim against the Ramavhungas, who are married in community of property, they ought to be sequestrated.

In reference to Madzonga’s defence that he was ignorant of the scheme and did not benefit from it, Judge Matojane found that it was more probable that Madzonga, an attorney of more than 23 years’ experience in the commercial and corporate financial business areas, knew of and benefited handsomely from the fraudulent scheme. He found much of Madzonga’s denials were littered with contradictions. The judge said Madzonga’s wrongful acts contributed towards the VBS loss and as a concurrent wrongdoer he was also liable for VBS's loss.

The liquidator of VBS Mutual Bank, Anoosh Rooplal, noted:

The final sequestration of the Madzonga and Ramavhunga estates concludes our efforts to sequestrate all the VBS executives involved in and who benefited from the wide-scale fraud perpetrated at VBS. The final sequestration orders will enable the trustees of their respective estates to intensify the recovery of assets, which ultimately can accrue to the benefit of the estate of VBS.
In November 2018, final sequestration orders were handed down on Tshifhiwa Matodzi, (Chairman of the VBS Board of Directors), Phillipus Truter (VBS Financial Officer) and Phopi Mukhodobwane (Head of Treasury at VBS).

Anoosh Rooplal appointed as final liquidator (from provisional) by the Master of the High Court

On 13 August 2019, Anoosh Rooplal was appointed as final liquidator of the VBS Mutual Bank. Rooplal said: “Although my duties and remit do not change much from when I was provisional liquidator, the appointment does entitle me to call a second meeting of creditors. This will allow for more creditors to prove their claims. An announcement will be made in the Government Gazette in due course.”

Pursuing outstanding amounts owed to VBS

The liquidators’ legal team is currently pursuing outstanding amounts on a number of VBS overdrafts, mortgages and other debts that are non-performing or in arrears. In some cases, the liquidator has entered into payment arrangements with clients to settle the debt over time periods which are considered acceptable and which are to the benefit of creditors.

Rooplal concluded, “We are aware of the growing impatience of South Africans who want to see the perpetrators of the VBS crime being held criminally liable. My civil remit is to collect all monies owed to the Bank, as dictated by the Insolvency Act.

“I am also legally compelled to co-operate and provide information to enforcement authorities, who are pursuing their criminal investigations. We have provided relevant information as requested and will continue to do so.”


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