High Court grants provisional sequestration orders on VBS executives

Depositors who stand to benefit from the recovery of these assets include municipalities who have deposits with VBS, trade and corporate creditors of the Bank.  Retail depositors whose deposits are in excess of R100 000 in VBS also stand to benefit. 

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By CNBC Africa and Curator of VBS Mutual Bank, Anoosh Rooplal

Acting deputy judge-president Moroa Tsoka on Friday granted provisional sequestration orders on Andile Ramavhunga, VBS’s Chief Executive Officer and Robert Madzonga, VBS’s previous chief operations officer and group executive officer of Vele Investments, in the South Gauteng High Court.

This follows Tuesday’s High Court ruling, where Judge Tsoka granted provisional sequestration orders on VBS Executives Tshifhiwa Matodzi, Phillipus Truter and Phopi Mukhodobwane. Vele Investments, VBS’s alleged main shareholder which according to the Curator’s founding affidavit benefited some R745 million ($56 million) from alleged fraud carried out by bank executives, was also liquidated.

READ: VBS Mutual Bank curator launches urgent court application, here’s why…

VBS Mutual Bank established in 1982, was placed under curatorship in March due to its increasing liquidity challenges emanating from a failure of the board of directors and executive management to manage the mutual bank’s rapid growth and the funding of its liquidity.

Vele, which was one of the bank’s major shareholders allegedly mismanaged VBS funds.

The curator’s statement had this  to say about Friday’s judgement:

Judge Tsoka found that Ramavhunga’s explanation of a receipt of R15 million was false and a lie and that the proceeds were probable fraud.  He further found that Madzonga’s claim that receipt of R4.5 million as a promotion bonus was a lie and an attempt to explain the inexplicable.

The judge went further to say that “the interest of justice looms large in this matter and that VBS was stripped of its assets that belong to poor people. Fraud was perpetrated by the very people that were placed in the position to look after these people’s interests. It was motivated by greed, where enough is never enough”.

The judge cited a quote from the novel, Atlas Shrugged, (1956): “when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed”.

“Luckily”, the Judge concluded ” it is not 1956 but 2018, and the constitution rules supreme and justice is done between men”.

A delighted Rooplal noted: “This week’s outcome in the High Court is a 100% strike rate for the curatorship. It is a further step to the potential recovery of some of the R1.5 billion that rightfully belongs to the depositors of VBS”.

Depositors who stand to benefit from the recovery of these assets include municipalities who have deposits with VBS, trade and corporate creditors of the Bank.  Retail depositors whose deposits are in excess of R100 000 in VBS also stand to benefit.