There are many questions surrounding the validity of the loans that VBS Mutual Bank, formerly known as the Venda Building Society, granted to clients seeing as the bank allegedly accepted investments from 21 municipalities in contravention of legislation.
In terms of the Municipal Financial Management Act, municipalities are prohibited from investing in mutual banks.
During the past week, the South African Reserve Bank placed VBS under curatorship and the FF Plus is calling on the curator to launch an investigation to determine if the loans that were granted, with money that was obtained by means of illegal investments, is valid.
VBS is known for offering home loans in particular to clients from rural areas and small business enterprises.
The bank was also in the spotlight last year due to its controversial loan of nearly R8 million to the former president, Jacob Zuma, which enabled him to pay his share of the costs of the upgrades at Nkandla.
Last year, the FF Plus requested the National Credit Regulator to investigate how the former president would be able to repay such a vast loan with the salary that he was earning at the time. The FF Plus will address a written request to the curator to specifically investigate the legality of the loan.
Then there are also questions surrounding the decision of the Public Investment Corporation (PIC) to invest so much money in VBS that it now basically owns 30% of the bank. The PIC, which is responsible for investing government employees’ pension money, at one stage had two directors serving on the VBS board of directors as well. Earlier today, the FF Plus addressed parliamentary questions to the Minister of Finance in regard to this matter.
The abovementioned should set alarm bells ringing and government employees are justified in feeling unhappy about the risky investment of their money, most probably made via political connections, in VBS.
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