As VBS Mutual Bank’s crash paralyses municipalities after it lost R1.5bn of their funds, details are now emerging of how Vhavenda King Toni Mphephu Ramabulana and the bank’s executives lived the high life, flying in helicopters, driving Range Rovers and Mercedes-Benz Vianos, and shopping at exclusive boutiques.

A stack of bank statements City Press has obtained show how Ramabulana; Tshifhiwa Matodzi, the bank’s former chairperson and Vele Investments founder; and former Vele chief executive Robert Madzonga allegedly dipped into hundreds of millions of rands belonging to depositors to finance their lifestyles.

This all took place while Andile Ramavhunga was the chief executive of VBS.

The documents also show how the bank collapsed under the weight of hundreds of millions of rands in unpaid overdrafts, vehicle finance deals, mortgage bonds and complex intercompany loans between VBS, Vele Investments and other Vele-controlled companies.

Vele Investments is VBS’s main shareholder, with a 53% stake in the bank, but it appears to have used the bank to keep its other businesses afloat.

The bank statements show how Ramabulana received a monthly salary of R310 000 from Vele, which was deposited into his VBS account. The bank also financed the king’s five cars, worth more than R6.5m in total, including a top-of-the-range Mercedes-Benz Viano worth R1.6m and a R1.4m Range Rover.

The statements also show that Ramabulana spent R26 000 on designer clothing at the exclusive Giorgio Armani store in Sandton, Johannesburg, and a further R12 000 at La Martina, a boutique sports and leisure clothing store in Nelson Mandela Square, in one day.

VBS also paid the Dzata Trust, registered under Ramabulana’s legal adviser Paul Makhavhu’s name, R9m – some of which was used to pay for the monarch’s Viano, his Range Rover and a mortgage for his house in the upmarket gated Johannesburg suburb of Dainfern. The trust also enjoyed a R6m overdraft from the bank.

The king is known to throw lavish parties at his home, where guests are treated to bottles of their choice of expensive whisky or champagne on arrival, which is served by the king’s personal butler, who is also his aide and driver.

Those close to the king also apparently benefited from the bank’s largesse. In March last year, a close ally of his, whose name is known to City Press, was paid R500 000 from the bank’s corporate account.

Turning to Madzonga, the bank statements show that he enjoyed an after-tax monthly income of R400 000 and a travel allowance of R100 000 a month.

Madzonga received a further R15m from VBS. This was first transferred to Vele, then to another company and finally deposited into Madzonga’s account. This money was used to pay for six of his cars, which are worth more than R6m, cover his R213 000 monthly bond payment and pay for occasional dinners at Gianni’s Ristorante, an up-market seafood eatery in Ballito, KwaZulu-Natal.

Madzonga’s cars and property are all financed by VBS.

The statements show that, in May last year, Matodzi’s VBS savings account received R22m directly from the bank.

INTERCOMPANY LOANS

The bank statements also paint a picture of complex intercompany loans and transfers to Vele and its subsidiaries, including:

. Between August and December, about R175m in depositors’ funds was transferred from VBS’s corporate account into Bophelo Benefit Services;

. Between October and December, about R120m in depositors’ funds was transferred from VBS to Bophelo Life Insurance;

. Between R250m and R300m a month was moved from VBS to Insure Group Managers. A few days later, the money would be transferred back into an account belonging to VBS. Statements show this happened from at least September until February this year;

. Anglo African MBR Finance operated through a R14m unserviced overdraft from VBS;

. Wegezi Power Holdings ran its operations through a R7m unserviced overdraft facility from VBS;

. In January last year, Vele Investments had a R15m overdraft facility at VBS; and

. A number of small companies with irregular or no income at all ran their operations through unserviced VBS overdraft facilities worth between R1m and R10m.

Vele Investments has a string of subsidiaries, including Wegezi Power Holdings, Insure Group, Anglo African MBR Finance, Malibongwe Petroleum, Allcare Administrators, Hlomphanang Logistics, the Mvunonala group of companies and a lucrative zinc processing plant in Springs, east of Johannesburg.

HOW THE MONEY DISAPPEARED

A source close to SizweNtsalubaGobodo, which the SA Reserve Bank appointed as the curator of VBS in April, said Vele Investments used depositors’ funds to acquire and operate many of its subsidiaries.

“The guys at VBS used depositors’ money to fund Vele’s expansion. If you look at the books closely, you will soon discover that there are three ways in which the bank’s money disappeared,” the source said.

“People simply didn’t pay their home loans, overdrafts and vehicle loans. But also, some of Vele’s subsidiaries ran their day-to-day business through large VBS overdraft facilities and complicated intercompany loans. It was like a Ponzi scheme that was eventually going to fail.”

The source said VBS’s 20 biggest creditors were related and linked to Matodzi, Ramabulana and their families.

Vele spokesperson Ndivhuwo Khangale did not respond to detailed questions sent on Thursday. He did tell City Press that he was speaking on behalf of the king as well as former VBS and current Vele executives, all of whom, he said, declined to comment on the contents of the bank statements because an investigation was under way.

A senior executive at Vele Investments said the money transferred from VBS to Vele Investments were genuine loans, and there was nothing illegal about this.

“No money was stolen. Granted, procedures were not followed properly when Vele borrowed money from VBS, but we have some form of documentation and we will produce those documents in an appropriate forum,” he said.

The executive said Vele was in the process of signing an acknowledgement of debt, and would “probably” sell the company to settle what it owed VBS.

Meanwhile, at the municipalities

This week, Cooperative Governance Minister Zweli Mkhize met representatives of 14 municipalities that invested their funds in VBS. He gave them a month to come up with plans to mitigate their losses.

Mkhize also instructed the mayors of the affected municipalities in Limpopo, Gauteng and North West to submit financial reports and recovery plans.

Further documents City Press obtained show how a municipal manager ordered a subordinate to deposit R50m into a VBS account within 30 minutes.

This was done in the middle of the first “liquidity stress event” the bank experienced last year.

Emails show how Romeo Mohaudi, the chief financial officer at West Rand District Municipality, pulled his counterpart from Merafong City Local Municipality, Thys Wienekus, out of a meeting to ensure he made the payment before noon on June 23 last year.

Mohaudi had been seconded to Merafong as municipal manager at the time.

The bizarre haste with which Merafong gave VBS R50m is possibly explained by happenings at VBS itself that week.

In an affidavit earlier this year, Kuben Naidoo, the registrar of banks, included a list of “liquidity stress events” at VBS – instances when the bank did not have cash to settle transactions with other banks.

The first one was on June 20 last year, when VBS came up R295m short. The previous day, Rand Merchant Bank filed a final written demand and began suing VBS.

On June 22, Wienekus emailed VBS at Mohaudi’s behest to enquire about interest rates. The next day at 11.18am, Mohaudi emailed an administrative officer at Merafong to “please ensure that Thys receives the attached documents and invests the money through to VBS Mutual Bank. The amount agreed is R50 million. The investment deposit must be made today before 12pm.”

When the administrator responded that Wienekus was in a meeting, Mohaudi wrote: “I have requested him to excuse himself from the meeting to ensure the payment is done before 12pm.”

The payment was evidently made because the Merafong and West Rand municipalities each have R50m in VBS, according to figures presented in Parliament by Treasury earlier this year.

Wienekus and Mohaudi declined to comment.

“Provincial treasury had appointed Deloitte to conduct a forensic investigation on VBS Investments, therefore I cannot further respond to your questions. Let’s allow the investigation to be concluded,” said Wienekus.

Mohaudi said: “While I can readily respond to your questions, I would rather request that I be afforded the opportunity to give due regard to the investigative processes currently under way.”

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