The troubled Community Scheme Ombud Service (CSOS) has been asked to lay fraud and attempted theft charges against a service provider who deposited the agency’s R20-million surplus funds into an Absa account under his own company’s name.
This is according to a forensic report into the CSOS, which also recommended that the agency should recover R80-million that was “recklessly” paid into now defunct VBS Mutual Bank by the same service provider, Gundos Pty, owned by Ralliom Razwinane.
According to the report, Gundos Pty was not an authorised financial services provider, as required by law.
Razwinane was one of the individuals who received gratuitous payments “without any just or legal cause” from VBS. According to the South African Reserve Bank’s report, compiled by Terry Motau SC, Razwinane received R24 224 198.
The forensic report by Knowles Husain Lindsay Attorneys, which was presented to the former CSOS board last month, said the payments were not authorised by the board.
The board was made aware that the Absa payment was done by a third party in August last year after a subcommittee investigated Absa’s insistence that it did not have an account in the CSOS’s name.
According to the report, the R20-million deposit of the agency’s surplus funds, which was made in January last year, meant that the state institution had no direct access to the funds.
The report said: “CSOS does not have a contractual right to receive the cash invested in Absa Bank due to the fact that the investment account is not in the name of CSOS and the money is therefore not a financial asset of CSOS … The prudent authority’s investigator [advocate Motau] does have the powers [as we understand it] to access those records and to determine whether any criminal or other illegal actions accompanied the opening of the Absa investment.”
The customer was reflected by Absa as Gundo Pty and Gundo’s reference was reflected as Razwinane.
“Adv Motau’s team may thus very well have an interest in investigating how the Absa investment ended up in an Absa account held by Gundo Pty,” according to the report.
The CSOS was set up to resolve administrative disputes in schemes such as sectional title and homeowners’ associations. It is financed by levies paid by sectional title schemes, homeowners’ associations and a government grant.
It was further recommended to the CSOS that the matter should be referred to the authorities for criminal charges.
“CSOS should lodge a complaint with the Financial Sector Conduct Authority against both Gundo Pty and Mr Razwinane, and should lay criminal charges of fraud and attempted theft against both Gundo Pty and Razwinane in respect of the matter with the South African Police Service,” the report said.
A new CSOS board has been appointed and will only make a decision on the issue once it commences with it duties this year.
Razwinane, who has denied any wrongdoing, previously told the Mail & Guardian that he had not been invited by the CSOS or attorneys to contribute to the investigation and that he had not received the report so that he could weigh up his legal options.
According to the report, the CSOS’s financial statements from August 31 last year reflected that an amount of R20 612 106.03 was received by the agency on August 14, and the acting chief financial officer Nathi Dube said these were the funds from the Absa investment.