A senior executive of the controversy-stricken Community Schemes Ombudsman Services (CSOS), who is accused of investing R80-million of surplus funds unlawfully in an account belonging to VBS Mutual Bank, is to face a disciplinary hearing.
Themba Mabuya, formerly the CSOS chief financial officer, was suspended in August last year for financial irregularities, including for the VBS investment.
Mabuya faces allegations of gross negligence, dishonesty and dereliction of duty regarding the VBS Bank transaction and for failing to provide relevant information to the board relating to other investments.
A forensic investigation of the CSOS revealed that the money was deposited into an FNB corporate cheque account belonging to the now-defunct bank.
From there it was allegedly siphoned off and dispersed to such an extent that “it would not even be worth mounting a legal challenge for its return”, an insider with direct knowledge said.
“It was in a VBS-owned FNB account and not invested [and] that is why that R80-million is not in advocate Terry Motau’s report [on VBS, commissioned by the Reserve Bank]. What I have learnt now is that they [CSOS and VBS officials] took it because it was not known [as an investment] by VBS. It was a scam.”
These revelations are also contained in an affidavit filed by CSOS acting chief ombud Ndivhuo Rabuli in an application before the high court in Johannesburg.
The CSOS wants the court to issue an urgent order to prevent any withdrawal of funds from the FNB account pending the court’s ruling on the second part of the relief, which seeks to have the courts declare the transfer invalid and therefore not part of VBS’s insolvent estate, and order its return to the CSOS. It also wants the court to order the bank to release account statements so it can verify the balance and transactions on the account, arguing that public interest over public funds trumped client confidentiality.
The CSOS has cited FirstRand Bank Ltd, VBS and its liquidator, Anoosh Rooplal, as the first, second and third respondents in the application.
A legal opinion sought by the board had recommended that Mabuya face suspension and disciplinary action on the grounds that he played a role in “investing” the monies, knowing he had no permission to do so.
The CSOS made news last year when details emerged about the VBS investment, which was done without the full board’s knowledge.
The bank’s crash alarmed the CSOS’s government shareholder, Human Settlements Minister Nomaindia Mfeketo, who demanded a report.
The investigators also reported that Mabuya had issued a doctored copy of the CSOS’s investment policy, which was used to mislead Mfeketo.
Mabuya has been named as a central figure in the alleged fraud, in which R80-million left the CSOS in two tranches under the pretext of being an investment.
Motau’s forensic investigation of VBS uncovered large-scale looting and that money, in the form of bribes and commissions for luring government cash to the bank, flowed to traditional leaders, politicians and government officials.