/ 13 September 2019

Millions lost and now more VBS liquidations

Follow the money: VBS liquidator Anoosh Rooplal has applied for the court to grant him an order allowing him to attach Jacob Zuma’s Nkandla homestead.
Follow the money: VBS liquidator Anoosh Rooplal has applied for the court to grant him an order allowing him to attach Jacob Zuma’s Nkandla homestead. (Madelene Cronjé)



Two companies linked to disgraced former KPMG partner Sipho Malaba face permanent closure after they failed to repay more than R28-million in loans, vehicle finance and mortgages granted to them by the now defunct VBS Mutual Bank.

The two companies, Egrove Holdings and Betanologix, are the subjects of a court application to place them under final wind-up. The application was launched by VBS liquidator Anoosh Rooplal in the Johannesburg high court late last month.

This is after both companies failed to respond to several demands for full and final payment of R21-million for two overdraft facilities, R490 000 for a car loan and R8.8-million for a home loan that were in arrears.

Both companies have the wife of dismissed former KPMG partner Sipho Malaba — Jacqueline — listed as director.

Malaba was fired by KPMG after he was found to have purposefully overlooked a R1-billion cash shortage at the now defunct VBS bank at the time he was its external auditor.

The forensic investigation report into the crash of VBS, penned by senior counsel Terry Motau, uncovered the R28-million in gratuities paid to Malaba — through the two companies — to buy his silence regarding the true state of the bank.

The bank housed deposits of numerous societies and stokvels belonging to mostly rural and poor people in Limpopo. It also had R1.5-billion from equally poor municipalities across the country and several other state-owned entities.

The deposits by the municipalities and state organs were found to have been illegally made and often saw several middlemen, including politicians and bankers, rewarded handsomely for bringing in the cash.

Motau’s report also noted that billions were then looted from the bank by connected politicians and executives through payments, loans and mortgages.

VBS was finally liquidated in 2018, following an application by the South African Reserve Bank that had earlier placed it under curatorship.

A statement issued by the bank at the time said: “Whilst VBS is currently under curatorship pursuant to a decision taken by the minister of finance on 10 March 2018, the Prudential Authority is of the view that curatorship must now be terminated and VBS must be placed in final winding-up.”

It added that: “VBS is hopelessly insolvent as a result of the massive frauds [that] have been perpetrated against it”.

The Mail & Guardian has previously reported that Malaba, one of two KPMG executives who resigned from the audit firm in the wake of the VBS debacle, did not disclose to KPMG that they held the loans with VBS.

Malaba was KPMG’s lead auditor on the account, while his colleague Dumi Tshuma, also a senior executive, worked alongside him.

The two denied any wrongdoing and instituted a R30-million damages lawsuit against KPMG. Malaba had also indicated that he intended to take Motau’s report on review.

This week, the liquidator, Rooplal, also applied for the court to order that former president Jacob Zuma pay back a R7.8-million loan given to him by the bank in 2016.

Rooplal also wants the court to grant an order allowing him to attach Zuma’s Nkandla homestead. The outstanding payment is for a loan Zuma took out to repay the government’s unauthorised upgrades to his property.

In his application to wind-up the Egrove Holdings and Betanologix, Rooplal reveals they were each granted R3-million in overdraft facilities in 2016, and these were increased to R11.1-million and R8.6-million by December 2017.

Egrove was also granted a R455 500 loan to purchase a Mercedes-Benz CLA 200, as well as R7.3-million bond to purchase a property in Maroeladal, Fourways, in March and August 2016, respectively.

The latter two loans were serviced until November 2017, Rooplal said, and to date Egrove has failed to remedy this breach of contract, prompting several notices of demand this year.

The companies acknowledged the debt in letters by attorney Hlubi Radebe of MI Radebe Attorneys in March, but failed to respond to requests for detailed payment plans.

In the founding affidavit accompanying his application, Rooplal said: “The applicant is creditor of Egrove and has the necessary locus standi in terms of section 9 of the Insolvency Act to institute this application and apply for the relief sought.”

He added that: “Egrove is deemed to be, and is in fact, unable to pay its debts, and Egrove has admitted the indebtedness and its inability to pay the debt.”

Radebe on Thursday said both Egrove and Betanologix “went into voluntary liquidation with the master of the high court in Johannesburg”.

Winding up involves ending all business, and includes liquidation. Liquidation involves the selling of company assets to pay creditors, and then closing the company.