King Toni caught in VBS crossfire

Date: 30 June 2018 By: Anton van Zyl

While investors at VBS Mutual Bank are battling to get their savings back, Vhavenda King Toni Mphephu Ramabulana got caught in the crossfire and is now being accused of using the bank’s money to pay for luxury items such as cars, a helicopter and a house in Dainfern Golf Estate. Ramabulana, in turn, has threatened to open a case of fraud and corruption against Vele Investments’ Robert Madzonga and the former VBS chairman, Tshifhiwa Matodzi.

Earlier this week, the Makhado police had to be called in to calm the situation outside the VBS Bank’s branch in Louis Trichardt. For the past two weeks, people have been queuing outside VBS branches, desperately trying to secure their savings.

Last week, the curator of VBS Mutual Bank called upon small depositors (with less than R1 000 in their accounts) to close their accounts at the bank. The customers were asked to do this before 31 August. This announcement seemed to cause panic, with many believing that the bank will be closed at the end of August this year.

Ms Louise Brugman, spokesperson for the curator, said that the decision to take a more conservative approach and close the accounts of certain individual deposit holders was made as a result of the increased uncertainty surrounding VBS and given that the forensic investigation into the bank was still underway. 

“Other retail depositors remain unaffected and they will still be able to withdraw R1 000 per day from the branches as a protective mechanism for all retail deposit holders. Burial societies continue to be able to withdraw R7000 per burial after producing a valid death certificate,” Brugman said.

King accused of going on a spending spree

In reports that appeared in weekend newspapers, the Vhavenda king’s name is mentioned as someone who benefitted from a multimillion-rand spending spree, using VBS Mutual Bank’s money. The City Press reported that bank statements that had come into its possession indicated that Ramabulana, along with the bank’s former chairperson, Tshifhiwa Matodzi, and the former chief executive of Vele Investments, Robert Madzonga, had allegedly dipped into hundreds of millions of rands belonging to depositors to finance their lavish lifestyles.

According to the newspaper report, the statements show that 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 article states.

The documents leaked apparently also show that VBS paid R9m to the Dzata Trust, which is registered under the name of Ramabulana’s legal advisor, Paul Makhavhu. Some of this money was allegedly used to pay for a mortgage on the king’s house in the upmarket suburb of Dainfern in Johannesburg.

How does Ramabulana tie in with VBS?

The Vhavenda king’s relation with VBS Mutual Bank stretches back many years. This relationship was questioned in court papers filed last year by a contender for the kingship position, Masindi Mphephu. Her legal team argued that Toni Mphephu Ramabulana had used his position as “leader” of Dyambeu Investments to influence VBS Mutual to lend a substantial amount of money to former president Jacob Zuma. Dyambeu Investments holds 25,22% shareholding in VBS Mutual and is, along with the Public Investment Corporation (25,26%), the majority shareholder in the bank. The other shareholder in VBS is Vele Investments, a company apparently formed some three years ago by Ramabulana and Tshifhiwa Matodzi, a chartered accountant.

Masindi Mphephu’s legal representatives argue that the loan granted in 2016 to Zuma might have influenced the latter’s decision to recognise Toni Mphephu Ramabulana as the rightful king of the Vhavenda.

In replying responses, the king’s legal representatives argue that Ramabulana does not hold shares in his personal capacity in VBS Mutual Bank. An entity known as the Vhavenda Heritage Trust, comprising the king and other senior traditional leaders, owns 51% of Dyambeu’s shares, it is argued. The respondents also deny that Ramabulana exercised any influence on the decision-making process at VBS Mutual.

The friendship turned sour

What became clear the past week is that the relationship between the Vhavenda king and his former business associates is no longer rosy. The Sunday Times reported that Ramabulana considers laying charges of fraud and corruption against Matodzi and Madzonga. He seemingly believes that his name was used to secure money from VBS Mutual Bank, which in turn was used to finance the luxury items. He has sent a lawyer’s letter to Vele Investments, demanding it settle the R11m debt used to buy the luxury cars and house.

One such item allegedly acquired without Ramabulana’s consent is a R12m Bell helicopter. The Sunday Times quotes the king’s office as saying: “The helicopter was used by Matodzi and Madzonga most of the time and it was hardly available for use by the king, to everyone’s surprise.”

One person who may agree with some of Ramabulana’s statements is the suspended Vele Investments’ executive chairman, Maanda Manyatshe. He made sensational claims last week that Vele might not have paid a cent for its shares in VBS Mutual Bank. The Sunday Times article did not disclose how this was done. It quotes Manyatshe as saying that Tshifhiwa Matodzi was paying for the king’s house and cars, assets which the king believed were gifts from them.

Robert Madzonga, Group CEO of Vele Investments, denied many of Manyatshe’s allegations. He said he had never given or promised the king anything. He also stated that he had settled the king’s debt of between R12m and R15m.

Municipalities may have to wait some more

While the forensic investigations into the happenings at VBS Mutual are continuing, the already-cash-strapped municipalities that invested money with the bank are stuck. The local municipalities that ignored National Treasury’s instructions not to invest in VBS Mutual Bank include the Vhembe District Municipality (R311,5-million), Collins Chabane Municipality (R122,4-million) and Makhado Municipality (R61,7-million).

The parties that suffer the most from the situation are the numerous stokvels and burial societies that invested their money at VBS. The burial societies were told that they may not withdraw more than R7 000 for a funeral. The administrators have complained that this is not enough, as they normally pay their members R10 000 per burial.

The past week, seeing customers queuing in front of branches of the bank from very early in the morning was a regular sight. Many could be seen with blankets, sleeping in queues while waiting for the doors to open.

Minority shareholders are fuming

On Monday, a “VBS shareholder forum” meeting took place in Thohoyandou. Because VBS is a “mutual” bank, depositors effectively also become shareholders of the bank, unlike a commercial bank, where they simply remain customers.

The forum was very critical of the curator appointed by the Reserve Bank, accusing him of not acting in the interests of the bank. “He (the curator) is in the bank to close the bank,” the forum said in a statement afterwards. The members said that the actions of the curator to close accounts and not take in new deposits showed that he had no intention of saving the bank.

The forum said that investigations into alleged mismanagement and corruption must continue. “We are not defending any corrupt activities,” the forum members said but asked that the investigations be fast-tracked.

The members asked for more communication and consultation with all stakeholders. “We (only) learn everything from the media,” they complained. They appealed to shareholders to stand together to save the bank.

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Anton van Zyl

Anton van Zyl has been with the Zoutpansberger and Limpopo Mirror since 1990. He graduated from the Rand Afrikaans University (now University of Johannesburg) and obtained a BA Communications degree. He is a founder member of the Association of Independent Publishers.

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