Correctional Services spokesman Manelisi Wolela has denied allegations that student leader Mcebo Dla.
National Savings and Investment is investigating why they took the money from an investment from one of its clients to pay for a paid-up loan.
Milton Tladi, 60, of Mofolo Central in Soweto, said he has learnt the hard way not to stand surety for anyone, even if it is his brother.
He lost an investment of R10349 for a debt of R3000, which Tladi said had been paid off.
When his brother took a loan for R 3000 from National Savings and Investment, Tladi undertook to pay the debt if his brother failed to do so.
"I asked the company to give me statements so that I could monitor his loan repayments, which they did," Tladi said.
He said his brother took a second loan, but he - Tladi - did not stand surety for it.
But four years later, and long after his brother had repaid both debts with National Savings and Investment, they claimed Tladi's R10349 from Absa, to pay for the debt, he said.
The money was part of his early retirement package, which he had invested in 2003.
A year later he got the shock of his life when he tried to withdraw his investment.
"I was a bit relieved when the teller said it had been deposited into Absa's unclaimed account," he said.
He, however, lodged a complaint with the banking ombudsman because he couldn't understand why it had been deposited into the bank's unclaimed account before the maturity date.
"It was only then that I discovered that National Savings and Investment had withdrawn it.
"They had used a cession of right, which I signed in 2000 when I stood surety for my brother when he took out the loan from them," he said.
Tladi said he was told that his investment had been withdrawn by Courie Maritz of National Savings and Investment.
"Maritz admitted he had withdrawn the money, but said it was because my brother had not paid his debt.
"But he was at a loss for words and couldn't explain why he done so when my brother produced proof of payment," Tladi said.
National Savings and Investment is investigating the reasons for their taking Tladi's money.