PIC to have forensic investigators look into all transactions with VBS
The Public Investment Corporation (PIC) will appoint forensic investigators to look at all transactions related to its investment VBS Mutual Bank‚ with two former PIC executives implicated in “serious allegations of impropriety”.
The aim of the forensic investigation is to determine “if any‚ or to what extent‚ PIC officials were involved in the demise of VBS Bank”‚ it said.
VBS‚ in which the PIC owns a 25.26% stake‚ was placed under curatorship in March amid fears that it would collapse. The South African Reserve Bank said this week that as much as 75% of its assets may have been stolen by its executives and directors‚ placing depositors at risk. By the end of January 2018‚ the bank held total assets of R2bn‚ according to data provided by VBS to the Reserve Bank.
Ernest Nesane‚the PIC’s executive head of legal services and one of the fund manager’s delegates on the VBS board‚ resigned with immediate effect on Friday. His resignation came after more information came to light following his testimony before the forensic investigation into VBS earlier this week‚ the PIC said. Nesane did not respond to messages seeking comment.
Nesane’s departure follows the exit of Paul Magula‚ the PIC’s former executive head of risk and compliance and fellow VBS member. He was fired for poor performance in April. Since then‚ details have come to light of payments of hundreds of thousands of rands to his accounts in 2016 and 2017 from Vele Investments‚ the biggest shareholder in VBS. The allegations were contained in an affidavit by Anoosh Roolpal‚ the curator of VBS. Magula has previously denied receiving money from VBS‚ and said he provided information to the investigators on Vele.
“As company directors and PIC executives‚ both Nesane and Magula were entrusted with duty of care to ensure that the institution and its business practices apply the highest standards of ethics and good corporate governance‚” it said in the statement.
The PIC is the biggest investor in South Africa and on the JSE‚ with more than R2-trillion in assets under management. It mainly manages money on behalf of the Government Employees Pension Fund and the Unemployment Insurance Fund.
Municipalities in some of the poorest parts of the country‚ who illegally deposited R1.6bn with VBS‚ stand to lose almost all of this money‚ increasing the risk of budget shortfalls and violent protests that could result from a lack of service delivery.
The PIC said it will also investigate an allegation in Roolpal’s affidavit that R5m in cash was paid to an unnamed senior PIC official in exchange for extending a R350m line of credit to VBS.
According to its records‚ the R350m facility was approved in 2015‚ almost two years before the alleged bribe was paid‚ the PIC said. “Should there be any proof that a PIC employee has received such a bribe‚ the PIC will immediately institute the appropriate disciplinary proceedings and report the matter to law enforcement authorities‚” it said.
“The PIC fully cooperates with the South African Reserve Bank‚ the curator‚ and the forensic investigation instituted by the curator‚ into VBS. The PIC supports any appropriate action against those responsible for the demise of VBS and those involved in any corrupt practices‚ including the demand for‚ the payment of‚ or accepting of bribes‚” it said in the statement.
Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.