Disturbing details are beginning to emerge of an elaborate billion-rand bank robbery seemingly orchestrated by senior politicians, government officials and top-earning corporate professionals. Media reports in recent days have consisted in whodunnit investigations. But for Lawrence Ndlovu there is a far more distressing scandal that needs to be addressed. What of the bank’s poorest customers who trustingly deposited their hard-won savings in its vault?
One of the most frustrating experiences for those who follow news and public discourse is how the angles taken in news always seem not to get to the root of the problem or the real meaning of the events they cover.
When the South African Reserve Bank issued its report VBS Mutual Bank – The Great Bank Heist, the findings of a forensic investigation led by Advocate Terry Motau SC, media coverage ran quickly and zoomed in on the names that appeared in the report.
Although that angle was necessary it stole attention from the real causalities of this ‘great bank heist.’ It has also narrowed the scope of this problem hindering the much broader and needed view that shows how big a beast this problem is.
Failure of personal conscience
The clients of VBS Mutual Bank (VBS) are mostly poor women, burial societies, stokvels or savings clubs. There is firstly supposed to be a relationship of trust between a bank and its clients. In the case of VBS these clients are already economically marginalised people and groups. The bulk of whose economic activity is in the urban areas and major cities. It takes a concerted effort on the part of individuals and groups to organise their finances and retain a culture of saving.
None of them, as is the case with anyone in the world, could have imagined that their efforts would be the playground of brazen thuggery with impunity. The very thought that people’s trust was disregarded is an indication that the moral quality needed to turn this country around is extremely low and threatening extinction.
No institution relies solely on the personal ethics of individuals. For this reason institutions are structured such that there are enough checks and balances to provide a safeguard for those moments when someone’s hand might slip into the cookie jar. Enter VBS’ second failure.
Failure of internal checks and balances
The unmitigated looting of money from VBS and even strange loans of exorbitant amounts to individuals and the bank’s relationships with certain municipalities are clear signs that internal regulatory systems were ignored. It would be interesting to see the board reports because if board members were misled it would explain why they too failed in their fiduciary duties.
The executives themselves were not supervised properly and did as they wished. It does not make sense that finance departments and workers within the bank could not raise their concerns when there was suddenly a black hole and large sums of money could not be accounted for. It is either that a system driven by fear was advanced on all who questioned or that they were personally rewarded for their silence. Either way these point to the institutional death of governance within the bank.
If the individual does not have their own conscience to worry about and also does not have a system in place to ensure that they do the right thing, surely there must be external entities that will save them from their ethical lapses? Not at VBS.
Failure of external gatekeepers
What has become clear from this report is that auditing firms lend their names to auditors and seemingly trust what their senior executives pronounce is absolute truth. This means yet another layer of individuals, who are meant to be scrupulous in their pursuit of factual truth, is technically unsupervised. Or if they are then their supervisors know very little about their dealings with clients.
It does not make sense that former KPMG partner Sipho Malaba could sign an audit opinion under the name of KPMG knowing very well that there was at least a cash hole of close to R1 billion. The total amount looted at VBS is reportedly close to R2 billion but this figure cannot be confirmed until the curator in charge delivers a final verdict. In a further strange twist the senior auditor himself is said to have benefited close to R34 million from VBS.
This is not an isolated case. KPMG has found itself in the same position before when they were involved in the Guptagate saga. What is extremely worrying in this report is to see that there is a junior clerk who worked with the team led by Malaba who raised concerns about discrepancies and was led to believe that they either were or would be fixed.
The thought that a young person at the genesis of their career would be exposed to such corrupt practices is sad. We should not be left to wonder when they too grow to become the same kind of corrupt professionals.
There are also questions to be asked about other regulators like the South African Reserve Bank and the South African Receiver of Revenue. Surely all money declared to SARS, if indeed it is declared, should be said to be coming from somewhere and for a particular reason? In the entire banking system it is unbelievable that no one saw anything suspicious about VBS until money stopped coming out of the ATMs.
Unfortunately the trust with which the poor deposited their money into VBS was intercepted by thievery. To add salt to the wound this money was not stolen to be invested in other businesses or to create large-scale employment but for pure opulence and greed.
The truth of the matter is that this is the story of almost every poor South African who receives limited to no services to better his or her life, be it for infrastructure or even accessible basics like healthcare, etc. Then when she tries to do something for herself like saving her own money it is stolen from her. Her hard-earned cash stolen to buy yet another flashy car, expensive suits and drinks flashed around to gain artificial respect based on an external life of opulence – a quasi-success story.
This is a story of monumental failure at almost every level of society, from personal to institutional, translating to gross economic criminality and wanton hostility towards the poor. This means that the entire structure is flawed because it has failed to protect the ones who need protection – the poor.