VBS Mutual Bank And Kpmg

VBS Mutual Bank And Kpmg

VBS Mutual Bank And Kpmg, Embattled KPMG is set to take a huge financial knock over its role in the near R2billion fraud scandal that sunk the corruption-riddled VBS Mutual Bank.

Advocate Terry Motau, the forensic investigator who was appointed to probe VBS, yesterday released a scathing finding on the conduct of KPMG’s lead auditor for the bank, Sipho Malaba.

Motau said the financial services firm should be forced to take responsibility for its role in the collapse of VBS.

“It (VBS Mutual) is corrupt and rotten to the core. Indeed, there is hardly a person in its employ in any position of authority who is not, in some way or other, complicit,” Motau said.

“I recommend further that an auditor’s liability claim be instituted by the Prudential Authority, the curator and National Treasury against KPMG for recovery of their respective damages,” Motau said.

Motau’s report said he pocketed nearly R34 million from the bank.

Motau found that Malaba was aware that there was a cash hole when he gave his audit opinion in respect of the annual financial statements for the year ended March 31, 2017 in July last year, thus committing fraud.

VBS was placed under curatorship by the SA Reserve Bank in March against a backdrop of a serious liquidity crisis at the mutual bank.

The initial findings of the curator revealed significant financial losses in VBS, which prompted the decision to institute a forensic investigation.

The curator immediately withdrew VBS’s audited financial statements for the year ended March 2017, “as they contain material misstatements and are no longer considered to be reliable”.

The investigation also concluded that VBS and its main shareholder Vele and Associates (acted) in cahoots with erstwhile VBS chairperson Tshifhiwa Matodzi and “operated as a single criminal enterprise, with Matodzi firmly at the helm”.

The paper trail revealed that Vele benefited improperly to the tune of R936m from VBS, while Matodzi took home a handsome R325m.

Vele chairman is accused of having benefited from the rot to the tune of R11m.

Motau further recommended that criminal and civil litigation be taken to recoup assets stolen from the bank.

In July Sarb governor Lesetja Kganyago washed the central bank’s hands off 15 municipalities that had deposited at least R1.5bn with VBS.

Nedbank was appointed to facilitate payouts to other depositors.

At least 15 municipalities had deposited a combined R1.5bn with the troubled bank.

Yesterday Sarb said the courts would be the final adjudicator in the matter. “The Sarb has handed over a copy of the report, as well as all the detailed interviews and annexures, to the law enforcement authorities for further investigation,” Sarb said.

“The evidence presented in the report is not a reflection of either the guilt or innocence of any party as not all parties have been given an opportunity to respond to the evidence.”

KPMG said it had noted the report and would only comment once it had studied it in full.