The report into VBS Bank has found that former KPMG partner Sipho Malaba knew the bank was R1 billion in the red, but nevertheless signed off on VBS’s financial statements and pocketed about R28 million. The audit firm should be held responsible for damages incurred by the VBS curator, National Treasury and the Prudential Authority.
The report has recommended that KPMG, which was left reeling after its discredited investigation into the so-called Sars “rogue unit”, be held liable for damages incurred by the VBS curator, National Treasury and the Prudential Authority.
Advocate Terry Motau proposed that former partner Malaba should face criminal charges, alleging that he defrauded the SA Reserve Bank.
He also called for charges against the bank’s former executives and at least 50 individuals who benefitted from the looting at the bank, including the executives of Vele Investments, its largest shareholder.
The report’s allegations against Malaba are damning: “Malaba had obtained very substantial facilities from VBS which cannot be regarded as arm’s length borrowings and were not declared to KPMG. An unqualified audit opinion was given in circumstances where he knew the financial statements were mis-stated. Additionally, he gave regulatory audit opinion which he knew to be untrue”
The benefits Malaba enjoyed, included an overdraft of R11 million and a bond of nearly R8 million, of which little was repaid.
The report further found Ihaawi Lesizwe Trading (ILT), a company owned by Malaba’s wife, Jacqueline, was granted a R2 million overdraft, which was gradually increased to R11 million.
Motau believes Malaba intentionally manipulated the VBS audit to conceal irregularities, while fraudulent deposits were used to siphon more than R1 billion out of the bank.
He apparently overlooked the bank filing fraudulent monthly and quarterly reports to the Prudential Authority, which allowed it to avoid oversight of its risk profiles.
The National Prosecuting Authority’s Asset Forfeiture Unit step in to recover some of the assets, Motau advised.
