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South African court allows Reserve Bank to wind up VBS bank

BUSINESS
By Reuters | Nov 13th 2018 | 1 min read
By Reuters | November 13th 2018
BUSINESS
Many South African Municipalities had deposits with the bank. [Photo: Courtesy]

JOHANNESBURG - A South African court on Tuesday approved an application by the central bank to wind up VBS Mutual Bank, which was caught up in a corruption scandal this year.

A report commissioned by the South African Reserve Bank and titled “The Great Bank Heist” found that at least 1.9 billion rand ($132 million) had been looted from VBS and that its financial statements had been misstated.

The regulator placed the small lender under curatorship before applying last month to the High Court to close it down for being “hopelessly insolvent”.

 “There is no reasonable probability that the continuation of the curatorship will enable VBS to pay its debts or meet its obligations and become a successful concern,” court papers filed by the Reserve Bank said.

The collapse of VBS has prompted an outcry in South Africa because many municipalities had deposits with the bank. More than 50 individuals and firms are alleged to have benefited from the fraud.

VBS was thrust into the spotlight in 2016 when it provided a 7.8-million-rand loan to then-president Jacob Zuma to reimburse the state for lavish upgrades to his private residence including a swimming pool and Amphitheatre.

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