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Tshifhiwa Matodzi, the former chairperson of VBS Mutual Bank, has been sentenced to jail.
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Who Were VBS?
VBS Mutual Bank was established in 1982 and operated primarily in the Limpopo province of South Africa.
It was a mutual bank, which means it was owned by its depositors rather than shareholders.
Read More: Shareholders Vs Bondholders
VBS once helped rural communities with mortgages and savings but collapsed in 2018 after years of secretly being looted. The scandal reached from small villages to high levels of government, defrauding many ordinary South Africans.
Jail Time for the Crooks
In court this month, Matodzi admitted to 33 crimes, including corruption, theft, fraud, money laundering, and racketeering.
Although the combined sentence totals 495 years, he will serve 15 years because the court ordered the sentences to run at the same time.
The investigation into his crimes and the looting at the bank followed a 2018 report by the central bank that called the scandal “the great bank heist“.
Read More: VBS Report Reveals Widespread Corruption
Traditionally this means that Matodzi would be up for parole once half that sentence is served.
From Nice Mutual Bank to Corrupt Slush Fund
VBS was originally a successful bank owned by its depositors, aimed at helping rural communities secure loans and save for important events. Sadly, however, it quickly became a slush fund for corrupt politicians and officials.
Bank employees involved in the scandal bribed local officials to divert municipal budgets into VBS (which they were not meant to do) in return for cash and gifts.
‘people were given bank loans but never asked to pay them back’
In many cases, it was said that people were given bank loans but never asked to pay them back. The people who received the loans got to spend the money but then never had to make any payments and so these are seen as bribes or payouts.
In one case the bank was supposedly paying over R1 million every month just to keep the politicians out of their business and to stop them saying and things about the bank in the press or parliament. Others received massive loans for homes and cars that they never paid a cent for.
Investigation and Aftermath
The full extent of the looting came to light when the central bank eventually took control of VBS. The bank was liquidated in November 2018.
Matodzi was ultimately identified as the mastermind, and succeeded in the criminal enterprise by working with a network of fraudulent companies and professionals.
Despite many arrests in the VBS case so far, only Matodzi and former CFO Phillip Truter have been found guilty and sentenced to date. The question is: will that change down the line?
Recent revelations have confirmed past allegations of wrongdoing by BIG political names and the very public way that things have now been revealed has prompted authorities to say they are going to investigate more. So, it will be interesting to see what happens next.
The post VBS Mastermind Jailed first appeared on Debtfree Magazine.