VBS Mutual Bank claims the Public Investment Corporation was about to lend it R700m when the Reserve Bank placed the cash-strapped bank under curatorship, says a Sunday Times report. In court papers challenging the decision, VBS’ majority shareholder said the PIC had decided to lend the bank enough to keep it afloat amid a liquidity crisis.

‘It transpired on 12 March 2018 that the PIC agreed to advance R700m as a loan to VBS Mutual Bank,’ Vele Investments said in its affidavit. ‘Had the Minister (of Finance) waited until then the liquidity would, due to such loan, have improved beyond a point of concern and with no need to appoint a curator.’

The company went to court in March to challenge the curatorship decision. The matter was withdrawn, but the Sunday Times says it understands Vele intends to make a fresh application because shareholders and directors believe the Reserve Bank negotiated with them in bad faith. But the PIC, a 26% shareholder in VBS, reportedly told the newspaper its investment committee had reviewed the loan application and decided to reject it.

In its responding affidavit, the Reserve Bank said VBS was severely mismanaged and there was reason to believe there had been fraudulent reporting and manipulation of financial information. A spokesperson for Vele Investments reportedly said the company had yet to decide whether to re-institute the case. The Reserve Bank said it was not aware of any moves to make a new court application.

Full Sunday Times report (subscription needed)