A forensic investigation has revealed about R80m said to have been illegally invested in VBS Mutual Bank by rogue officials at the state-owned Community Schemes Ombud Service (CSOS) was actually deposited into an FNB corporate cheque account belonging to the now-insolvent bank, says a Mail & Guardian report.

From there it was allegedly siphoned off and dispersed to such an extent that ‘it would not even be worth mounting a legal challenge for its return’, an insider with direct knowledge reportedly said.

‘It was in a VBS FNB account and not invested (and) that is why that R80m is not in Advocate Terry Motau’s report. What I have learnt now is that they (CSOS and VBS officials) took it because it was not known (as an investment) by VBS. It was a scam,’ said the insider.

This latest revelation is also contained in an affidavit filed by CSOS acting chief ombud Ndivhuo Rabuli in an application before the Gauteng High Court (Johannesburg). The CSOS wants the court to issue an urgent order to prevent any withdrawal of funds from the FNB account pending the court’s ruling on the second part of the relief, which seeks to have the courts declare the transfer invalid and therefore not part of VBS’ insolvent estate, and order its return to CSOS.

The CSOS also wants the court to order the bank to release account statements so it can verify the balance and transactions on the account, arguing that public interest over public funds trumped client confidentiality. CSOS has cited FirstRand Bank Ltd, VBS and its liquidator Anoosh Rooplal as the first, second and third respondents in the application.

‘The premise of CSOS’ claim against FNB for repayment of its funds is that those funds are owned by FNB and that, owing to the fraud, VBS has no right to the funds. In the event that FNB allows the withdrawal by VBS of the funds from the bank account of VBS or their transfer to another bank it will no longer own the funds, defeating the CSOS’ claim,’ said Rabuli in her affidavit.

‘This would constitute irreparable harm in that there is little prospect of recovery by the CSOS of its monies by way of a claim against the insolvent estate of VBS.

Full Mail & Guardian report