South Africa’s biggest bank heist took place without a single shot being fired.
Thieves armed with explosives and assault rifles attacked dozens of armored vehicles delivering cash to the country’s lenders last year, stealing hundreds of millions of rand. They’ve allegedly been outdone by five bankers accused of siphoning off at least 1.5 billion rand ($114 million) from VBS Mutual Bank.
The collapse of the seventh-smallest of South Africa’s 21 banks has left a trail of destruction, with customers queuing up outside branches before dawn in the hope of accessing their funds. Like Mulalo Ramano, a 72-year-old widow who’s suffered anxiety attacks fretting about the 20,000-rand life savings she deposited at the bank.
“My heart beats so so fast, it feels like it’s going to pop out,” a frail Ramano said July 14 as she waited outside a branch of VBS in Thohoyandou in northeastern South Africa. She was among dozens of people lined up to trying to get their money back from the lender that collapsed in March.
‘Biggest Frauds’
The scale of the fraud is more than three times the size of the 10 biggest cash-in-transit heists pulled off by armed attackers last year, when they netted 456 million rand, according to Interpol data published by the Johannesburg-based TimesLive news website.“It probably is the biggest bank heist in South Africa by bankers,” said Kuben Naidoo, the registrar of banks and a deputy governor of the central bank, who described VBS as a Ponzi scheme. “It certainly is one of the biggest banks frauds that we’ve seen in South Africa.”
Nedbank Group Ltd., South Africa’s fourth-biggest bank, with support from the central bank, has stepped in to help with payouts for VBS customers.
VBS’s history stretches back to 1982, when racist laws were in full force and black South Africans had little or no access to finance. Burial societies established the Venda Building Society to offer impoverished communities a way to set aside money for funerals.
‘White Banks’
South Africa’s biggest lenders reacted to the corruption allegations by closing down all accounts linked to the Guptas. That triggered a backlash, with Zuma’s supporters calling for a boycott of what they labeled “white banks.” Municipalities came under pressure from some politicians to instead place their money with black-owned banks like VBS—in contravention of laws that prohibit mutual banks from taking municipal deposits, according to Naidoo.“There was an element of politicization of the bank,” he said. “There was certainly political pressure on municipalities to take money from so-called white banks and put it in black banks.”
‘Fabricated Accounts’
“It took deposits, gave the money to directors and shareholders and their associates and companies, and then it needed to pay back deposits so it had to get more deposits in,” Naidoo said, describing the structure of the Ponzi scheme.‘Heads Held High’
Matodzi said in a signed letter to Naidoo in March, which Naidoo included in court papers, that his VBS team would “leave the space with our heads held high knowing that we achieved what was considered impossible. In the end, we were faced with a well organized and powerful system which does not tolerate growing black banks and black excellence.”Back in Thohoyandou, Terrence Mulaudzi, 23, hustles through the streets of the town, selling everything he can—from belts to mobile-phone SIM cards—to eke out an existence. His extended family has been a victim of the bank’s collapse.
“Everyone in my family is affected, from my dad to my cousins,” he said. “We trusted the bank and the system to look after us, and now to discover we have been throwing money into a bottomless pit and for thieves to enjoy.”
