MKMVA concerned about VBS bank having been forced into curatorship and calls for it as the only black-owned bank to be saved
13 March 2018
The Umkhonto we SizweMilitary Veterans Association (MKMVA) is very concerned about the unfortunate situation that has developed regarding actions that the South African Reserve Bank (SARB) announced with regards to VBS Bank, which have now culminated in the bank being placed under curatorship.
While the duty of the SARB to protect the integrity of the banking and overall financial system in South Africa is acknowledged and respected, the manner in which the SARB carries out this mandate is of critical importance. The SARB cannot operate in 'splendid isolation', as if it exists in an a-historical suspended bubble, and ignore the harsh realities of our economic environment where black people (especially Africans) have been exploited and subjugated for centuries by white colonialists, who have morphed into White Monopoly Capitalists, and who with their white owned and controlled financial institutions, have total control over the availability and cost of capital and loans.
The SARB operating 'independently', without aligning and supporting government economic transformation policy, has long been a matter of serious concern to MKMVA. Our 5th National Conference in June last year passed a Resolution in which we called for the SARB to align with government economic transformation policy. We also called for the private ownership of shares in the SARB to cease, and that government must be the sole owner of all Reserve Bank shares. Our Resolution furthermore noted that urgent steps had to be taken to promote and fund black entrepreneurship through making affordable capital available, with the specific intention to promote emerging black (especially African) business and young emerging black entrepreneurs. With this foremost in mind MKMVA called on the SARB to move quickly to establish a State Bank and to grant a full banking licence to the Post Office. Despite our call for such urgent action to be taken, no progress has been registered in this regard. Instead the Governor of the SARB, Mr. Lesetja Kganyago, continues to insist on the 'holy grail' of so-called SARB independence from government transformational policy.
MKMVA believes that it is in this unfortunate context that the current developments regarding VBS Bank must be addressed: VBS Bank is the only black owned and managed bank in South Africa, and as such it is practically and symbolically of great importance for the cause of black economic empowerment and Radical Economic Transformation (RET) - especially in the context of the continuing dereliction of the SARB to proceed with establishing a State Bank, and issuing a full banking license to the Post Office.
As an emerging black bank, transforming itself from being a building society with a mutual banking licence, to a fully fledged commercial bank to be listed on the Johannesburg Stock Exchange, VBS Bank is evidently faced with challenges - especially with regards to complying with the stringent requirements of the SARB.
Instead of taking VBS Bank's hand, so to speak, and assist with a developmental approach to get this emerging black bank to get the commercial banking licence that they have recently applied for speedily, or allow municipalities to bank with financial institutions that have a mutual banking licence, the SARB turned out to be particularly harsh, unbending and ligitious in its approach to VBS Bank. In fact far more so than the SARB had been to the other established banks and financial institutions, that are all in the ownership of White Monopoly Capital.
So for example did the SARB specifically intervene in favour of KPMG, issuing a statement with great haste, and told top lenders that they cannot fire KPMG as their auditors despite KPMG being entangled in a scandal relating to their auditing of companies related to the Gupta family. In doing so the SARB was apparently motivated by 'concerns' that it may undermine financial stability.
This the SARB had done, despite evidence against KPMG having piled up to the point where KPMG itself said it will ask a senior legal figure to conduct an external investigation into whether its South African-based workers were complicit in illegal activities or colluded in producing a report that has since been discredited. In November last year KPMG sacked its South African leadership after it found that work the accounting firm had done for companies owned by the Gupta family had fallen “considerably short” of its standards.
Another example of the SARB bending over backwards to accommodate and defend WMC owned financial institutions is their vociferous defence of ABSA against the Public Protector, advocate Busisiwe Mkhwebane, when she raised the issue of the illegal R 1, 1 billion 'life boat' of tax payers money that was given to ABSA. Similarly the SARB defended Capitec against the Viceroy Report.
It must be pointed out that despite VBS Bank not having been implicated in any corruption or malpractice, the letter of the law with regards to their intended transformation and application for a commercial banking licence is being enforced to the utmost by the SARB, with absolutely no consideration given to transformational issues and the need for black empowerment in the banking sector.
This unnecessarily harsh approach was made worse by how National Treasury approached the matter of reviewing the policies that govern municipal investments. One meeting and one minor resolution allowing for municipalities to bank with institutions with a mutual banking licence, is all it would have taken to change the MFMA in order to resolve the issues that VBS Bank faced regarding municipalities being their clients. Instead a relentless order was issued by Treasury for municipalities to withdraw their deposits from VBS Bank, knowing very well the devastating consequences this would have for the liquidity of the bank. No similar considerations about protecting a financial institution and avoiding financial instability, that were applicable for KPMG, were applicable for VBS Bank. One cannot come to any other conclusion but that VBS Bank was deliberately driven into curatorship. Curatorship should be the very last resort in addressing the technical (we emphasise NOT criminal) problems that VBS Bank is faced with.
MKMVA is not at all convinced that the SARB approached VBS Bank with the intention to exhaust all options, and to try and find solutions that would serve and enhance transformation and black economic empowerment. The impression arises that there is a degree of vindictiveness, almost as if the SARB wants VBS Bank to fail.
In our South African context such an impression is most unfortunate, because it inevitably raises the question whether the actions by the SARB have been informed by the White Monopoly Capitalist establishment, and some of their agents in government, having been unhappy that VBS Bank granted former President Jacob Zuma a R 7, 8 million loan to reimburse the State for some upgrades that were made to his home in Nkandla. This is a valid concern when taking into consideration the avalanche of viciously negative reports that were published by the WMC owned mainstream media when VBS Bank granted former President Jacob Zuma the loan.
Furthermore, there is the factual historical reality that when VBS was in early 2011 a struggling bank under white management and white board control the SARB expressed hardly any serious concerns about it, other than that it was worried about its sustained losses. It was then a small struggling bank with no business strategy in place. However, in 2012 when Dyembeu became the controlling shareholder and announced that it intended to turn the bank around, and remove most of the redundant white management the Reserve Bank's attitude changed. It was at this point that the SARB suddenly with haste started to insist on full compliance and other issues that they were not insisting on when VBS was under white management. This went as far as the SARB actually refusing to approve black directorship appointments, despite the fact that they were better qualified than their white counterparts. As the chairperson of the Board of VBS Bank, Mr. Tshifhiwa Matodzi, stated: "we fought these battles with the SARB, and the message was clear that [as a black bank] we are not welcome."
MKMVA insists that VBS Bank must be saved, and in a transformational manner the SARB and Treasury should with a Radical Economic Transformation approach, assist this black bank to become a powerful black empowerment institution, as is envisaged by its majority black shareholders.
It cannot be that Radical Economic Transformation (RET), and true black economic empowerment, remain slogans that get constantly frustrated and derailed by White Monopoly Capital. Similarly it cannot be that institutions such as the South African Reserve Bank and National Treasury, that should be at the very centre of driving black economic empowerment, behave in a manner that defends and promotes White Monopoly Capital while undermining black economic advancement.
MKMVA calls on our ANC majority led government to intervene decisively to bring this situation once and for all to an end. We - the liberation soldiers of Umkhonto we Sizwe (MK) - have not sacrificed our lives for the full liberation of our country to see this aberration of economic transformation and liberation now being imposed on our people.
This betrayal of our National Democratic Revolution (NDR), (especially it's Second Stage), must come an end, and the SARB and National Treasury must be progressively and radically transformed until they become champions of Radical Economic Transformation (RET) and full black economic empowerment. We will not leave a stone unturned until that is achieved!
Issued by Carl Niehaus, NEC Member of MKMVA and National Spokesperson, 13 March 2018