Reserve Bank governor Lesetja Kganyago says it was difficult to know of the looting at the VBS bank as they had relied and trusted the information furnished to them by external and internal auditors, the board and management of VBS.
The governor was speaking on Friday at the Association of Black Securities and Investment Professionals (ABSIP) conference.
The bank was placed under curatorship by the Reserve Bank earlier this year after it was found to have been involved in wide scale looting totalling nearly R2 billion.
Kganyago says banking is a business based on trust. He says the first line of defence is management, the second line of defence is internal audit which is the internal assurance provider and the third line of defence is the external auditors.
He says: “The management accounts to the board and the board holds management accountable and the board has to report to the shareholders. If management buys the internal auditors, buys the shareholders, buys the boards, supervisors can’t present fraud in an institution that is a management function. The people who were supposed to be watching were the ones who were stealing.”
