KPMG’s VBS Mutual Bank settlement faces backlash over secrecy

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The recent out-of-court settlement between KPMG and the liquidators of VBS Mutual Bank has sparked condemnation for its veiled secrecy, drawing criticism from the Congress of South African Trade Unions (Cosatu).

Cosatu has released a statement strongly condemning the lack of transparency surrounding the settlement, claiming that the secrecy undermines the interests of the workers and municipal residents who have suffered from financial mismanagement and corruption at VBS.

VBS Bank was placed under curatorship by the South African Reserve Bank (SARB) in March 2018 due to a severe liquidity crisis.

Advocate Terry Motau was later appointed to investigate the bank’s affairs, revealing in his findings that 53 individuals collectively received billions from VBS. Among them was a former KPMG partner, Sipho Malaba, who received R34 million.

KPMG, as the bank’s auditor, faced allegations of failing to prevent or expose the malfeasance.

Cosatu expresses concern that the confidential nature of the settlement deprives workers and pensioners of their right to full transparency, shielding crucial details from public scrutiny and accountability.

VBS Breakthrough | Analysis of the VBS Mutual Bank saga:

Fraud and corruption

According to Cosatu, KPMG’s alleged role in facilitating fraud and corruption at VBS exemplifies the negligence and complicity that has contributed to South Africa’s ongoing battle against corruption and state capture.

Motau’s report recommends criminal and civil action, including sequestration and winding-up proceedings, against those identified as beneficiaries of the illicit activities at VBS.

Criminal charges against the accused include racketeering, corruption, fraud, theft, and money laundering, involving the misappropriation of approximately R2.3 billion and the manipulation of financial statements, leading to losses for depositors.

While municipalities involved in the VBS scandal have seen some recovery of funds, with about R160 million recovered and set aside for distribution, Cosatu insists that the secrecy surrounding the settlement exacerbates the challenges faced by the most vulnerable in society, and hinders the path to justice and redress for those affected.

The union stresses that the repercussions of such financial scandals are far-reaching and require a commitment to transparency, accountability, and the pursuit of justice. It further demands the immediate publication of the full settlement agreement and the amount involved.