According to reports heard at The Standing Committee on Finance on Wednesday, VBS Mutual bank had submitted unreliable audited financial statements to the Reserve Bank.
SA Reserve bank Governor Lesetja Kganyago, Deputy Governor Kuben Naidoo and others explained the processes taken in handling VBS Mutual Bank’s curatorship to the Committee. Due to VBS’s liquidity crisis early this year, they were placed under curatorship.
“Banks submitting untrue data to Reserve Bank is a serious offense, whether the data was audited or not, it could result in them either losing their license or obtaining a fine.”
Naidoo recounted the most important lesson learnt from VBS: “We overly relied on the audited financial statements”. He further said, “It is quite obvious in hindsight that the data that was submitted on a monthly basis or a quarterly basis by VBS was not accurate, even though the auditors approved it”.
According to him the auditors were part of the conspiracy. Naidoo says that the next step is to find alternative ways of verifying financial statements for all banks and small institutions.
MPs questioned why Nedbank was selected to facilitate repayments to VBS deposit holders. The Committee heard that this decision was made based on their products and low fees. A full report will be made available to the Committee in this regard.