AFFIDAVIT |. the undersigned ‘TSHIFHIWA MATODZI do hereby make an oath and states follows: 1 | am an unemployed aduit male of 46 years with @ South Afican identity number 770718 5406 082.1 am the former chairperson ofthe VBS Mutual Bank (“VBS") and Executive chairperson of Vele Investments, 2 ‘The facts herein deposed to by me are true and correct and are within my own personal knowledge and belief, save where otherwise stated or the contrary appears from the context 3. | hereby declare that | make this statement voluntarily and out of my own free wil. | have not been coerced, threatened andlor promised anything in exchange for making this statement. | understand the nature of the charges against me, including corruption, fraud, theft, money laundering and contravention of the pattem of racketeering activities. | take ful responsibilty for my actions. | am cooperating withthe police and prosecution in the hope to rectly my wrongdoings and seeking appropriate consequences for my actions,4 PART A - BACKGROUND AND HISTORY (4.9) INTRODUCTION 4a 42 Foremost, | wish to record and offer my sincere and unconxitional apologies to all the victims of my actions which include depositors, shareholders, stakeholders, suppliers, staff and members of the public and South Atican taxpayers at large. ‘As will appear from the facts set out hereinunder, | was entrusted to play an important role in overall oversight in my capacity as Chairman of VBS. | admit that | totaly failed in my responsibilty inthis regard. PERSONAL BACKGROUND 84 52 | grew up in Thohoyandou wich is situated in the Limpopo Province. VBS, then known as Venda Building Society (“VBS”) had a branch in Thoheyandou. My parents had a small General trading store which was situated near VBS, At the ‘time | was stilin high school. During weekends and after school, | would assist ‘my parents in their business by selling, amongst other things, paper bags. With the passage of ime, I made some profits out of selling paper bags. This led to ‘my parents opening a bank account for me at VBS so I could deposit my share of profits ‘After 1995 | moved to Johannesburg to study my BCom Accounting degree at Randse Afrikaanse Universitet (“RAU”). Every time | went back to Venda during term holidays, | would notice that the previously long queues at VBS: were growing smaller. To me this was evidence of VBS deterioration. This observation stirred in me a keen interest as to how best to restore VBS to what ‘one may call its former glory. Given my commerce studies and history of entrepreneurship, | started discussing my concems with my fellow commerce studenis at RAU especially those who knew VBS and its history just ke me, Down the line ! obtained my BCom Honours in Accounting degree and later ‘qualified as a Chartered Accountant ("CA") | thereafter worked for various ‘auditing firms and later ventured into corporate and business outside banking ‘environment, 2° As2012 VBS SHARE SUBSCRIPTION ADVERTISEMENT: et 62 Sometime in 2012, | received a call from my friend, Mr Chris Manwadu (*Chris”), whom | had met at RAU where he was also studying commerce there at. Chris happened to have been part of those university conversations about VBS. In that telephonic conversation Chris informed me that VBS had advertised for share subscription in a Venda local newspaper. | immediately travelled to Venda and made enquires about the share subscription which led to my acquisition of 10, 000 shares for myself. | personally purchased these shares for R100, 000 using my own money. Chris further provided me with the ame of one Mr Ntendeni Sasa Nemabubuni ("Sasa"), being the person with ‘whom I could engage with since atthe time he was the branch manager of the VBS Sibasa branch. In tum | met Sasa who later introduced me to two gentlemen namely Mr Otto Kwinda (“Otto”) and Mr Solomon Maposa (*Solly”). At the relevant time Otto was a shareholder at VES whereas Solly was an employee of VBS in the Credit and Collections Department. After ‘meeting with all three of them, | then had a wholistic overview of the VBS, Including its shortcomings impeding its growth and potential, During the purchase of my intial shares in VBS, the Public Investment Corporation (“PIC") was already a shareholder of more than 80% shares at VBS. At that relevant time, | became aware that VBS had 600, 000 unissued ‘shares valued at R6 millon and stil available for sale to the public. The ‘ownership of the 600, 000 shares would have resulted in the person acquiring them becoming the second biggest shareholder of VBS. VBS SHAREHOLDERS FORUM: 7A 72 Having become aware ofthe challenges confronting VBS's potential, and given my newly acquired slatus as a shareholder, | then sought to engage fellow shareholders for a way forward to address these challenges. My intention was to encourage the fellow shareholders not to be less passive in matters that had fan impact on both the growth and success of VBS. | knew that to address the challenges confronting VBS, | needed to gamer the support of fellow VBS shareholders, This view or approach meant amonget 3 OD «73 other things the necessity to form a shareholders’ forum to progress VBS and its interests, Following the above, the shareholders forum constituted by over 150 members ‘was formed in 2013, Of the initial members that formed part thereof I only remember three namely: Otto, Mr David Kholophe, Mr Mulaudzi (whose frst names | can't remember) FORMATION OF DYAMBEU INVESTMENTS 84 82 a3 a4 In 2013 Dyambeu Investments (Pty) Lid with Registration Number: 2013/003852/07 was duly registered and incorporated as a company in terms of the South Affican law (“Dyambeu"). Its directors at the time were the following: Paul Makhavhu and Ramaano Ramabulana, who represented the Vhavenda Heritage Trust (“VHT”) which held 51% equity stake: David Mabilu Who represented himsetf through Promafco which held 24,5% equity stake Myself and Maanda Phalanndwa represented Briliant Telecommurications holding 24,5% equity stake “The sole purpose for which Dyambeu was formed was to acquire the above- ‘mentioned 600 000 unissued shares in VBS. “The process of formalising the purchase of the 600 000 shares by Dyambeu took approximately a year to complete, The reason was due to the folowing processes that needed to be completed: 834 ‘The VBS board needed Dyambeu to present a structure that was acceptable to them. 832 ‘The FICA regulations and accompanying documentation had to be completed and complied with 333 Engagement and acceptance by the PIC. 834 Engagement wih SARB. Dyambeu futiled the conditions as set out by the VBS board for acquisition of the unissued shares. Afterall processes stated above were complied with the shares were then issued to Dyambeu on 13 February 2014. The actual amount that was paid was RS, 990, 620 for a total of 599 062 VBS shares. The total payments were effected by Brillantel and Promafeo's own funds,8.5. | became the main shareholder representative of Dyambeu on al administrative {issues where VBS, PIC, SARB or any relevant stakeholders were involved, The PIC representatives at the time were Mr Emest Nesane (‘Nesan alternate board member was Mr Paul Magula (Magula”). and his a ‘TURNAROUND STRATEGY AND THE ENGAGEMENT WITH THE PIC/SARB: 8.1 The first time | met with Nesane in person was at the VBS Annual General Meeting (“AGM”) which was held on 26 July 2013 but postponed to 27 ‘September 2013. On this date (27 September 2013) | met Magula forthe first time and Nesane was also present 9.2 During the course of Dyambeu application for shares in VBS, Nesane advised me that Dyambeu needed to draft and present a formal turiaround strategy to the PIC. 9.3 Various meetings were held with PIC regarding VBS strategy culminating in presentation of strategy to SARB by Dyambeu and PIC. 94 Once the turnaround strategy was finalised, Dyambeu and the PIC presented the strategy to the SARB, The SARB alec recommended certain requirements to some points within the strategy. One example was the SARB requirement that the Fuel Finance Facilty be subordinated. The newly appointed Chief Executive Officer ("CEO") designate, Mr Andile Ramavhunga (“Andile") was. also involved inthe strategy and made various inputs, including introduction of the Fuel Finance and Contract Finance Fecility. After Dyambeu share approval by the VBS board and SARB approval the tumaround strategy was then handed overto the VBS CEO. The strategy then became the property and responsibilty of VBS board through its CEO, see copy ofthe turnaround strategy attached herewith, marked and annexed as TM-1. The strategy was formally adopted by VBS board during the bank’s strategic session in August 2014.10. PART B - PERSONS OF INTEREST (10-13) GENERALLY CORRUPT RELATIONSHIPS 10.4 ‘The following ill highlight the activities that myself, certain VBS bank officials and board members, municipal officials, politcal office bearers and other role players participated in which led to the collapse of VBS. 1014 10.12 10.13 10.14 ‘We engaged in a web of corrupt activities. The way we operated ‘was unspoken yet well understood by those involved, This ‘operation was designed to separate the main role players and their functions from other role players to keep the proverbial Chinese Wall between the participants, even though those: involved knew their specific roles within the system, To my knowledge, the management and control ofthese activities was, in one way oF another, performed by the following people being myself, Andie, Truter, Phophi and Solly. To my knowledge the: ‘ther participants involvement was limited to their specific areas, of expertise. ‘The general understanding amongst those involved was to perform actions in return for benefits andlor favours. Our combined actions were characterised by deliberate and fraudulent financial maneuvers which resulted in signicant financial losses to VBS, thereby undermining its financial integrity fand in the process violating our fiduciary and ethical responsibilities, ‘Some of these transactions and favours were never documented, they followed © sot of unwritten rules that each Participant inherently recognised. We maintained a united front, ‘skiifully avoiding overt confict of interest, to @ point that even some members of the VBS board would abstain from attending certain meetings where sensitive matters that could expose their involvement would be discussed. Howeve10.1.8 This coordinated effort underscored our common purpose and feinforced the corruption that bound all of us together, thus ‘ensuring ourilct activities remained concealed 1" PERSONS OF INTEREST ‘Around February 2014 | became a shareholder representative for Dyambeu and ‘around July 2018 | was appointed the Chairman of the VBS board. The following persons were involved in one form or another in respect of the iregular activities that led to the collapse at VBS. 11.1. Andile Ramavhunga (*Andilo”) was the CEO of VBS. Andile was appointed as ‘Acting CEO on 22 November 2013 and CEO of VBS in 2014, He reported to the board of VBS and was also an ex-oficio member of the same board. | am the person who introduced Andile to VBS. He was an experienced banker and he Joined VBS following my persuasion. As already stated above and to my knowiedge, Andile was also involved in the folowing iregular activites in the following manner: 11.1.1 He launched some of nancial and banking products outside the approved strategy and VBS board approval, for example, he ‘approved loans for Leratadima (“Leratadima”) digital decoder migration project, despite PIC having ring-fenced the facility for fuel transactions ony, 11.1.2 He approved loans and facilities that exceeded his delegated ‘authority. For example, he approved transactions for Leratadima R100 milion and thus over his delegated authori 14.4.9 He regularly issued iregular verbal instructions to his subordinates to conceal his involvement 14.1.4 He regularly appointed people in senior postions without {following proper HR processes. 11.1.8 He failed to report large exposures and fraudulent transactions to the board and the relevant financial authorties. 11.4.6 He was aware and at times also participated in the gratification ‘scheme being paid to the VBS commission agents who in turn eee an @Q \waz 1.48 11.4.9 144.10 He knowingly participated in the approval of the falsified records ‘and documents presented to him for the approval of funds released from the PIC Fuel Finance Facil. He signed the Directors Responsibility Statement knowing fully that there were misstatements and unreported irregularities in the Financial Statements | am aware that Andie signed a letter to the PIC containing false financial information to PIC for the October 2017 rights issue ‘Andile was linked to two companies namely, Dambale Holdings and Munyai Investments. Payments were made fram the Vele bank accounts to Andile's two companies as mentioned above on his behalf, These payments were iregular and corrupt in nature as they were rewards for his participation in the broader VBS ‘corruption scheme. Neither Andile nor his two companies rendered any services to Vele Investments that entitled them to any remuneration from Vele Investments, ‘At the relevant time Philip Truter("Truter”) was the Chief Financial Officer st VBS and reported to the CEO. He was both an ex-officio member of the VBS board and its company secretary. To my knowledge, Truter was involved in iteguiar activities in the folowing manner. 24 122 1123 124 1125 He manipulated the OI returns which caused the SARB to have ‘an incorrect view of VBS level of capitalization, He actively participated inthe creation of kregular deposits and ‘manipulation of the VBS suspense account which caused financial loss to VBS. He participated in forging records and customer documents to have funds released by the PIC from the Fuel Finance Facilty He was aware of the gratieation scheme being paid to the VBS. Commission agents who in turn paid gratification to the municipal officals, He enabled the breakdown of controls by manipulating the banking system and regularly backdating transactions, D13 126 27 1128 129 112.10 nan He Knowingly ecelved regular gratification for the manipulation of the VBS suspense accounts which caused financial loss to ves. He failed to report large exposures and fraudulent transactions to \VBS board and the relevant authorities, |lam aware that Truter submitted false financial information to PIC. for the October 2017 rights issue He Intentionally mislead the VBS auditors by falsifying the annual financial statements of VBS leading to incorrect reporting to the stakeholders, He signed the Director's Responsibility Statement knowing fully that there were misstatements and unreported irregularities, ‘Truter was linked to @ company called Shangri La. Payments ‘were made from the Vele bank accounts to Truter and Shangri La ‘on behalf of Truter. These payments were irregular and corrupt in nature as they were rewards for his participation in the broader VBS coruption scheme. Neither Truter nor Shangri La rendered any services to Vele Investments that entitled them to any remuneration from Vele Investments Phophi Mukhodobwane (“Phophi") was the Head of Treasury and Capital Management at VBS. Around 2016, Phophi was introduced to me by an ‘employee of VBS, Mr Neivhuwo Mafunzwaini He was interviewed by Andile {and Truter forthe position of head of treasury. He was appointed around July 2016 to relieve the pressures on Truter and to stabilize the treasury and cash ‘management function. To my knowledge, Phophi was involved in iregular activities in the folowing manner: nad 1132 1133 He participated in the clearing of Vele and its related parties’ overdrafts, He also participated in the ilegal creation of suspense accounts which led to nancial losses to VBS. He knowingly received an iegular gratification for the manipulation of the VBS suspense account which caused farce tothe bank @® °1134 1135 1136 37 a8 He Intentionally falsified VBS financial records line items for Deposits and amounts owed to depositors amongst others, Leading to incorrect annual financial statements of VBS. He manipulated the SARS DI returns which caused the SARB to have an incorrect view of VBS level of capitalization, liquicity Profle and capital reserves amongst others. He failed to report lage exposures and fraudulent transactions to the VBS board and the relovant authorities. He processed many iregular transactions on hhis own without approval or supervision. He was linked to a company called Lemawave, Payments were ‘made from the Vele bank accounts to Phophi and Lemawave for the benefit of Phophi. These payments were irregular and corrupt in nature as they were rewards for his participation in the broader VBS corrupt scheme. Neither Phophi nor Lemawave had rendered any sorvices to Vele Investments that enttid them to ‘any remuneration from Vele Investments, ‘At the relevant time Solomon Maposa ("Solly”) was the General Manager of Credit at VBS. To my knowledge, Solty w involved iniregular activities in the following manner: nas 1142 143 a8 He failed to report large exposures and fraudulent transactions that occurred in the credit department to the executive, the VBS board and relevant authorities He processed several iegular transactions on his own and ‘without approval from his superiors. He processed and approved iregular requests. and credit applications from VBS executives, VBS board members and ‘other participants without following VBS credit granting and approval polices. He was aware of the iregular clearing of Vele and its related Parties’ overdrafts. He failed to report these to his superiors, the VBS board or relevant authorities @11.4.5 He utilised his family and associates’ entities as a vehicle to channel funds and receive iregular benefits which enviched his family, his associates’ entities and himset. 11.46 Later became aware that Solly regularly processed transactions from customer accounts without thelr approval or instructions This he did to sometimes siphone money out oftheir accounts or to assist strategic clients without their consent. [At the relevant time Ntendeni Sasa Nemabubuni ("Sasa") was the General Manager for Sales and Marketing at VBS. To my knowledge, Sasa was involved in irregular activites in the folowing manner: 11.5.1 He was involved in actively pursuing investments for VBS and the facilitation and payments of irregular commissions and kickbacks to municipal oficials, 11.52 He was aware ofthe gratification scheme being paid to the VBS. ‘Commission agents who in turn paid gratification to the municipal officials. He participated in cash delivery meant for gratuity payments to VBS commission agents and municipal employees alike, 11.5.3 | am aware that Sasa received gratification from me for the ‘successful conclusion of certain municipal investments, He was ‘ranted an overdraft facility through one of his companies known 12s NAP Holdings forhis own benefit with the assistance of Soy ‘Avhashoni Ramikosi(*Ramikosi") was the non-executive director at VBS and Chaiman of its Audt Committee since 2013, After various discussions with Ramikosi regarding potential working partnership, | advised Ramikosi to open an entity that will be used to faciitate business between ourselves, Ramikosi facilitated the creation of an entity through an associate of his and submitted details to myself for creation of a shelf company. A shelf company in the name of Zanoware was dully registered around March 2016 for his control, The reason forthe creation of an entity was agreed between myself and Ramikosi to avoid perceived conflict and secrecy that would arise, Ramikosi was the chair of the Audit Committee and an influential member of VBS board and his co - @® nye‘operation was crucial Various payments were made with no explanations for the nature of service being rendered. To my knowledge, Ramikosi received the following major payments which were questionable and without basis: 11.6.1 Once Zanoware was registered and bank accounts opened within VBS | caused an amount of R250 000-00 to be deposited in ‘Zanoware VBS account from Venmont Holdings. The deposit was made on 13 March 2017, There was no service rendered by Zanoware nor any agreement entered int. 11.62 Ramikosi received an amount of R200, 000 around July 2017. ‘This money was a request from Ramikosi who asked if | could assist wth anything. | then caused the R200 000 to be transferred to Zanoware for his benefit from Venment Holdings. There was 10 service rendered or underlying business transaction for this payment, 11.6.3 During October 2017, | appointed Ramikosi as a Director for one ‘ofthe Vele subsidiaries following Vele conclusion ofits acquisition ‘of Mvunonala, In celebration of the acquisition of Mvunonala | ‘sponsored Ramikosi a trip to Maurtius. The amount that was transferred to Zanoware was R300, 000 from Venmont Holdings. He was also appointed as a non-executive director of Bophelo life during October 2017. 11.6.4 Following the curatorship of VBS in 2018, Ramikosi approached ‘me to sign a loan contract in relation to all the monies he ever received from me. 1 agreed and signed the contracts and backdated them to reflect the dates when the monies were paid to Zanoware, Ernest Nesane ("Nesane") was non-executive board member of VBS representing the PIC and he was the chairperson of the HR committee of VBS. board. | met Nesane in 2013. To my knowledge, Nesane was involved in iregular activities inthe following manner: 14.7.1 After became the Chaicman of VBS in 2018, Nesane demanded shares in Vele. He was allotted convertible preference through his oa **1172 73 174 company called parallel. He wanted his shareholdership to be a secret lest it create a confict of interest considering that he was already 2 non-executive board member at VBS representing the Pic, He received regular gratfcations from Vele which were paid ‘monthly to his nominated company. These gratuitous payments ‘were itegular and never disclosed to either PIC or VBS. He solicited and received cash of RS milion from VBS wich he claimed was to pay PIC employees and certain executives to release payment forthe Fuel Finance facility which had long been ‘outstanding, To avoid the conflict of interest arising at some instance he elected not to attend specific board meetings whereupon the ues relating to the approval of the REO milion Vele share ‘subscription was on the agenda, Paul Magula ("Magula") was non-executive board member of VBS representing the PIC and he was the chairperson of the Credit and Risk ‘committee of VBS board, | met Magula in 2013. To my knowledge, Magula was Involved in regular activities in the following manner et 82 183 ‘Alter | became the Chaitman of VBS in 2018, Magula demanded shares in Velo. He was alloted convertible preference through his ‘company called Parallel, He wanted his shareholdership to be a secret lest it create a confict of interests considering that he was already a non-executive board member at VBS representing the Pic He received irregular gratfcations from Vele which were paid ‘monthly to his nominated company. These gratuitous payments ‘were iegular and never disclosed to either PIC or VBS, To avoid the contct of interest arising at some instance he lected not to attend specific board meetings whereupon the issues relating to the approval of the R80 milion Vele share ‘subscription was on the agenda, oO44.8 In 2016, Robert Madzonga (“Madzonga) was intially arpointed as the Chief Operating Officer (COO") designate of VBS, However, when his nomination was presented to the SARB, SARB dectined his appointment to this position Vele then appointed Madzonga as its COO in 2016 and later as its CEO. | Viewed Madzonga as an experienced person who was going to help in the ‘overall stricta of Velo, The reasan why the SARB decined the nomination of Madzonga was based on a media allegation relating to his previous ‘employment at MTN-SA. Madzonga indicated that he left MTN-SA amicable as he was never charged by MTN-SA, hence the SARB decided to decline his nomination. Madzonga was included in the PIC initiates to raise funds because he was representing Vele which was a sharetolder at VBS. The payments to Madzonga were linked to his employment contract wth Vele, | first met Madzonga in 2016. To my knowedge, Madzonga was involved in Irregular activities in the following manner: 11.9.1 He conducted various underhanded and undisclosed dealings between Vele and companies that he was appointed to oversee. | became aware that Madzonga was receiving regular payments from Vele subsidiaries, Black Label Telecomms, Firmanox, Wegezi, Foxburg, Sabicorp and many others. His modus ‘operandi was to misrepresent facts to have @ Vele subsidiary release funds to him. 11.8.2 Afterthe VBS curatorship Madzonga illegally claimed money frorn ‘@ company called B3 Funeral and Insurance which had received 2 joan amount of R10 milion from Vele that remained unpaid at the time 11.9.3 Madzonga irregularly transferred an amount of approximately 10 milion from Vele into his attomey account namely Tshivhase ‘Attomeys. Ftom this transfer | was paid an amount of approximately R2 milion for my Vele unpaid salary and legal foes. 11.9.4 After VBS curatorship, Madzonga sold some of Vele and Mvunonala motor vehicles for his own benef11.10 Sipho Malaba (“Malaba") was the audit partner at KPMG and was the engagement partner responsible for VBS audit. | fist met Malaba during 2012 when I was visiting KPMG offices. To my knowledge, Malaba was involved in iteguir activities inthe following manner: 14.404 11.402 11.403, 11.104 When VBS and KPMG were busy finalising the 2016 aucit, Malaba informed me that he and his partner had property Company and he enquired if he can get a mortgage bond facilty from VBS. | referred him to Solly to assist in processing the facies. Malaba ultimately received large value facies for the benefit of his property company, Malaba obtained overdrafts from VBS, and at one point he asked ime for an increase in his overdraft limit by R3 milion through a WhatsApp message. | referred Malaba to Solly to facilitate the increase in facilities. | doubt that any of the normal VBS credit ‘granting processes and procedures were complied with | know that an annual independence checklist was sent fo VBS from KPMG in elation to Malaba, | doubt that it truly represented Malaba’s position relating to his and related parties’ exposure to the bank as | knew he had multiple facilities that would ‘compromise his perceived independence if disclosed | can recall during June 2017 while the year-end audit was at ‘nalistion stages, Malaba had a meeting with Truter regarding outstanding Audit matters for Partners attention. After this, meeting, Truter sent me a message and indicated that Malaba had agreed to VBS classification of SAMOS reconciling tems as ‘cash and cash equivalents in the balance sheet, Malaba also called me and informed me that he classification matter has been resolved and that he is giving the bank 12 months to finalise ‘outstanding reconciling items. | contacted Truter and informed him of the conversation. Malaba in his capacity as audit partner personally cleared the R700 milion unreconciled cash audit query raised by his juniors, including the audit manager. The clearance ccurted without any further substantive procedures being performed. The explanation can only be that he was already 2 5 &indebted to VBS and went out of his way to conceal this material audit difference, 11.105 Malaba was linked to two companies called Bentanologix and thaawu Lesizwe. Mortgage bonds, vehicle finance and overdraft facilties were granted to these companies by VBS. These ‘acilties were granted irregularly in nature because: ‘+ Neither Malaba nor the companies involved qualified for the facies granted by VBS. ‘+ Of the mortgages granted to these companies, related transfer costs were paid by Vele companies on behalf of these companies, and this was never questioned or queried by Malaba, ‘+ Instaliments on the mortgage faites and overdrafts were ever serviced for the entire duration, This cleary indicates that he had no intention of repayment 11.106 — Malaba was involved in writing pre-emptive reports meant to Shield VBS. The first such pre-emptive report was on related Parties and large exposures. This was after he warned me that PwC and the SARB were questioning transactions with related partes. The second report was to cover up the SMME Bank of Namibia. On this second report | remember that the scope was highly restricted, and the report did not focus on the merits of ‘SMME Bank complaints 11.107 Malaba as an ausitor in charge and based on his experience as fan Audit Partner should have been immediately aware that because of the above facts, that VBS control environment and Credit risk are very high. He should have therefore paid more attention and investigation in this aspect. However, as he was himself benefiting through corrupt means he chose not to act on these risks. 11.11 To my knowledge Kabelo Matsepe Involved in a company called Moshate Investments (Moshate”). Moshate was ao ™® ‘Matsepe”) is a businessman. He wasalso an agent for VBS appointed for purposes of sourcing investment deposits, | met Matsepe for the fist time around August 2016. at the Waterfall Estate ‘Shopping Centre with a newspaper journalist called Setumo Stone ("Stone" ‘The meeting was due tc issues surrounding investment that Capricom Municipality made with VBS, had accepted a deposit from the Capricam Municipality in contravention of the Municipal Finance Management Act 'MFMA"). This was the fist time that | was aware of the MEMA restrictions ‘Stone had indicated that he was preparing to write a story about the iegular deposit made by Capricorn. Stone wanted a comment and explanation fom me 88 a representative of the bank. Matsepe was also in this meeting as it seems that this complaint from a person in the municipality around the investment was ‘made also at a politcal level. | gave them an explanation that VBS has been ‘collecting investment deposits from various other municipalities without any issues, and that VBS is a fully registered bank in terms of Mutual banks act. | ‘managed to convince them that this was all legtimate and I informed them that the SARB was aware ofthis strategy. | further informed them that we will be placing a lot of emphasis on getting more investments from other municipalities, Matsepe and Stone left afte this meeting convinced thatthe investments were all legitimate. | lator met yp with Matsepe at the Fusion Boutique Hote! in Polokwane with Danny Msiza (‘Danny’). To my knowledge Danny was Matsepe business partner. Matsepe was very interested in boing appointed as 2 ‘Commission agent for VBS. had indicated that VBS would pay a commission in the region of 2% for any investment that could be sourced by him from the ‘municipalities. | knew that Matsepe and Danny were well connected politically and that they would be able o use their political influence to secure investments ‘rom municipaities especialy in the Limpopo province. For this reason, Danny _and Matsepe representing Moshate were appointed as commission agents for ‘VBS. To my knowledge, Matsepe was involved in ireguiar activites in the ‘following manner: 11.411 Matsepe woud regularly discuss strategies and proposals to ‘generate more municipal investments. The discussions would further be around VBS making additional funds available for gFatifications cf municipal ofcals Onaz 1412 14.013 11104 We regularly discussed strategies and proposals to generate ‘more municipal investments and the discussion would be aroune ‘making additional funds available to bribe municipal officials. | knew thatthe gratification payments were intended to induce the ‘muricipal officials to place new investments with or roll over ‘existing investment with VBS, | was aware that Matsepe had regularly claimed commission Payments on municipal investments that were sourced by other ‘commission agents. He would put a lot of pressure on Andile, Phoohi and Myself and force us to make @ payment to him under threat that he would then tel the municipal officials to withdraw the investments immediately. He used the excuse that the ‘municipal officials were upset that they have not yet been paid ‘and he was an expert at manipulation as he said that he had numerous negotiations with officials, and they were expecting payment. | can recall that | was required to intervene on Complaints between Matsepe and Sasa or commission agents on, the following municipalities investments: = Polokwane ~ Vhembe = Makhado ‘Around 20 December 2017, | received @ WhatsApp message from Matsepe requesting that a gratuitous payment be made to the then Mayor of Vhembe, Mrs Florence Radzilani (“the Mayor”). | had never met the Mayor and most of the Vhembe ‘municipality staff as 1 was not “customer facing” at the bank. In that WhatsApp message, Matsepe informed me that the Mayor ‘wanted "Christmas" money as the R300, 000 that was already paidto her and the Speaker was not enough forthe jb they were doing. The gratuitous amount Matsepe was requesting was R15. milion. This payment could not be made, and it was agreed that this request will be finalised after December holidays. On 18 Janvary 2018 | received @ long WhatsApp message from Matsepe regarding this issue. It appeared to me that Matsepe had ® 18discussed with Phophi about the gratuly being requested as payment to the Mayor. It further transpired that Phophi had Wanted the Mayor to invoice VBS directly using her own entity to fensure that such amount indeed would end up in the Mayor's hhands. Alternatively, the other option was that Sasa be the person ‘who delivers the said to the mayor by hand. However, Phophi's Proposal did not sit well with Matsepe/Danny. | agrood with Phophi and Sasa's concerns considering that at this juncture we at VBS had become aware and weary of Matsepe's double dealings, In this regard there had been instances in the past ‘where municipal staff had been promised funds by either Matsepe ‘or Danny, yet they never received or were paid such despite such ‘amounts having been hugely inflated by Matsepe and Danny's ‘own benefit. Whereas the intial gratuity requested for the Mayor in December 2017 was R1,6 millon, in January 2018 that ‘requested amount had been inflated by Matsepe to R2 millon. In View of the intensified and premature withdrawals by municipalities during that period we then succumbed to Matsepe's demand for the R2 million payment and paid that ‘amount into Moshate account. The investments in question in \Vnembe were rolled over as Matsepe promised 41.12 To my knowledge Daniel Msiza (“Danny”) was a politician and at the relevant time he was Provincial Treasurer ofthe ANC in Limpopo Province. Danny did ‘ot have a direct relationship with VBS, His involvement with VBS comes by ‘way of his association with Matsepe and Moshate. I mot Danny forthe frst time atthe Fusion Boutique Hotel in Polokwane around August 2016. Atthe time the three of us had discussions regarding how Matsepe's company ie, Moshate ‘could be appointed by VBS as a commission agent for municipal investment purposes. It was clear to me that Danny and Matsepe were very close to each ‘other, and | even joked that they were like father and son. Following these discussions the three of us agreed that Danny would also be involved in ‘securing municipal investments. Through his postion, Danny succeeded in Ooconvincing politcal ofice bearers in Municipaities. To my knowledge, Danny was involved in irregular activites in the following manner: 11.121 Inregard to the Thulamela municipal investment with VBS it took Danny's involvement for the investment to materialise after him having put pressure on the Thulamela Municipalty Mayor to Invest in VBS. Iwas present when sometime late 2076, the Mayor of Thulamela municipality was summoned to Attican Pride Hotel by Danny and Matsepe. VBS had already made an investment proposal to Thulamela Municipality, and they had been Uunresponsive. At tis meeting Danny placed poltical pressure on the mayor. Shorty afte this meeting an investment was made by ‘Thulamela municipality to VBS around December 2016. 11.122 For assisting VBS in securing municipal investments, Danny ‘ould be paid out of commission paid by VBS to Mochate, To my knowledge, Danny's rewards for his involvement by using his, Political influence which would lead VBS securing municipal investments, Matsepe and Moshate were effecting such a reward from agent's commission received from VBS. 11.123 I canrecall cash that was made available to Danny forthe Atican National Congress (ANC) conference. The amount was requested by Danny and Matsepe, of which there was no formal request from the ANC but | took their (Danny and Ma:sepe) word, | directed Sasa to arrange collection of the requested money and, deliver it to Danny around August 2016 at the Fusion Boutique Hotel in Polokwane. It amounted to R200, 000. Under normal circumstances Danny’ politcal interventions and activities would ‘normally be supported by Andile and |. | understood that Danny's ‘power benefited VBS indirectly with the municipal investments, 11.19 To my knowledge Raliom Razwinane (“Raliom") was the owner oa company called Gundo Wealth ("Gundo"). Around 2017 | learned that Gundo has been appointed as an agent for VBS to source investment deposits. Post Gundo's appointment, Raliom was introduced to me by Tsumbo Matambela who was ‘working at VBS in the office of the CEO. By the time I met Raliom, he had A”‘already been appointed as a commission agent by Andile. He was highly experienced in the investment space and knowledgeable regarding several investment products that VBS was not even offering yet. He knew many influential people within the investment space including the then DG of National ‘Treasury Mr Dondo Mogajane with whom he had a close relationship. To my knowledge, Raliom was involved in regular activites inthe following manner: 11434 11.132 14.133 11.134 According to my knowledge, he had links with many institutions, Including but not limited tothe Polokwane Municipality, Free State Development Corporation and the Community Schemes Ombud Service (CSOS). In hs role as a commission agent for VBS he assisted in securing investments for VBS for which he would receive an average of 2% of such capital investment. \Wnilst in Johannesburg, sometime in 2017 Raliom introduced me to the CFO of Polokwane Municipalty by the name of Mr Nazeem Essa. The three of us had an informal meeting. In this meeting Raliom mentioned that Mr Essa was the person that was assisting him with Polokwane Investments. At that time VBS had already {an investment from Polokwane Municipality through Raiom, | can recall a specific incident where | had to intervene between Raliom and Matsepe regarding the commission claims in respect of an investment that had been made by the Polokwane “Municipality to VBS. Both Raliom and Matsepe were claiming that leach one of them had independently faciitated that investment ‘The conflict was resolved after had convinced them to share the ‘commission and accept 1% each, ‘Around August 2017 VBS started receiving enquires from ‘municipalities regarding communication from National Treasury which was informing them (Municipalities) to withdraw their Investments from VBS since the MFMA prohibits any such Investments with a Mutual bank of which VBS was; see copy of communication attached herewith, marked and annexed as ‘TM.2. | discussed this with Raliom who informed me that he had 2 close relationship with Dondo, and he will arrange a meeting between myself and Dondo. To my recollection | had atleast five o11.135 11138 ‘meetings with Dondo. One of those took place at Pedro-Portia, Cigar Lounge at Cedar Square in Fourways. The other meeting took place at VBS offices in Rivonia whilst the third meeting took place at Eagle Canyon on 8 October 2017. The other meetings. we had Treasury and the Reserve bank. In all these five meetings it was never just me and Dondo but one or two other people Present at the Pedro-Portia meeting was Myself, Dondo, Raliom, {a Gentleman by the name of Chuma and a lady whose name I would later come to know as Dr Mkhize. Whilst the discussion was stil on this National Treasury letter to the municipalties, Raliom then softly whispered to me regarding our earlier agreement that | should pay an amount of R1 milion to Dondo. That is wher Raliom shared a whisper with Dondo and then Dondo said a milion rand is fine, nodding his head. In shor, the purpose of this meeting was none other than to confirm the Payment of R1 milion and the bank account where it was 0 be made. | then enquired from where this payment was to be made and that is when Raliom received a piece of paper from Or Mkhize and in turn handed that piece of paper to me. On that paper were ‘the banking details. | then enquited if these were the banking details into which Iwas to make that R1 milion payment, That will bbe when Dondo said yes nodding his head. | then left the meeting and the four ef them remained, Following the above an amount of Rt milion was paid into the Provided Standard Bank account with account nunber: 1023386223 belonging to Baphille Foundation NPC; see copy ‘thereof attached, marked and annexed as TM-3. To my kknowiedge this foundation is under the control of Dr Mkhize The. payment was intended for Dondo to intervene and to facilitate the ‘withdrawal ofthe National Treasury letter and to grant VBS the ‘special dispensation of 18 months fort to continue to accept the Municipal investments, At the time VBS had already started the [process to convert into @ commercial bank and in VBS view the Oo 2envisaged 18 months would have been suficient for the process tobe expedited. 11.14 Edgar Mucheke and Tshianeo Madazhe were involved in a company called TNE advisory services ("TNE"), TNE was also apponted as a commsions agent for VBS to source investment deposits. | cannot recall meeting with or ‘speaking to Edgar Mucheke and Tshianeo Madadzhe of TNE. However, | have been informed by Sasa that there was @ new commission agent appointed who also had experience having done similar work for Investec, | was further informed that they had brought in amongst others Collins Chabane and Giyani Municipalities. | have no further intimate knowledge oftheir involvement with ves. 2 MY ROLE INTO THE COLLAPSE OF GORVERNANCE AT VBS: | would tke to discuss a brief history of myself and my role as a person of interest in the breakdown of governance within VBS, which ulimately ledo the collapse of VBS. ta4 122 ‘After passing matric | enrolled for B Com in Accounting at RAU. | obtained my ‘CTA/Honours degree in accounting and proceeded to KPMG to commence with my atices training. | qualified as @ CA and later worted for NKonki Siawe Nisaluba (now SNG), Emst and Young in various roles before heading for the corporate world where | was GM: Finance at Denel Corporate. Sometime in 2004 | followed my entrepreneurial ambitions and co- founded a company called Brillant Telecommunications (*Briliantel”) with a friend that | have known since my RAU days. Briliantel grew and is currently one of the largest black-owned ICT companies in the county, It was while was stil in Brillante! that through Dyamlbeu | had shaves at VBS. | later became the Chairman of the board of VBS. | ceased to be director and co-owner of Brillantel sometime in 2016. While at VBS, in both my capacity as shareholder representative of Dyambeu and later as chairman of Vele and subsequently as chairman of the VES Board, | became involved in and participated inthe following iregular activites: 12.2.1 Issuing instructions without exeoutive autho 2 Oo42244 12212 | began issuing instructions directly to VBS staff once Dyambeu became a shareholder. Some of these instructions would range from choosing best suppliers and ‘engagement with technology partners, ‘After becoming the chairman of the VBS board, | would regularly make requests for loans and or overdrafts increases thereof for use by my companies or those of associated with me in one way or another. In some instances, these loans were approved without folowing the credit polices of VBS. In other instances, these loans would be approved to people whose credit profes were of Unacceptable levels based on VBS credit policy. These practices introduced excessive credit and liquidity risk to ves. 12.22 Involving myself in promoting unlawiul activites in municipalities and investee entities. 122.24 12222 12223 | knowingly participated in the formulation and promotion of unlawful activities either alone or in cahoots with other Participants, both within and outside VES in the acquisition of investments from municipalities around the Republic. ‘The above was achieved with my acive participation in compromising municipal officials through offers of sratfcation. This was done with my approval and knowledge. Officials that were deemed strategic in these entities were ‘actively encouraged to apply for loans at VBS or to move. to VBS their existing banking and loan facies that they held at other banks. The loans to these individuals were granted without following strict credt policies of VBS and/or ignoring the individual's adverse credit profile, This ‘was deliberately designed to ensure that these individuals are permanenty indebied to VBS whilst they remain ‘employed at their respective entities. It was further intended that even when they change treie employment to 2 24‘ther entities or similar positions elsewhere their indebtedness would remain due and payable, thereby ensuring that they remained biased towards VBS. 12.3. Creation and abuse of suspense accounts within the bank whilst | was the chairman of the VBS: 1231 1232 12.33 1234 | became involved with a few other colleagues within VBS, ina ogue deposit-suspense accounts creation scheme, These deposit suspense accounts were the main cause of VBS collapse through availing non-existent cash to Vele and its entities. This deposit suspense account scheme involved creation of fictitious deposits through manipulation of ‘deposits’ into ‘suspense accounts which were later credited either to companies ‘owned by myself, my associates, certain bank officials and my family members. Ater creation, these deposits were immediately available for use or withdrawal even though no real cash was deposited. Ths led to VBS running out of cash, ‘Myself and my accomplices utilised the money from the suspense account to acquire big companies. It also enabled us to nance four expensive personal lifestyles at the expense of the real depositors. 1 literally abandoned my ethical and moral responsibly 10 VBS, its real depositors, shareholders, stakeholders and any governance principles that | had adhered to throughout my years of training and acquired during my Previous financial services experience. This scheme became out of control due to its easy and simple nature to implement, to the point that the bank lost its ability to effectively perform cash management and liquidity control, There were simply uncontrolled withdrawals of money by us that never existed inthe frst place. The greed by myself involved prioritising ‘my own payment plans over those of legitimate needs of VBS to lend money to qualifying clients or to invest excess money in liquid money markets for the benefit of VBS and its shareholders/depositors, oo’124 1235 Through creation of these fake deposits, | obtained majorty Control of VBS through acquisition of VBS shares. This invariably led to the prejudice of legitimate shareholders of VBS, effectively diluting their shares and thus rendering them minority ‘shareholders in their own bank. Involvement in falsifying financial records and misleading the VBS board: 1244 1242 Although aware, | never questioned these involved in preparation of and the sending of false Ol retuns to the SARB. | was further aware and sometimes | would even Participate inthe preparation of the financial records fr the. Annual Financial Statements, the PIC and auditors, thus misleading them while knowing the true state of affairs My actions of meddling with the executive functions had the effect of compromising, misleading and weakening the \VBS board which rendered itunable to effectively perform its duties in the following manner: 2) | participated in deliberately withholding certain information intended for various committees of the \VBS board. | achieved this through collusion with certain members of the executive within VBS. b) kept silent on non-compliance with policies. and delegations which | had become aware of as | was, also party to faunting them with sorve executives, ©) | was aware of certain transactions that were approved at executive level and that normally Fequited board approval which I never questioned but allowed them to quietly proceed 2 MY FAMILY MEMBERS AND OTHER PERSONS’ INVOLVEMENT: | now turn to my family members and other persons involvement 134 13.44. ) OD 6 neweata 134.42 134.13 My mother is 74 years old. Philip Tshillo, then a branch manager at VBS Thohoyandou branch i the person | had tasked to assist my mother, family members and myself with every banking related issues at VBS. ‘Alter | developed a relationship with VBS as a ‘shareholder, my mother opened for herself personal ‘and business accounts at VBS. At the time when VBS shares became available 1 informed my ‘mother, and ! gave her money to purchase those shares. | weuld instruct Mr Philip Tshillo to transfer money into her VBS accounts whenever she requested money. At fimes | would arrange for her to collect cash from Me Philip Tshillo, This money would have been debited from one of my personal 6r Vele accounts in VBS, ‘The folowirg are the entties that are known to me in which at the time my mother was the director or the trustee: a) Afficasana; b) Shimba La Ndou Trust; and (©) Masingi Resort oa ee he 2iv. Around 2018, a continuing coverage mortgage bond was registered over a property owned by my mother. The said property was stand 1095 Block F in ‘Thohoyandou. The covering bond was registered for an amount of RS milion. This ‘was done in case my mother applies for an overdraft to finance her bakery business in Aricasana in future and the property will stand as surety for the loan. All bank processes were followed inthe registration of this covering bond at the time and the Property was independently valued at R3.5, million, She however never applied for any Joan in VBS. Alicasana was later used by ‘myself through Vele and an overdraft of RS million was loaded without her knowledge. | used the facility in Aficasana to make various payments mostly for Vale related issues. There were payments processed from Afficasana VBS bank account for purchases of items for her house. These payments totaled around R1,2 millon, The moment Afticasana was loaded with overdraft the management of the VBS account was by myself. 13.1.2 Takalani Matodzi(“Takalani”) Takalani is my brother and | employed him at ‘Vermont Build Environment around 2016:Venmont Build environment was a Vele subsidiary. His duties were to source land for development, mainly for residential units developments. He would present fo ‘me for approval all land that would have been 2 2sourced since | was responsible for organizing finance. The following are companies where ‘Takalani was appointed as director by me and role he played Vermont Built Environment (*Venmont") ‘At Vermont Takalani was not involved in the day- to-day administration, which would have included the payments from bank accounts, or organising ‘overdrafts and loan facilities, Overdrafts in this ‘company’s accounts were arranged through Vele bby myself without Takalan's knowledge. Folowing the meeting held at Eagle Canyon on 19 March 2017 Vermont's overdrafts account amounting to R15, 700, 000 was cleared, Tekalani was not aware of the Vermont overdraft nor the subsequent Clearing thereof. The financing was sourced from \VBS through my interventions and mortgage bonds were registered against these properties. During the ‘early stages when | was not yet the chairman of \VBS | personally provided securty against the fist land purchase using my property in Eagle Canyon {8 additional security. Takalani never performed ‘any administrative or banking activites as those were handled by myself through my personal assistant, Miss Takalani Mmbl. The following were Companies that were controlled by myself through \Vole, and that Takalani held directorships: Vermont Holdings ‘Tomy recollection, Takalani was the only director of ‘Vermont Holdings prior to its name being changed to Venmont Holdings. Venmont holdings was ‘administered by myself through my PA, Me Takalani Mmbi. | personally organised overdraft facilities for ‘Vermont Holdings. Venmont Holdings’ overdrafts oO 2» Awere cleared because ofthe meeting held at Eagle Canyon on 13 March 2017. Takalani was not aware ‘ofthe overdraft nor the subsequent clearing thereof Robvet From the records with CIPC this company was incorporated on 22 April 2016 with Takalani as its sole director and he resigned from this company as a director (on 13 May 2016. | only became aware of Robvet sometime in 2016, when 1 was having discussions regarding commission payments with Solly. Solly mentioned that he uses a company called Robvet to pay commissions. 1 enquired from Solly as to who the director of the company ‘was and Solly mentioned that it was his cousin, Mr Rabetani Ramuntshi. let itat that, and | also started using the company as a slush fund for payment of agent ‘commissions and at times my own personal expenses. Robet was under Solly's contro! and later Phophi took: control of it 13.1.3 Aluwani Matodzi(“Aluwani") 18.1.3.1 Aluvani is my sister. Between 2016 and 2018 VBS. ‘ranied her two facilities namely Motor vehicle finance and home loan. 13.1.3.1 Around 2017 1 assisted Aluwani with her bond application document at VBS. At the time ! had employed her to consult Vele regarding starting a fleet ‘management company as she had expertise in the area. | offered her a monthly fee of R30, 000, At the time of her bond application wth VBS I requested a company called Proforum Accountants to draft a root of income letter for income of R107, 000 on her behalf. The basis for the letter was the R30, 000, income she received from Vele and a contract her company Winisouroe had with a client called MK Exotics. MK Exotics was paying Winisource a o”19.132 13:433 13:1.34 ‘monthly rental fee of around R44, 000. The balanoe of her income was made from ad hoc invoioes with her clients which | did not verity. This letter was at my request and was forwarded to VBS. | thus take responsbilty for the remainder which was inflated a the request letter forthe confirmation of income ‘was made by myself “The motor vehicle was approved by VBS on 18 May 2016 the instaliments were paid from Winisouroe \VBS account, total payments paid from Winisource VBS account from May 2016 to April 2018 ‘amounted to around R77, 000. Winisource received paymenis from Vele for services rendered or for payments | directed being paid to it. ter Apr 2018, ‘and post curatorship, she continued to pay installments from her own funds/employment and the account has since been fully setled and closed, VBS aporoved Aluwani's mortgage bond on 10 November 2017. The mortgage bond was registered on 28 February 2018, Her fist instalment was due on 31 March 2018 and the bond account was serviced from April 2018, The ‘mortgage bond continues to be serviced. ‘Aluwani owned a company called Winisource, Winisource had a bank account with VBS. | would reguiarly make payments to this account through \Vele or is entities for ad hoc requests, | assisted with the payment of bond costs for R580, 000 which was paid by myself to Winisource. There was also Payment to Winisource for an invoice when Vele Private Equity was hosting an opening function in Cape Town, | had requested Aluwani to source a Company to transport delegates to the event ao”Bld 4345 B46 Whisource invoiced and was paid by one of Vele subsidiaries, Winisouroe was not a recipient of VBS. overdrafts. Aluwani was not aware nor formed part of corrupt activities at VBS. ‘Shonisani Difotso (‘Shonisan’) 13.144 13442 Mr Phillip Tet 13.154 ‘Takalani Mmbi ("Mmbi 19.164 Shonisani is my sister. | would occasionally gratuitously assist her with money whenever she was in need over a period, Most financial assistance involved assisting her with personal expens debts and her child University tution fees. My ‘estimate total financial assistance from 2016 to 2018 is around R980, 000. Shonisani did rot have any credit or loan facities with VBS. ‘Thabelo Grace Matodzi (“Thabelo”) was my wife. Our divorce was finaised around 2018. She received spousal allowance from myself totaling around R100, 000 a month and paid into ter FINE. ‘account. This was basically a compensation of her being @ housewife and no longer working as a Chartered Accountant, Around 2017, | appointed her as CEO of a new Vele subsidiary called Vermont Foods. All facilities and overdraft of \Venmont foods were arranged directly by myself, ‘Thabelo was not aware ofthe corrupt activiies that were happening at VBS and Vele, (*Tshitto”) Mr Tshillo’s role has already been described in sub paragraph 13.1.1 above. | worked with Takalani Mmbi since my days at Briliantel where she occupied the postion of 513162 13.163 financial manager. At the time | was both the CFO ‘and co-owner of Briliantel. When | moved to Vennont around 2016, 1 recruited her as my personal assistant and accountant thereat. Mmbi was never involved nor aware of my actions at VBS Cr Velo. | tasked her to procure shetf companies of Which I would appoint her as a director until the enties become operational. | am not aware of any ‘companies she opened outside of my instructions save for entities relating to stokvel savings clubs with her friends and co-workers, which she would Inform me about Mmti received a monthly salary of R180, 000 net {rom Vele which was paid through Vele VBS ‘account or one of its subsidiaries. Any other ‘payment or claim by her would be paid to her after ‘my approval. These payments amounted in all to approximately R139, 000 paid over the total period of har employment at Vole, She also had a ‘morgage bond at VBS, and | assisted ner wan the bond costs. | remember she had bought VBS shares of a small amount, and | recall assisting her to.get more shares at VBS IMmbi is the person who provided Matsepe and Maluieke with the documents of Vele motor vehicles land her computer hard drive duting the VBS ‘curatorship. This she did on my instructions since at the tine | was out ofthe country. oO?4 PART C - MUNICIPALITIES (14-17) MUNICIPAL INVESTMENTS: 144 142 143 144 ‘The strategy to approach municipalities to invest with VBS was adopted in the tummaround strategy which was approved by the VBS board around August 2014, Initially the investments were to be sourced in-house through the VBS marketing department which was headed by Sasa. During the intial stages 1 was involved with Sasa in drafting the presentation material and setting up appointments with municipalities | had relationships with. At a later stage | became involved with Sasa at a technical level when chalenges around Interpretation of MEMA arose. After this phase I was not involved inthe client- facing aspect and | left this function to the executive, consultants, and ‘commission agents to deal with. However, as Chaitman of the board | was informed on a reguiar basis regarding the status of all the investments. | received updates regarding what liquidity and cash position of the bank was and these | received in the form of weekly reports, cell phone messages and verbal feedback. | even received updates in the following aspects ofall the ‘municipal investments: a) Potential investments, b) Matures, ¢) Current investments, 4) Investments ‘due for rollover, e) Investments on notice, f) Resolving standoffs between bark officials and commission agents regarding commission payments and bribes. Decision to accept municipal investments was part of VBS strategy which was approved by VBS board, The strategy was also submited to the SARB and presented to all subsequent tr:lateral meetings between VBS board, SARB and \VBS auditors (PwC and KPMG), Al investments recelved from munlclpallies were disclosed to the SARE through monthly SARB DI returns. ‘Around June 2016, during my discussions with Sasa around the Capricom investment, it became clear that there were potential legal isstes in terms of MFMA regarding municipal investments to VBS which is not a bank as defined In the MFMA. The issue from Capricom was that their own lnvastment policy Fequired their investments to be placed st financial instituions with an investment grade rating. Ths is also a requirement in terms of the MFMA and © u iw‘as VBS, we discovered this when the Capricom Municipality queried the investment grade rating. It was from this query that as VBS we realised that there were compliance issues with regards to MFMA. The potential legal challerges regarding MFMA compliance were reported to the VBS beard and 'SARB, and the National Treasury was also notified 18. | wil be dealing withthe following municipalities that| had personal dealings with which ate the folowing: 15.1. West Rand District Municipality ("West Rand”) 16.1.1 I knew the Municipal Manager of West Rand, ie. Mr David Mokoena {"Mokoena”).| had known him for a long time since his days at Mogale City where he worked with my father. Later, | would engage with him ‘hrough Brillantel which had a contract with the Mogale City municipality. Mokoena was like family myself and Manda Phalanndwa (‘Maanda’) Maanda was Billant’s co-owner and current CEO. 15.1.2 Nest Rand was the frst municipality to Invest in VBS. Mokoena and Sasa had already known each other when Mokoena applied for bond facilities with VBS in 2014, Mokoena did inform me that he contacted Sasa for the purposes of the intial investment, Sasa was in tum introduced to West Rand employees by Mokoena, Once Sasa engaged with staf at West Rand, Mokoena and | never discussed West investments and it was left to Sasa and relevant municipal staff. After that, | was involved on an occasion regarding an issue which involved ‘West Rand's CFO named Romeo Mohlaudi. This issue concered rollover and Mokoena, being the Municipal manager, had to call me seeking clarity inthis regard. 16.1.8 Mokoena was aware of my VBS share acquisition endeavors through Brillante! since 2012/2013. Once municipal investments strategy was approved by VBS board, | informed Mokoena that VBS had a product Which catered for Municipal investments. Mokoena had wanted to become part of BrilianteDyambeu consortium earlier but when things «int work out, Maanda and I promised him that we will buy him his own shares outside the Oyambou structure, When I met Mokoena at one of 35 Oo *for the investment proposal, he reminded me about the shares we [Promised him. This reminder had been ongoing for awhile. Maarda and. \ had decided that then agreed that | give Mokoona my personal shares. This | did, hence my arrangement with Sasa that he transfers one of my: personal share certificates holding 10 000 shares to Mokoena, ! never claimed this payment as refund at VBS as it had nothing to do wth VBS, nor had | ever requested payment of commission to him as was the ‘normal modus operandi at VBS thoughout the many investmen's made- by West Rand. Throughout my dealings with Mokoena no brbe was. negotiated by us, Neither was the frst investment made by West Rand the resutt of unlawful dealings between us. To my knowledge Sasa nor ‘any VBS employee never discussed any regular payments beirg made to Mokoena. 16.1.4 Sasa informed me that was involved withthe CFO, Mr Romeo Wohlaudi ("Romeo") and some of Romeo's juniors in the investment sotctation and payment of bribes. | had ful knowledge that bribes were beng paid for the investments and for the rollover of investments. | was notable to know specific details of every transaction, amount or who was paid when and how much and by who. 15.2 Thulamela Municipality (“Thulamela") 15.211 | knew the Mayor of Thulamela atthe time i. Mr Mushoni Tstifhango (“Mushont) since our days as students at RAU. At some stage he set Lup a meeting at the municipality whereby joined Sasa for an investment presentation to the Mayor and his team. However, at that time Mushoni was not a mayor yet at Thulamela, After this presentation no investments were made for a period. It was only after Danny's intervention at the African Pride hotel during 2016 that an investment was made, | know that Mushoni received a bribe inthe form of a motor vehicle since '™m the person who through the Robvet VBS account bought him a Jeep Cherokee, 3615.3 Capricorn Municipality Capricorn") 15.3.4 Capricom was introduced by Sasa through his connections within the ‘Municipality. | was not involved in the solicitation of the investment and ‘Sasa handled everything. | only became involved when sometime in June 2015 Sasa called me informing me that the deputy CFO of the Caprionrn had iestiad an instruction to municipal staf to withdraw funde Invested with VBS. The reason for the i Municipal funds were notin compliance with MEMA, struction was Investments of 15.4. The Rest of municipalities (“The rest”) [As more commission agents were on-boarded within VBS to assist Sasa and his team, my role became more of a facilitator and resolving issues between bank officials and commission agents. For this reason, do not know many of ‘hese municipal officials and their detailed dealings with staff at VBS or ‘commission agents. The details | came across were through engagement with bank staff or information disclosed to me by those involved. Besides Moshate ‘and Gundo, | do not remember meeting or engaging with other commission ‘agents that were on-boarded by VBS. I was however aware of irregular payments that were being made to officials and some of the commission agen! ‘regular dealings. 16. THE MEETING AT THE RANCH HOTEL IN POLOKWANE: 16.1. Around September 2016, ! was informed by Matsepe that there woud be an ANC Premier's imbizo where the Premier of Limpopo province had invited MECs, Mayors and Municipal Managers. | saw this Imbizo as an Important opportunity to market VBS investment products, During my discussions with Matsepe, he informed me that through the assistance and infiuence that Danny had as the ANC Treasurer-General in the province, at the Imbizo he (Danny) would avail the municipal officials for \VBS to pitch andlor present the municipal investment products to ther | was supposed to attend this Imbizo, but felt that Sasa should rather attend as he was the GM of Sales and municipal investments fll under his department. The imbizo was held on 19 September 2016 and Sasa Oo aattended. | was in contact with him, and he updated me on how the ‘engagements went on that day. It took a while before the investments ‘started flowing in after that imbizo. 162. noticed amarked increase of investments during 2017 and l associated this with the Ranch meeting ‘COMMISSION AGENTS: 1". According to my knowledge, VBS had no policy on procurement of services by commission agents, Payment of commissions to commission agents for services rendered was governed by the contracts between the commission agents and VBS. These contracts were designed along industry norms for soliciting investments in ‘municipalities and other institutions. The diferent commission agents are now being discussed hereunder 17.4 Moshato Investments ("Moshate”) 17.4.4 Thad refered Matsepe to Andie for conclusion of commission ‘agent contract between Moshate and VBS. This was done between Andile as CEO of VBS and Matsepe as Moshate's representative 174.2 | was not aware if Moshate was compliant with FSCA requirements or not However, | recall that Moshate had not Provided investment advisory services to clients before. 17.1.3 Hereunde’ is the list of municipalities where Matsepe was involved \Vhembe District Municipality ‘Makhado Municipality Fetakgomo Greater Tubatse Municipality Maikeng Municipality Elles Motsoaledi Municipality Ephraim Mogale Municipality Maknuduthamaga Municipality Pobkwane Municipality Colins Chabane Municipality+ Giyani Municipality 47.2. Gundo Wealth ("Gunde") 17.2.4 Tomy knowledge Gundo was compliant wih all requirements for investment advisory services 17.2.2 Dung an introductory meeting between Raliom and myself, he highighted the fact that his company had al the required certications with FSA. 17.3.3 Hereunder isthe ist of municipalities and entities, that! can stil recal, where Gundo was involved ‘+ Polokwane Municipality ‘+ Dr Ruth Municipality ‘+ Free State Development Corporation (FDC) ‘+ Community Schemes Ombud Service (CSOS) 17.3 TNE Advisory Services (“TNE 17.3.1 | was not involved with the on-boarding process of TNE Advisory Senices, 17.3.2 | was not aware if this commission agent was compliat withthe FSCA requirements or not. However, recall Sasa mertioning to ‘me that this commission agent was providing similar services to Investec Bank 18. PART D— VELE INVESTMENTS AND ITS INVOLVEMENT (18-27) VELE INVESTMENTS: In 2015 | registered Vee Investments (“VELE") with the aim of consoliating all ‘companies which were under my control at the time under one single holding entity. ‘The interim shareholding structure of Vele was formalised; see copy thereof attached herewith, marked and annexed as TM-S. 18.4 VELE SHAREHOLDERS. 18.1.1 EQUITY SHAREHOLDERS 39 So\Vele was 100% owned by Vele La Mbeu. The sole equity shareholder of \Vele La Mbeu was King Toni Mphephu, with an equity shareholding of 100%; see attachec herewith the share certificate, marked and annexed ‘as TM-5, The King’s shareholding was artificial and was meant for PR purposes as the equity shareholder had no voting rights 18.1.2 PREFERENCE SHAREHOLDERS \Vele La Mbeu had two preference shareholders namoly, Vencor and PM Trust. Vencor held 71,4% of convertible preferent shares in Vole La Mbeu, the balance of 28,6% was held by PM Trust for the benefit of Paul Makhavhu and the King. The two preference shareholder groups were the real shareholders of Vele La Mbeu and in turn Vele. The type of shares were Convertible Preference Shares. Each shareholder could convert these Comertile Preference Shares to proportionate ordinary shares on certain conditions. Preference shareholders were entitled to Fights normally associated with ordinary shares and could appoint directors based on their shareholding, Preference shareholders were enitied to a monthly management fee which was agreed to by all parties ‘and was amended om time to time. In effect this was @ monthly salary for the timate teneficial owners of these shares, Most of the shareholders elected to receive this “salary” through their entities that hheld the preference shares to avoid detection, accountability and disclosure. The paynents that were described as salaries were actually corrupt benefits tothe persons involved as they andlor their companies never rendered any service to Vole andlor its subsidiaries nor paid any value for their shareholdings, The preference shareholders are listed below with their respective shareholding percentage and ultimate 4) Parallel owned 20% of Convertie Preference Shares in Vencor resulting in utimate effectve shareholding in Vele of 14,28%: see ‘copy of preference share certificate is attached herewith, marked land annexed as TM. The ultimate owner was Nesane. Preference shares were used as a shareholding instrument for general secrecy and to disguise the actual owners of Vele as some of these actual owners were conflicted. Payments made Oo"b from the Vele bank accounts and/or its subsidiaries to Parallel on behalf of Nesane were itegular and corupt in nature as they were rewards for his participation in the broader VBS scheme. Neither Nesane nor Parale! rendered any services to Vele that ‘would entitle them to any remuneration by Vele Investments. The Convertible Preference Shares were never paid for by either Parallel or Nesane. The total sum ofall payments for salaries and ‘elated fees paid throughout the 2016 to 2018 years by Vele and, its subsidiaries to Perallel was approximately R7, 450, 000. The Salaries mentioned exclude any loans or facilities that Nesane/Parallel had with VBS as these were applied directly with ‘the bank by himself, Munyai Investments owned 20% of Convertible Preference ‘Shares in Vencor resuting in ultimate effecve shareholding in Vele of 14,28%; see copy of preference share certificate is attached herewith, marked and annexed as TM-7. The ultimate ‘owner was Andile. Preference shares were used as a ‘shareholding instrument for general secrecy and to disguise the ‘actual owners of Vele as some of these actual owners were conflicted ‘The total sum of all payments for salaries and related foes paid throughout the 2016 10 2018 years by Vele and its subsidiaries to ‘Munyai investments was approximately R23, 495,000. Payments ‘made from the Vele bank accounts andlor its subsidiaries to ‘Munyai investments on behalf of Andile were itegular and corrupt in nature as they were rewards for his participation in the broader VBS scheme. Neither Munyai Investments nor Andile rendered any services to Vele that would entitle them to any remuneration, by Vele Investments The Convertible Proference Shares were never paid for by either Munyal Investments or Andile. The salaries mentioned exclude any loans or facilities that ‘Andile/Munyai Investnents had with VBS as these were applied directly withthe bankby Andile andlor Munyal Investments 4 a)©) Hokima Capital owned 20% of Convertible Preference shares in \Vencor resulting in ultimate effective shareholding in Vele Investments of 14,26%; see copy of preference share certificate is attached herewith, marked and annexed as TM-8, The utimate ‘owner was Magula. Preference shares were used as a shareholding instrument for general secrecy and to disguise the actual owners of Vole as some of these actual owners were Conficed. Magula was linked to two companies known as Hekima Capital and Investar Connect Holdings (“Investar”) Payments from the Vole bank accounts andlor its subsidiaries to Magula and Hekima Capitalinvestar on behalf of Magula were imegular and corupt in nature as they were rewards for his Participation in the broader VBS scheme. Neither Magula nor Hekima Capitalinvestar rendered any services to Vele Investments that would entite them to any remuneration from, Vele investments. The Convertible Preference Shares were never paid for by either Munyai Investments or Andie. The total sum of all payments for salaries and related fees paid by Vele and its ‘subsidiaries throughout the 2016 to 2018 years to Magula was approximately R7, 000, 000. The salaries mentioned exclude any loans or facilites that Magula had with VBS as these were applied