🔒 EFF bank fraud scandal reminds world that SA is corrupt

EDINBURGH — The bank scandal that has thrust the Economic Freedom Fighters (EFF) into the headlines might be welcome news to those who would like to see the EFF disappear – but it is a reminder that corruption is deeply embedded in South Africa. The EFF is a small party ordinarily of little interest to global decision-makers, yet its role in the collapse of VBS Bank has attracted the attention of respected global business newspaper The Financial Times. This is perhaps because Julius Malema is seen as a powerful threat to the ruling ANC; at the very least, EFF policies have influenced the recent behaviour of ANC leaders who have, for example, embraced land grabs. – Jackie Cameron 

By Thulasizwe Sithole

Just as South Africa is recovering from the Zuma-Gupta state capture scandal, a new corruption scandal has thrust the country into the international limelight.

“Investigators in South Africa have uncovered new links between the radical opposition Economic Freedom Fighters party and a high-profile bank fraud, deepening a national scandal over the fallen lender’s alleged financing of political corruption,” says the Financial Times.

“A forensic report released last month into the collapse of VBS bank detailed how management of the ‘rotten to the core’ lender had falsified accounts and bribed local officials to rapidly grow its deposit base. The investigation also implicated relatives of EFF leader, Julius Malema, and his deputy in suspicious transfers of money from the lender.

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VBS Mutual Bank, Floyd Shivambu, EFF
Glass House Ave. More of Zapiro’s brilliant work available at www.zapiro.com.

“Now investigators commissioned by South Africa’s central bank are examining evidence that VBS illicitly financed the purchase by the EFF of an exclusive Johannesburg property, officials familiar with the probe said. The links between VBS and the EFF threaten a crisis for South Africa’s second-biggest opposition party and its firebrand leader, who built his reputation as a critic of corruption under President Jacob Zuma, who was removed from office in February,” continues the FT.

“Mr Malema is eyeing the role of kingmaker in important elections next year, where Mr Zuma’s successor, Cyril Ramaphosa, faces a battle to defend the ANC’s majority in the face of voters’ anger at the legacy of corruption. But the EFF’s future has become increasingly intertwined with the fallout from the collapse of VBS, which was liquidated last week,” it reports.

“Mr Malema has attacked South Africa’s central bank for not recapitalising VBS in what became a critical test of the independence of the country’s banking regulators against political pressure. ‘We must be ashamed of ourselves, where all of us just decided to fold our arms when a black bank was being closed down,’ the EFF leader said last week.

“Regulators had concluded that the bank could not be rescued given the scale of fraud on its books. The bank rose to political prominence in particular when it gave Mr Zuma a mortgage, after cultivating ANC politicians. VBS, formerly an obscure building society in the Limpopo region, used bribes and political connections at local municipalities to rapidly grow its deposit base, according to last month’s forensic report.

“Investigators are now seeking to recover assets for the bank. A company owned by a brother of the EFF’s deputy leader, Floyd Shivambu, received R16m ($1m) in payments associated with the bank, the report concluded. Investigators have also homed in on the EFF’s purchase of the Johannesburg house for more than R5m ($350,000) last year,” continues the FT.

“According to records seen by the Financial Times, payments from VBS flowed through companies owned by the EFF leaders’ relatives, including a cousin of Mr Malema, in transfers that referenced the address of the property. South Africa’s Daily Maverick newspaper has also reported the transfers.”

Mbuyiseni Ndlozi, an EFF spokesperson, has reportedly denied any link between the property and illicit VBS funds.

“He said the party legitimately acquired the house as an investment property and financed the purchase with a bank loan. Mr Ndlozi declined to specify the lender or details of the loan but South African bank officials said it was not normal practice to lend mortgages to political parties. Mr Malema and Mr Shivambu have repeatedly denied any wrongdoing in connection with VBS, including receipt of illicit funds from the bank.”

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