Vele Investments, the majority shareholder in VBS Mutual Bank, intends applying to the court to challenge the decision to place the bank into curatorship on the grounds that it is inconsistent with the Constitution.
In an affidavit filed with the High Court in Pretoria on Wednesday, Vele director Maanda Manyatshe said the Reserve Bank’s decision to place VBS under curatorship, triggered by severe liquidity challenges at the bank, was not constitutionally sound as banking regulations dealing with curatorships infringed on the rights of the people affected by them.
Previously, the placing of a bank under curatorship required the written consent of the bank’s board of directors or its CEO, but this was amended in 2013 to allow for curatorships without such written consent or even the involvement of the courts.
"A dispute on whether a curatorship is appropriate or not is not a process that can be brought before a court and consequently infringes the constitutional rights … of persons affected thereby to challenge the appointment or the need for the appointment of a curator in a fair hearing before the court," said Manyatshe.
He argued that the curatorship was inappropriate as the bank was in talks with the Public Investment Corporation (PIC), a 26% shareholder in VBS, about a R1.5bn loan that would have improved VBS’s "liquidity figures".
Manyatshe said Reserve Bank deputy governor Kuben Naidoo, who also acts as the registrar of banks, was informed of this at a meeting on March 8, and that the PIC’s investment committee was due to meet the following day to consider the loan.
The decision of the investment committee meeting would have been made known on March 12. VBS chairman Tshifhiwa Matodzi confirmed to Vele that Naidoo agreed to hold back on his decision to place the bank under curatorship until the PIC decided on the loan.
Manyatshe said Naidoo reneged on the agreement by placing the bank under curatorship on Sunday, the day before the PIC could decide.
The PIC did not respond to questions from Business Day regarding the veracity of Manyatshe’s allegations.
"In the letter advising the VBS Mutual Bank of the appointment of the curator, the registrar of banks makes a material error of fact by stating the PIC loan application has failed," said Manyatshe. "His recommendation to the [finance minister] was based on this factual error … and is reviewable on that basis."
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