The collapse of the VBS Mutual Bank and the politics of survival

The eventual collapse of the VBS Mutual Bank opened a plethora of nagging questions in relation to the direction the country is taking in terms of economic emancipation. The subsequent uproar that came about as a result of the bank’s demise deepened the ongoing uncertainty about the possibility of a stable economic trajectory which should seek to unbundle the hurdles hampering the entry of black people into the mainstream economy and to allow them to be equal participants. A black owned bank that opened doors in 1982 slipped through the wisdom of our polarizing society into oblivion. No bailout whatsoever, a concept that has become synonymous with the management of our country’s resources by the government.

It is very interesting that instead of working to salvage the bank, politicians seized on its precarious situation and used it as a launching pad for political survival. Elitism overshadowed the essence of ensuring that black community initiatives are appreciated and supported. The demise of the VBS bank was triggered by the very elite that now seeks to convince everybody that their bickering is more important than the savings of the many wretched souls that lost their hard earned money. The preservation of the status quo economically will indeed continue to plaque and deter all efforts seeking to acknowledge the critical role that black people can play in the economic life of our country.

As soon as the thirty six year old institution called VBS Mutual Bank deflated and shrank, political parties jumped onto the bandwagon and started hurling accusations and counter accusations. These parties took advantage of the bank’s situation to score some quick political points. The fact is; it will remain a festering sore that the bank was allowed by the South African Reserve Bank (SARB) to collapse in spite of the renewals that it ratified each time they were due in accordance with the statutes. That political parties got animated by the collapse of a bank established and run by black people points to an acute shortage or lack thereof of understanding of the essence of the precepts of the transformation project our country should be pursuing.

The demise of the bank came as a shock as the Adv. Mutau report revealed the depth of the rot and pointed to beneficiaries of the looting and named several notable politicians across the political divide. This triggered political parties to engage their defence modes in order to thwart the blemishing revelations. These parties resorted to this strategy at the expense of the poor who relied on the bank for the safekeeping of their savings. Affected parties at most failed to own up to their involvement and prevaricated on their responsibility to deal with their affected members as a way of intensifying the fight against corruption. In the end, the blame scope was spread widely and utterly deflected attention from the much anticipated attempt to save the bank from total collapse.

Obviously, the reason for the establishment of the bank was for economic self- sustenance and over the years people entrusted with its welfare turned it into their private concern. They mercilessly abused the trust bestowed on them until the coffers could take it no more and when the bubble burst they arrogantly defended themselves. The scale of looting was so reckless that it attracted the municipalities whose mandate to manage public finances was flouted in order to benefit few individuals. Affected municipalities continue to operate as if nothing untoward happened. This is an illustration of the extent to which public resources are misused.

One critical aspect in South Africa is one of redress and the most difficult part of this process is for all citizens to accept that it is possible and viable to co-exist. Often, our contribution to debate on recourse is selectively styled which in a way deflect certain sides of the process that are correlated.

It is therefore very important for the available constitutional instruments to strive to put synergy in the overall work seeking to correct the imbalances of the past through a fair redress.

The collapse of the VBS bank has once more brought forward the necessity to unlock the human potential aplomb in black people especially on the economic front. State institutions should therefore play a pivotal role in order to ensure that there is synergy in the redress project. The politicians were once again presented with an opportunity to play their part as public representatives to ensure that the transformation agenda doesn’t unnecessarily leave certain aspects of the project behind thus derailing the realization of a productive outcome. The economic disparities are a reality not to be shirked if a dream of an equal society is to be realized. In essence, an enabling environment should be created which should serve to consolidate and deepen economic emancipation for black people as they are the once that are still paying bitterly and painfully for the injustices of the past. Saving the VBS from a total collapse should have been central and key to the politicians’ leadership efforts.

The unfortunate demise of the bank was occasioned by the inability of the majority of public representatives’ lack of forensic capabilities to exercise oversight productively. That it took them so long to know that the bank was already on the cliff edge illustrates an acute shortage of skills and determination to correct the anomalies riddling our governance systems. It was no surprise that most of the parties saw the collapse of the bank as their marketing tool. Political parties should therefore tighten the net in terms of appointing their members to serve as public representatives in institutions of governance.

Those that were involved in the looting spree should be brought to book. Their assets should be seized and forfeited to the trust coffers so as to ensure that all the monies unlawfully accumulated are recovered. It is not yet late to rescue the bank from total disappearance from the banking system of our country. The government should find ways of retrieving this bank from the abyss, assist in putting proper structures for its management and allow it to function properly. Inasmuch as the SARB was able to intervene in the manner that I did, it can as well assist in ensuring that the bank is rescued and that it functions properly.


Goldrick Mafologela

015 0040 430

Politics & Governance


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