The chairman of VBS Mutual is a tall, dark and imposing chartered accountant; on this late summer’s morning he is fed up. Tshifhiwa Matodzi and his shareholders suffered slings and arrows when they opted to loan President Jacob Zuma millions to refund the taxpayer for Nkandla. At the time politicians were baying for the bank&#8217;s blood and media was digging for dirt.
Soon after it was announced that the president paid the money through VBS Mutual in September, a small bank founded in Venda in 1982, in northern South Africa, the opposition Democratic Alliance (DA) issued a statement demanding disclosure.
“While both Zuma and VBS Mutual Bank claim a home loan agreement or mortgage does exist between the two parties, there’s no evidence of such a bond registered in the deeds registry, raising the question as to whether a home loan indeed does exist,” says the DA.
It was a deal that the press and opposition in Parliament thought fishy; they thought the loan was funded by the Public Investment Corporation (PIC), a retirement fund that has a 25% shareholding in VBS Mutual. Eight months later, Matodzi, suited and booted in a Melrose Arch hotel in northern Johannesburg, was indignant, but composed.
“There were no underhand dealings. They all said go find out if there’s bribery involved. If you do things right, these things fall out. People realized that we are not interested in politics, I have never met the president. They came with their corruption accusations, but they found nothing. There were racism undertones,” says Matodzi.
On December 14, the DA leader Mmusi Maimane’s spokesman, Mabine Seabe, said neither the office of the president or VBS Mutual complied with their demand to see the proof of payment.
“It is in the public interest to ascertain whether a loan exists; what the conditions of the loan are; whether Jacob Zuma has personally signed surety on the loan, and not any of his cronies; and what effect, if any, does this have on the court’s finding that the president must personally pay back the R7.8 million determined by the National Treasury,” says the DA.
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“We cannot provide the DA or anyone with a proof of payment of the President&#8217;s loan or any of our clients&#8217; because of the confidentiality rule and agreement that governs the relationship between the bank and its clients. It is important to note that the National Treasury did make it publicly known and confirmed that the President has honored the said payment through a loan from VBS Mutual Bank. This confirmation was made public to the DA and everyone that the President has paid through a loan from VBS Mutual Bank,” says a response from VBS Mutual.
Matodzi decries controversial stories around the President’s loan, questioning the bank’s funding of rural homes without title deeds. Cynicism emerged on radio stations, in particular Power FM, where the bank was discussed. One online response said: “What are the odds that within a year this little mouse of a bank will have to be bailed out by the PIC because of a cashflow problem due to a certain big lender not honoring his commitments?”
Again Matodzi was indignant.
“It was not the biggest loan, it was not even in our top 50, but it was the biggest profile simply because it’s the president. The bank has the assets of R1.2 billion ($87.5 million), so you may understand that a R7 million ($500,000) is a drop in the ocean. The original name was Venda Building Society, so our main core business was funding homes in traditional Venda where other banks didn’t want to go,” he says.
City Press’ investigative and award-winning journalist, Sipho Masondo, was one of the journalists Matodzi claimed to have written hearsay about VBS Mutual. In one of the articles entitled ‘What is VBS Mutual Bank? Everything you need to know’, the newspaper alleged Matodzi and Robert Madzonga, the Chief Operating Officer, ran the bank with impunity. Masondo said the bank’s board didn’t approve of a R136-million ($9.9-million) loan for the two to buy a 54% stake in Afric Oil but they took the loan anyway. Masondo further alleged Zuma intended to crown the Venda king, a VBS shareholder, around the same time the loan was awarded. But when FORBES AFRICA asked Masondo to reiterate his claims in December, he was uncooperative.
Matodzi denies any wrongdoing.
“Whether it was in Nkandla or Venda, to us it was not a problem. I think it was the lack of education and a political issue that created the talk about the President’s loan. Countries should be built from their rural areas, and that’s what VBS has been doing better than any other bank. As a business we are exploiting the vacuum that has been created by mainstream banks,” says Matodzi.
Matodzi was still in primary school when the bank was formed by the Venda Bantustan government and traditional leaders. He says in the 1980s it was a go-to bank for the local people. It was during those early days he had the epiphany that when he finished university he would help the bank grow.
VBS Mutual became a mutual bank in 1990. Now it is one of three in the country, along with Ithala Development Finance Corporation and Finbond Mutual Bank.
VBS Mutual, which has only four branches in South Africa, including the headquarters in Johannesburg, was in the red until 2013 when Dyambeu Investments acquired a majority stake. Dyambeu partners, including Matodzi, property magnate David Mabilu, telecoms businessman Maanda Phalanndwa, and the Venda King Toni Mphephu Ramabulana, own 26% of the shares.
Matodzi, who served as an IT auditor at various South African banks while doing articles at KPMG, says one of the pillars of their turnaround strategy was the repositioning of the bank as a small- and medium-enterprise (SME) bank. In a year, more than R450 million ($32.8 million) was advanced to SMEs. He claimed 99% repayment from rural clients.
It may be a small bank but it will be remembered for lending always to the big man.

Tag: VBS Mutual

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