The National Prosecuting Authority issued a racketeering certificate in which the group is accused of being instrumental in the fleecing of the bank's resources and its ultimate implosion. They will be prosecuted for a broad range of crimes, including allegations of racketeering, corruption, money laundering, fraud, bribery and theft, Scorpio was told.

Four bankers, two officials from the Public Investment Corporation (PIC), a KPMG auditor and a lieutenant-general in the South African police have been arrested in connection with their instrumental role in the theft of over R2,7-billion from VBS Mutual Bank, a bank mainly catering for the poor. This group includes four chartered accountants and an attorney.

Those arrested are:

• Tshifhiwa Matodzi, chairman of VBS and Vele Investments (a company which obtained the majority shareholding in VBS through an alleged scam);
• VBS treasurer Phophi Mukhodobwane;
• VBS CFO Philip Truter;
• non-executive directors of VBS and nominees of the PIC Ernest Nesane and Paul Magula;
• KPMG auditor Sipho Malaba;
• CEO and executive director of VBS Andile Ramavhunga; and
• VBS non-executive director and chair of the bank’s audit committee, lieutenant-general Avhsahoni Ramikosi.

This marks the first arrests in the VBS scandal after Advocate Terry Motau and law firm Werksmans at the behest of the SA Reserve Bank investigated what looked like a “liquidity issue” in 2018. In October that year, Motau and Werksmans announced that the bank was actually robbed into insolvency. Investigators fingered the bank’s managers, auditors, attorneys, politicians and fixers as the main beneficiaries of the scam.

Under the guise of a legitimate business the men participated in a “pattern of racketeering activity”, the National Prosecuting Authority (NPA) said. This refers to the planned, ongoing, continuous and/or repeated participation or involvement of several offences which aimed to hoodwink the bank (and ultimately its depositors) out of their money.

They will be charged and prosecuted under the Prevention of Organised Crime Act (Poca) of 1998.

The lead prosecutor in the case is the highly experienced deputy director of public prosecutions Advocate Hein van der Merwe.

The Hawks and a task team of investigators and prosecutors have been investigating the orchestrated theft at VBS for months. Their colleagues in the NPA have sung their praises, saying “South Africa has really good prosecutors and investigators who worked very hard on this matter to ensure we bring justice for the bank’s poor depositors”.

Racketeering is a complex crime – it essentially refers to the group activity of running and hiding a criminal enterprise while deriving benefit from it. A group of people can be prosecuted for racketeering when at least two concomitant crimes mentioned in the Prevention of Organised Crime Act (Poca) are present. This ensures that the definition of racketeering is extremely broad. The Constitutional Court has considered and upheld the broad nature of Poca, saying the act “seeks to ensure that the criminal justice system reaches as far and wide as possible in order to deal with the scourge of organised crime in as many of its manifestations as possible”.

This ensures that even when a person only knew of – or reasonably ought to have known of – a racketeering enterprise they can be found guilty of a crime.

The crime of racketeering carries the penalty of a fine not exceeding R100-million and/or imprisonment for up to life behind bars.