#VBSBankHeist: Insure made reckless deposits for attractive interest rate
JOHANNESBURG – Suspended Insure chief executive Charl Cilliers was mentioned in Advocate Motau’s report for having received a sum of R12 683 000 from VBS.
Over and above this amount we are concerned about the other issues which he did not address in explaining his conduct to the Insurers from whom premiums are withheld.
The following is an extraction from the Curator of Insure dated 31 October 2018.
- “In terms of allegations noted in the VBS Report and as far as it relates to me specifically, I respond as follows:
- “The SARB statement as quoted in the News24 article on October 10, 2018 indicated that “the evidence presented in the report is not a reflection of either the guilt or innocence of any party as not all parties have been given an opportunity to respond to the evidence”.
- “I understand that there was limited time for the investigators to request and review all the details and I am comfortable that once given the opportunity to provide further information, that it will show that all which transpired as far as my involvement and dealings, was entirely above board.
- “I can further confirm that the amount stated against my name does not relate to funds I personally received, and this too will be clarified 100 percent, in due course, and when I am called on. I have to date given my full co‐operation and will continue to do so as I have nothing to hide.”
I confirm that, I had sent Cilliers a list of questions, but despite his initial willingness, no response was received from him.
A picture emerges that casts a dark shadow over the intentions and motivations for the deals as the structure and terms of the deal with Vele Investments in particular, were not business as usual. Similar deals have not been concluded by any of the other premium collection companies, such as Stratcol. The following corporate actions of Cilliers and his co-directors forms part of the dots that need to be joined.
We list some of Insure’s recent deals which are to be judged from the perspective of their core business, being insurance premium collection.
Investments were made in a mining rehabilitation operation located in Springs, Gauteng. Hopefully more details would be forthcoming on this deal, regarding the parties involved and the rationale to venture into transactions so far removed from the core business of premium collections.
There were also investments made in a property portfolio comprising a number of high value property developments, located in various parts of the country. No wonder the Group has liquidity problems.
It is extremely difficult to see how such a gross mismatch between maturity terms of assets and liabilities is a result of mere negligence. These investments have been done deliberately while the cash flow projections and the underlying assumptions should not have escaped the directors attention and should have raised an alarm. He chose to ignore basic essential investment parameters while dealing with other people’s money.
Deposits in VBS were explained as having been made to attract an attractive interest rate. No due care was taken to assure that the financial ability and soundness of VBS Bank was adequate.
Insure had made reckless deposits at VBS and their excuse for making the investments was that they had been attracted to the deposit on account of the attractive interest rate.
Even a first year B Com student knows “every Yield tells a story”. Students and amateur investors, please take note, what a story this has turned out to be. Had a rating agency looked at VBS Bank it would have received a junk-status rating. It seems clear that no reputable and informed institution would have made deposits with VBS Mutual Bank.
The deal to sell Insure shares to an Investor (Vele Investments) to raise capital to cover illiquid investments had the effect of compounding the woes of Insure.
This was a shady deal and does not appear to be at an arms-length. Even without any knowledge of the entity with whom Insure was getting to bed with, in the ordinary course of business, Insure should have insisted that payment was made to their existing Bank account (Absa).
Accepting a deposit at VBS should have raised serious alarm.
It certainly raises the suspicion that they were well aware of the fraud being perpetrated by Vele Investments and VBS.
Insure accepted this arrangement which was highly irregular and as it turned out had put the company at harm. A third of the R250m was not withdrawn before VBS was placed under curatorship, leaving them with a loss of R82 500 000.
In addition the curator of VBS is currently in negotiations with Insure regarding the R167 500 000 that Insure received as proceeds from fraud.
Corrie Kruger is an independent correspondent for Business Report.
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