Residents cry foul over lost R4 m investment with Village Bank
Residents of GaMathabatha are up in arms after seemingly having lost at least R4 million collectively from large sums invested with Mathabatha Financial Service Cooperative, which has been trading as Village Bank since the start of operations in 2000.
Documents made available to Polokwane Observer highlighted that the bank was offering services from a smallholding in the area. The scope of its services includes deposits, withdrawals, fixed deposits, small loans, insurance, burial schemes, membership, shares, faxing, photocopies, typing and internet.
A source who wished to remain anonymous for fear of victimisation alleged that residents invested R4 million with the bank. The source added that although they were not getting interest on the money they saved, everything was going smooth until 4 December 2017 when they were told by the bank’s Board of Directors that there was no money left. The source further emphasised that they were informed that all the money got lost and the board was still investigating as to what exactly transpired.
“We gave them a chance to conduct investigations but three years later, we are still waiting for our monies. We are taken from pillar to post when we inquire and this is not fair because most families are affected. When we pressurise the board with questions and demands, we are told to go seek help anywhere we wish because the bank had no money. Some of us have been saving the money to pay for our children’s university fees while others were groups of burial schemes and groceries stokvels,” angry source explained.
Another source outlined that they only recently learnt that the bank management used the money to give out loans whereas this was never an agreement at the beginning. It was further reported that the bank lost all the money because people did not repay loans while others perished before they could pay back the money. The disgruntled sources stressed that they don’t care what chowed the money, all they wanted was their hard earned cash.
Records of savings deposited by several social clubs and individuals were forwarded as proof of transactions involving the largest amounts deposited by Botshabelo Burial Society, which had a closing balance of R44 032, Mmashadi Burial Society which saved R38 070, Holla Madikeleng Burial Society which had a total of R14 863 in the bank and Mashikane Kgomo Society that had R10 430 in savings.
A Zimbabwean national, who had allegedly saved R51 879 for his family back home, is reportedly having difficulties coping with the fact that his hard earned money vanished into thin air. Other individuals lost as much as R45 504 and R23 201 respectively. One of the affected residents indicated that the bank came into existence after a community member, Agnes Qwabe realised that people especially those who depend of social grants and temporary jobs could not afford to go to banks in Lebowakgomo to deposit their money.
In a telephonic interview Qwabe, a retired nurse, stated that she established the bank after realising that residents were forced to travel over 100 km from the village to the city to access banking services. The 80yearold granny further emphasised that she was involved in community development projects and her vision was to educate people about the importance of saving money and create job opportunities. Qwabe indicated that she had an organisation, Fanang Diatla which catered for over 50 people.
She added that those who were part of the organisation were compelled to save money in the village bank and reiterated that this was one of the mechanisms they used to maintain the institution. Qwabe concluded by saying she doesn’t know what happened to the money as she left the institution in 2013 when she retired as a nurse.
A former bank manager who identified herself as Princess Mathabatha indicated in a telephonic interview with Polokwane Observer that she was laid off from the position in 2018 after the board of directors told her that they were investigating what happened to the funds. She said the Village Bank was a community project which had no income and added that as far as she knows the money was used for loans. Mathabatha reiterated that the monetary challenges started in 2017 and explained that clients did not pay back the loans while others passed on before they could settle their debts.
After failed attempts to get hold of the board chairperson the sources highlighted that the
South African National Apex Cooperative (Sanaco) was also aware of the crisis. Sanaco President Lawrence Bale stated that he learnt of the matter on radio and decided to try and assist the affected residents. He concluded by saying the affected residents need as much assistance as possible to get their hard earned money back.
In a letter dated 14 February 2019 that was forwarded to the Office of the Premier, African National Congress Ward 27 councillor Tlouyabiba Mathabatha requested Limpopo’s highest office to intervene in the matter by conducting forensic investigations. The office, however, could not intervene in the case but rather referred the concerned group to the Financial Sector Conduct Authority (FSCA). Mathabatha indicated that they had faith in the Office of the Premier but they were surprised when they were referred to another institution. He added that they haven’t approached the Police yet as they were still searching for other avenues which affected clients can utilise to get their money back.
Provincial Government Spokesperson Kenny Mathivha stressed that South Africa was a constitutional democracy, hence there are organs of state that are regulated to deal with certain things that other organs can’t. He reiterated that the Office of the Premier does not have a mandate to investigate financial institutions and concluded by saying they will be in bridge of the law if they conduct forensic investigations into the bank.
A stash of emails made available to Polokwane Observer revealed that FSCA’s Consumer Education division, Department of Economic Development, Environment and Tourism’s (Ledet) Business Regulations and Governance sector, the South African Reserve Bank’s Prudential Authority (PA) and Cooperative Banks Development Agency (CBDA) have been in constant communication regarding the matter.
When acknowledging receipt of the complaints in a letter dated 4 April 2019 and signed by former Ledet Chief Director for Business Regulations and Governance Kenneth Maboea, Ledet indicated that upon careful analysis of the complaint the office has concluded that the authority that is competent to effectively attend to the issue was the Reserve Bank’s PA. The letter further reads: “Accordingly we are unable to pursue this matter any further and our office will proceed to close your file.”
The emails indicate that FSCA referred the case to CBDA. In a letter dated 22 February 2019 the organisation’s Consumer Education Manager Elliot Modisa wrote to representatives of the relevant departments and institutions stating that: “I consulted with the relevant line departments to make sure that this matter is not under investigation by any of our departments. According to our tracking system, Mathabatha Financial Service Co-operative is not an authorised financial service provider in terms of the Financial Advisory and Intermediary Services (FAIS) act. It, however, appears that this entity might have contravened the CBDA act. FSCA is therefore not in a position to attend to the proposed meeting and speak authoritatively on the allegations. I, forthwith, requested Stanley Phashe to refer the matter to the CBDA for further investigation.”
In a communique between Phashe and former CBDA representative Nomakhosi Shabangu, it was indicated that the matter should be referred to the Reserve Bank’s PA.
In the meantime it was learnt that Reserve Bank PA Manager for Banking and Insurance Supervision, David de Jong had a meeting with the affected residents on 8 March 2018 where deregistration or registration of Mathabatha Village Bank was discussed. It was further reported that De Jong advised that the bank be discontinued due to hiccups he learnt about.
When contacted for comment, De Jong highlighted that he was not allowed to speak to the media and suggested that an inquiry be forwarded to PA’s media desk. By the time of going to print, Reserve Bank PA Divisional Head Lebogang Tshabalala had acknowledged receipt of the media inquiry and indicated that they were currently gathering the required facts and other information in order to provide a formal response. She pledged to revert back to Polokwane Observer once this has been done.