VBS Mutual Bank, which provided former President Jacob Zuma a R7.3-million “Nkandla” loan, was involved in the supply of high volumes of diesel to Eskom in 2013 and 2014 during load shedding.
According to the Rapport, officials at the Treasury confirmed that VBS was involved in many dirty dealings since control of the bank was taken over by a consortium consisting of Vele Investments and the Public Investment Corporation (PIC).
The PIC acquired 27% of the bank in 2013 and extended a R350-million line of credit to it, which was used to enable several companies to acquire large volumes of diesel that was sold to Eskom through short-term contracts.
Eskom spent R10.5 billion on diesel in the 2014/15 financial year.
VBS used its line of credit from the PIC to provide guarantees to six companies which bought diesel from Sasol and sold it to Eskom.
An investigation opened by the former Minister of Public Enterprises Lynne Brown found that Eskom was exploited and paid too much for the diesel on these contracts.
The Dentons report commissioned by Brown also said there were serious irregularities when the tenders for the diesel contracts were evaluated.
VBS Mutual Bank also received deposits from municipalities in the same month it loaned Zuma the money to repay the state for unauthorised upgrades to his Nkandla homestead, stated the Rapport.
The bank would have reportedly run into liquidity problems had it not received the deposits – as its loan to Zuma was more than double its annual profit.
It also had a limit of R1 million on home loans prior to Zuma’s application.
VBS Mutual Bank has since been put into administration by the SA Reserve Bank.
It was put into administration after it was unable to repay money owed to municipalities.
While VBS repaid its line of credit to the PIC, 16 municipalities and other smaller depositors may lose their money.