Officials at VBS Mutual Bank fabricated deposits with computer entries to “create” money for themselves, an article in Rapport stated.
The report cited an affidavit from the curator of the bank, Anoosh Rooplal.
In the affidavit handed in at the High Court in Johannesburg, Rooplal described the scale of fraud at VBS as “epic.”
Rooplal said that VBS also paid millions in bribes to politicians and senior officials at the Public Investment Corporation (PIC) and the Passenger Rail Agency of South Africa.
The report stated that a senior executive at the PIC received a case containing R5 million cash in exchange for ensuring that it extended a R350-million line of credit to VBS, said Rooplal.
He alleged that the directors of VBS then stole more than R1.5 billion from individual investors and municipalities which invested money with the institution.
Rooplal has lodged an urgent application with the court to sequestrate the majority shareholder of VBS, Vele Investments.
VBS previously made headlines for extending a loan to former President Jacob Zuma to pay for upgrades to his Nkandla homestead.
It was put into administration by the SA Reserve Bank after it was unable to repay money owed to municipalities.
While VBS repaid its line of credit to the PIC, according to an earlier report, 16 municipalities and other depositors may lose their money.