25 April 2018

Namibia Monitors SA Reports On SME Bank

THE Bank of Namibia is monitoring reports in South Africa that a former KPMG official tasked to trace the N$200 million that disappeared from the SME Bank is being investigated.

Governor Ipumbu Shiimi declined to comment when approached for comment yesterday, saying the case is still in court.

However, a person briefed by Shiimi yesterday said the central bank is monitoring the situation in South Africa.

"We are following the story closely," a person with direct knowledge of the issue added. The source admitted that South African investigators had not yet consulted them.

South African weekly newspaper, the Mail and Guardian, reported on Friday that a South African law firm is investigating the role played by a former KPMG official regarding the Namibian central bank's clash with VBS Mutual Bank, where N$200 million from the SME Bank was channelled to other destinations.

The SME Bank was shut down last year because it failed to recover the N$200 million "invested" in South Africa through VBS Mutual Bank.

KPMG South Africa has been embroiled in controversies since last year, including allegations that it had approved three transactions suspected of being part of a money-laundering scheme by the politically-connected Gupta family.

The scandals forced KPMG South Africa to review hundreds of files going as far back as 18 months.

New details are now emerging that one of KPMG's key officials, Sipho Malaba, who helped the Bank of Namibia to trace the missing millions, resigned last week.

Malaba, former head of KPMG's biggest unit, the financial services auditing department, threw in the towel before disciplinary proceedings about his links to VBS Bank started.

KPMG South Africa admitted last week that Malaba misled them regarding his relationship with VBS Mutual Bank.

Reports are that Malaba failed to fully disclose that he had received a loan from VBS Mutual Bank.

The news report said South African law firm Bowman Gilfillan "is probing former partner Sipho Malaba's role in the fight between VBS Mutual Bank and the Bank of Namibia".

The newspaper said Malaba told the Bank of Namibia last year that VBS Mutual Bank had entered into legitimate contracts with the SME Bank.

Malaba denied any wrongdoing last week, and told the newspaper that his role was to trace the funds as requested by the Bank of Namibia.

"We traced that money that was coming into VBS from SME, and that money moved elsewhere. It was confirmed and agreed that this was not an audit. They [the Bank of Namibia] asked us to conduct the trace because we were auditors of VBS.

"There was nothing untoward in the work we did, and the Namibians are following the money. I don't see how this is made an issue against me. There was a court case between the parties [VBS and the Bank of Namibia], so if there was an issue, someone would have taken me to jail," said Malaba.

The article also quoted VBS's chief executive, Andile Ramavhunga, who said VBS was used by the SME Bank as an intermediary.

"The monies were held in various investments, and any proceeds of the investments would go to the SME Bank. It is them who can answer as to what happened to the monies," Ramavhunga said.

The battle for the SME Bank has mostly been playing out in Namibian courts between the bank's co-owners and the Bank of Namibia which wants the bank closed.

There is still no indication that progress is being made on how the lost N$200 million was going to be recovered, except that it was "invested" in fertiliser businesses abroad.

The Bank of Namibia turned a blind eye to financial irregularities reported at the SME Bank for years. Even though the central bank redeemed itself last year when it pushed the closure of the bank, it was a little too late to stop the loss of N$200 million in 2016.

Former Bank of Namibia governor Tom Alweendo, who is now the mines minister, blocked the initial plan to approve the establishment of the SME Bank.

President Hage Geingob last month played down a call by Popular Democratic Movement (PDM) leader McHenry Venaani for a state-sanctioned investigation into how the N$200 million disappeared.

Geingob said he could not order an investigation since a court case was ongoing.

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