Government pledges to recover stolen VBS funds

CAPE TOWN - Government said it would seek to recover billions of rands stolen from a local bank that subsequently collapsed owing substantial sums to creditors.

A central bank report, titled "The Great Bank Heist" into the failure of VBS Mutual bank, said over R1,8-billion was stolen over three years by 53 individuals, including executives and politicians.

Local Governance Minister Zweli Mkhize told parliamentarians that he had instructed lawyers to "launch a lawsuit on this matter so that we must chase and try and recover the money".

The minister described the situation at VBS Mutual as a "very crude abuse of finances which were destined for poor communities".

"We cannot allow this money to disappear, it's our people's money, poor people's money," he said, vowing that "justice must prevail".

WATCH: Mkhize briefs CoGTA on VBS Bank scandal

The investigation into the bank was launched after VBS suffered a severe liquidity crisis and it collapsed into administration.

The bank's failure has hit poor and rural clients hardest.

"It's grossly unfair. All the money must be recovered," Mkhize said.

The probe also revealed malpractice including the granting of overdrafts to well-connected clients and bribes paid to individuals in exchange for deposits from state-owned companies and municipalities.

Parliament last week said it would investigate lawmaker and prominent leader in the radical opposition Economic Freedom Fighters (EFF) Floyd Shivambu over claims his brother profited from the fraud.

eNCA's Cathy Mohlahlana was joined by the Former technical director of the municipality, Precious Mathebula.