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South Africa's biggest bank heist leaves trail of destruction

Johannesburg

SOUTH Africa's biggest bank heist took place without a single shot being fired.

Thieves armed with explosives and assault rifles attacked dozens of armoured vehicles delivering cash to the country's lenders last year, stealing hundreds of millions of rand - but they've allegedly been outdone by five bankers accused of siphoning off at least 1.5 billion rand (S$155.2 million) from VBS Mutual Bank.

The collapse of the seventh-smallest of South Africa's 21 banks has left a trail of destruction, with customers queuing up outside branches before dawn in the hope of accessing their funds.

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The scandal has claimed the jobs of senior managers at KPMG South Africa and the Public Investment Corp, Africa's largest money manager.

It has also put at risk 1.65 billion rand of illegal deposits made by 13 already cash-strapped municipalities, which the government has said won't be bailed out.

The scale of the fraud is more than three times the size of the 10 biggest cash-in-transit heists pulled off by armed attackers last year, when they netted 456 million rand, according to Interpol data published by the Johannesburg-based TimesLive news website.

Kuben Naidoo, the registrar of banks and a deputy governor of the central bank, who described VBS as a Ponzi scheme, said: "It probably is the biggest bank heist in South Africa by bankers. It certainly is one of the biggest banks frauds that we've seen in South Africa."

Nedbank Group Ltd, South Africa's fourth-biggest bank, with support from the central bank, has stepped in to help with payouts for VBS customers.

VBS' history stretches back to 1982, when racist laws were in full force and black South Africans had little or no access to finance. Burial societies established the Venda Building Society to offer impoverished communities a way to set aside money for funerals.

The bank shot to prominence in 2016, when it loaned former President Jacob Zuma almost 8 million rand to reimburse taxpayer money spent on upgrades to his private home.

At the time, he was facing accusations of allowing his friends the Gupta family to influence Cabinet appointments and unfairly win state contracts. Mr Zuma and the Guptas deny any wrongdoing.

South Africa's biggest lenders reacted to the corruption allegations by closing down all accounts linked to the Guptas.

That triggered a backlash, with Mr Zuma's supporters calling for a boycott of what they labelled "white banks".

Municipalities came under pressure from some politicians to instead place their money with black-owned banks like VBS - in contravention of laws that prohibit mutual banks from taking municipal deposits, said Mr Naidoo.

"There was an element of politicisation of the bank," he said. "There was certainly political pressure on municipalities to take money from so-called white banks and put it in black banks."

The trigger that sent the bank into administration in March, and offered the first glimpse of its liquidity crisis, was its inability to honour an obligation to a municipality the previous month.

An investigation by SizweNtsalubaGobodo, the administrator, blamed VBS chairman Tshifhiwa Matodzi and four others for the bank's collapse. They defrauded depositors by fabricating accounts, creating fictitious deposits, bribing officials at other organisations, transferring funds to themselves and buying bank assets that weren't recorded, including a helicopter, said Anoosh Rooplal, the bank's curator. BLOOMBERG