SPOTLIGHT ON CSOS R80-MILLION DEPOSIT IN LOOTED VBS BANK

By Blake Wilkins

Media reports in the last few days that a further seven suspects have been charged over the looting of R2 billion from VBS Bank has put the spotlight on the illegal R80 million deposit made by the Community Schemes Ombud Service (CSOS) in 2018.

Among the additional seven facing charges of racketeering, theft, fraud and money laundering are middleman Ralliom Razwinane, who allegedly was responsible for securing deposits for the small Venda-based bank from CSOS and the Free State Development Corporation. 

CSOS was set up by the Department of Human Settlements, Water and Sanitation in 2016 to regulate community housing developments that include sectional title schemes, homeowners associations, retirement housing schemes and housing cooperatives.

CSOS income is derived from levies collected from registered community housing developments, a government grant, interest on bank deposits and fees for dispute resolution.

Details of the actions taken by CSOS regarding the illegal R80-million deposit in VBS Bank were included in the CSOS annual report for the 12 months ending on 31 March 2020 under the heading VBS Update. However, no further update was included in the March 2021 CSOS digital newsletter Shared Living. CSOS did not reply to emailed questions in time to include responses by the deadline for inclusion in the Chronicle.

Ms Ndivhuo Rabuli, Acting Chief Ombud, said in the annual report that ‘after the finalisation of the investigation by both the CSOS and the Minister’s appointed Investigators, CSOS laid criminal charges against implicated parties. The case is currently being handled by the Directorate for Priority Crimes Investigation.

‘The National Prosecuting Authority has allocated the case to a prosecutor to assist with further investigation and for possible prosecutions.

‘CSOS is in constant contact with the investigation team to assist in the processing of the matter.

‘Further, CSOS lodged a complaint with the Financial Sector Conduct Authority (“FSCA”), to investigate the conduct of certain parties for contravention of the FSCA legislations.

To ensure that CSOS is able to recover some funds, even though this is not guaranteed, the CSOS has lodged a claim with the VBS Curator. The exact amount which the CSOS may be able to recover cannot be determined at this stage.’

There were no further investigations of malfeasance at CSOS during the 12 months ending on 31 March 2020, the period covered in the most recent annual report.

CSOS collected R217 million in levies during the financial year ending on 31 March 2020 compared with R196 million in the previous financial year.

The auditor general issued a ‘qualified’ finding on the financial year for the reporting period, an improvement on the ‘adverse’ audit finding of the previous year.

Mr M. Tyamzashe, Chairperson of the Board, remarked in the annual report that CSOS was in the process of acquiring and implementing in stages a business automation solution (BAS) ‘to act as a central core interface for the business units, dealing with revenue management, registration, governance, compliance and enforcement as well as dispute resolution’.

He said the decision to invest in the business automation solution was motivated to overcome ’recurring adverse audit findings…… centred around the inability to account for collections covering the entire universe of community schemes’. The objective was to achieve an ‘unqualified’ report in the auditor’s report for the current financial year ending 31 March 2021.  

Referring to the delay in the appointment of a chief ombud and chief financial officer, Tyamzashe said the delay ‘was initially influenced by the need to dispose of legal challenges from a previous incumbent in the case of the chief ombud and the long approval process in confirming a chief financial officer. This led to an undesirably long period of having “acting” personnel in these critical positions.

‘A headhunting executive search company was subsequently appointed to help with the two appointments and recommendations have already been made to the Minister via the Department (of Human Settlements…). At this stage, we are negotiating an offer with the preferred chief ombud candidate and restarting the search for a chief financial officer.’

The March 2021 issue of Shared living was signed by Ms Rabuli as Acting Chief Ombud, a clear indication that no candidate has yet been confirmed as the permanent chief ombud.

• The CSOS head office has moved to Berkley Office Park, 8 Bauhinia Street, Highveld Technopark, Centurion. Telephone 0800 000 653. The details are included in the latest edition of the Shared Living magazine.