South Africa’s Justice Minister Scrutinized Over VBS Loan Controversy

Simelane is accused of receiving a 575,600 South African rand (US$32,258) loan in 2016 from Gundo Wealth Solutions—a company involved in brokering unlawful investments into the now-defunct VBS Mutual Bank—while serving as mayor of Polokwane Municipality in Limpopo province from 2014 to 2021.

She allegedly used the loan to buy a coffee shop in Sandton, South Africa’s upmarket economic hub.

Gundo Wealth Solutions, owned by Ralliom Razwinane, is directly connected to the illegal investments of municipal funds into VBS Mutual Bank, for which Razwinane is currently on trial for fraud, corruption, and money laundering as a commission agent linking municipalities, including Polokwane, to the now-defunct bank.

Investigations have revealed that VBS Mutual Bank provided kickbacks to politicians in exchange for loans from municipalities. 

The VBS scandal has been described as a scheme that defrauded pensioners and financially struggling municipalities of their deposits. 

The bank was allegedly turned into a slush fund for corrupt politicians, local government leaders, and their business associates through a pyramid scheme. 

The bank’s owners are accused of bribing officials in some of South Africa’s poorest and most dysfunctional municipalities, convincing them to either divert or feign the diversion of their budgets into VBS in exchange for cash and gifts.

South Africa’s President Cyril Ramaphosa has demanded answers from Minister Simelane, as there is growing pressure for him to remove her from office.

“The media reports have linked the minister with monies alleged to have been received improperly from the VBS Mutual Bank during her tenure as Mayor of the Polokwane Municipality,” the President’s office stated Wednesday.

The statement emphasized that Ramaphosa has demanded “a detailed report and briefing” from Minister Simelane.

The Democratic Alliance (DA), which now co-governs South Africa with the ruling African National Congress (ANC), has requested that the chair of the Justice Parliamentary Portfolio Committee summons Simelane to address these allegations.

Leigh-Ann Mathys, national spokesperson for the Economic Freedom Fighters (EFF), has argued that as Minister of Justice, Simelane is responsible for overseeing critical institutions like the National Prosecuting Authority, which is actively investigating and prosecuting the VBS collapse. Mathys insists that, given these responsibilities, Simelane should be removed from her post.