July 13, 2018 / 6:00 PM / a year ago

Law head of South Africa's $150 bln state pension fund quits

JOHANNESBURG, July 13 (Reuters) - South Africa’s Public Investment Corporation (PIC), Africa’s biggest investment fund, said on Friday its legal head had quit with immediate effect after evidence of wrongdoing emerged during a disciplinary hearing into the collapse of VBS Bank.

In a statement the PIC said its executive head for legal counsel, governance and compliance, Ernest Nesane, had resigned after a disciplinary hearing earlier in the week found serious allegations of corruption against him in connection with VBS Mutual Bank, where the fund manger has a 25 percent stake.

“The PIC is concerned about the developments that have come to light since the commencement of the VBS enquiry and more so that two of its former employees have been implicated of impropriety in their personal capacity,” the fund said.

Nesane did not respond to phone calls and text messages requesting comment.

VBS ran out cash in March when 1.5 billion rand ($113 million), three quarters of its total assets, vanished.

It was then put under curatorship by the central bank to save its over 20,000 retail depositors, with the National Treasury this week granting the bank a 300 million rand guarantee.

The Reserve Bank and treasury have rebuked VBS for taking short term deposits and granting long term loans, as well as for accepting deposits from municipalities, despite this being prohibited by government’s financial management laws.

Albeit a relatively small player in South Africa’s 12 trillion rand banking sector, VBS attracted attention after it loaned former president Jacob Zuma the 9 million rand he was ordered to repay the state by the Constitutional Court for renovations to his personal home.

The scandal has also pulled in global audit firm KPMG, which signed off on the bank’s 2017 financial results, which have since been declared invalid by the curator citing glaring irregularities.

KPMG said in April it was investigating two of its partners for failing to disclose financial interests in VBS. ($1 = 13.2743 rand) (Reporting by Mfuneko Toyana and Tanisha Heiberg, editing by Louise Heavens)

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