, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
1. According to King 3 report, The Board of directors are expected to execute their duties with
diligence. Discuss the four main pillars of good corporate governance, which are Accountability,
Fairness, Transparency, and responsibility. Apply these to the VBS looting saga and through
research demonstrate how these principles were violated which resulted in the bank being
looted.
The Four Pillars of Corporate Governance: An Analysis of the VBS Mutual Bank Collapse
Introduction to Corporate Governance
Corporate governance serves as the fundamental framework through which organisations are
directed, controlled, and held accountable. As Valsamakis et al. (2022) explain, the risk management
process is incomplete until one considers the element of financing and the mechanisms that ensure
proper oversight. The King III Report, as articulated by Hendrikse and Hefer (2019), established the
benchmark for corporate governance in South Africa, emphasising that directors must execute their
duties with diligence, care, and skill. At the heart of effective corporate governance lie four
interconnected pillars: accountability, fairness, transparency, and responsibility. These principles are
not merely theoretical constructs but practical imperatives that, when violated, can lead to
catastrophic organisational failure.
The collapse of VBS Mutual Bank in 2018 represents one of South Africa’s most devastating cases
of governance failure, resulting in the loss of approximately R2 billion—much of it deposited by
impoverished municipalities and community members. This analysis examines how each of the four
governance pillars was systematically violated at VBS, demonstrating the real-world consequences
when ethical leadership and proper oversight are abandoned.
The Pillar of Accountability
Accountability requires that individuals and groups in a company who make decisions and take
actions on specific issues must answer for their decisions and actions (Hendrikse & Hefer, 2019).
The Compliance Institute Southern Africa (2024) emphasises that accountability is fundamental to
compliance practice, requiring clear communication channels with stakeholders and robust risk
management systems.
At VBS Mutual Bank, accountability failed at every level of the organisational hierarchy. The
forensic report titled “The Great Bank Heist,” authored by Advocate Terry Motau, revealed how
senior executives, directors, and connected individuals systematically siphoned billions from the
bank for personal enrichment (Vilakazi, 2026). Funds were diverted into luxury properties and
vehicles, ultimately leading to the bank’s collapse. The most egregious example involved former
President Jacob Zuma, who received a R7.8 million loan from VBS to pay for his Nkandla
homestead. The loan agreement was signed only nine months after the money had already been
granted, and Zuma only began repaying the loan after the bank was placed under curatorship
(Legalbrief, 2026).
The absence of accountability was further demonstrated by the conduct of the bank’s auditors.
KPMG, which audited VBS over several years, issued clean audit opinions despite clear warning
signs (Vilakazi, 2026). The lead auditor, Sipho Malaba, held undisclosed loans with the bank and
received kickbacks from VBS senior executives to facilitate the looting scheme (The Asian Banker,
2026). When accountability mechanisms exist only on paper but are not enforced, they become what
Vilakazi (2026) terms “performative governance”—compliance in appearance but absence in
substance.
1. According to King 3 report, The Board of directors are expected to execute their duties with
diligence. Discuss the four main pillars of good corporate governance, which are Accountability,
Fairness, Transparency, and responsibility. Apply these to the VBS looting saga and through
research demonstrate how these principles were violated which resulted in the bank being
looted.
The Four Pillars of Corporate Governance: An Analysis of the VBS Mutual Bank Collapse
Introduction to Corporate Governance
Corporate governance serves as the fundamental framework through which organisations are
directed, controlled, and held accountable. As Valsamakis et al. (2022) explain, the risk management
process is incomplete until one considers the element of financing and the mechanisms that ensure
proper oversight. The King III Report, as articulated by Hendrikse and Hefer (2019), established the
benchmark for corporate governance in South Africa, emphasising that directors must execute their
duties with diligence, care, and skill. At the heart of effective corporate governance lie four
interconnected pillars: accountability, fairness, transparency, and responsibility. These principles are
not merely theoretical constructs but practical imperatives that, when violated, can lead to
catastrophic organisational failure.
The collapse of VBS Mutual Bank in 2018 represents one of South Africa’s most devastating cases
of governance failure, resulting in the loss of approximately R2 billion—much of it deposited by
impoverished municipalities and community members. This analysis examines how each of the four
governance pillars was systematically violated at VBS, demonstrating the real-world consequences
when ethical leadership and proper oversight are abandoned.
The Pillar of Accountability
Accountability requires that individuals and groups in a company who make decisions and take
actions on specific issues must answer for their decisions and actions (Hendrikse & Hefer, 2019).
The Compliance Institute Southern Africa (2024) emphasises that accountability is fundamental to
compliance practice, requiring clear communication channels with stakeholders and robust risk
management systems.
At VBS Mutual Bank, accountability failed at every level of the organisational hierarchy. The
forensic report titled “The Great Bank Heist,” authored by Advocate Terry Motau, revealed how
senior executives, directors, and connected individuals systematically siphoned billions from the
bank for personal enrichment (Vilakazi, 2026). Funds were diverted into luxury properties and
vehicles, ultimately leading to the bank’s collapse. The most egregious example involved former
President Jacob Zuma, who received a R7.8 million loan from VBS to pay for his Nkandla
homestead. The loan agreement was signed only nine months after the money had already been
granted, and Zuma only began repaying the loan after the bank was placed under curatorship
(Legalbrief, 2026).
The absence of accountability was further demonstrated by the conduct of the bank’s auditors.
KPMG, which audited VBS over several years, issued clean audit opinions despite clear warning
signs (Vilakazi, 2026). The lead auditor, Sipho Malaba, held undisclosed loans with the bank and
received kickbacks from VBS senior executives to facilitate the looting scheme (The Asian Banker,
2026). When accountability mechanisms exist only on paper but are not enforced, they become what
Vilakazi (2026) terms “performative governance”—compliance in appearance but absence in
substance.
