Disgraced VBS auditor barred for life

The former lead auditor of defunct VBS Mutual Bank, which was consumed by corruption of R2bn, has been declaredpersona non grataand never to be allowed to practice again over his role in the saga. Sipho Malaba, who at the time of the looting of VBS was a senior auditor at KPMG, not only turned a blind eye to the glaring corruption but also benefited by more than R25m in underhanded loans — seen as gratification to help conceal the corruption that engulfed the mutual bank, perpetrated at the highest echelons of the company. Malaba was found guilty on eight charges by a panel constituted by the Independent Regulatory Board for Auditors (IRBA).

The charges included his “ghost auditing” of the Industrial Development Corporation and medical scheme Spectramed, where he showed total disregard of his role, thus painting a picture of systematic failings on his part. However, it was his role in the collapse of VBS, after he signed off on the unmodified audit report in the 2017 financial year in the face of serious evidence of corruption, that has drawn the sharpest rebuke from the IRBA. For his transgressions, Malaba, who snubbed the IRBA process, was fined R1.6m and a further R9.2m in costs and banned for life from practising as an auditor.

“The VBS Mutual Bank charge is in a league of its own [for a variety of reasons] if regard is had to the rural communities in Limpopo, including the depositors of their hard-earned money. They blindly placed their unflinching trust in the hands of the powers that be, at the time, at the VBS Mutual Bank,” reads the sanction handed down by the panel this week. The IRBA welcomes the panel’s decision and emphasises the auditing profession plays a critical public interest role whereby registered auditors are required to uphold the highest standards of integrity, independence and professional competence “They were disappointingly rewarded with a fraudulent audit opinion by the respondent at its helm [as an audit engagement partner].

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The respondent must take the ultimate responsibility of having signed off on the audit opinions concerned.” Advocate Terry Motau, who investigated the looting of the bank, last week argued before the disciplinary panel on behalf of the IRBA that Malaba had shown no remorse and has no business being in the auditing profession. Motau’s 148-page report, “VBS Mutual Bank: The Great Bank Heist”, released in October 2018, blew the lid off the looting that characterised the bank, from which about R2bn was syphoned in less than five years. KPMGin 2024 agreed to pay VBS R500m to settle a lawsuit launched by the bank’s liquidators.

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