S Africa opposition calls bank fraud claims 'madness'

South Africa's radical opposition EFF party claimed on Tuesday that fraud claims against a top leader were politically motivated to discredit it ahead of crunch polls due in 2019.

The far-left Economic Freedom Fighters (EFF), led by Julius Malema, is embroiled in a row raging around the collapse of the VBS Mutual bank which has particularly hit poor and rural clients.

A central bank probe into the failure said $130 million (112 million euros) was stolen over three years and named EFF deputy president Floyd Shivambu's brother as a beneficiary.

The report, titled "The Great Bank Heist", described the bank as "corrupt and rotten to the core".

It implicated 52 other individuals as well as Brian Shivambu who is an active member of the EFF, South Africa's second largest opposition party in parliament.

Malema distanced the party from the scandal in a two-hour media briefing at party HQ in Johannesburg.

"The EFF has not been mentioned in any wrongdoing," said Malema, accusing the local media of seeking to undermine the party.

"Its intention is to discredit the EFF and make sure the EFF loses support in the 2019 election." The VBS collapse is one of the most serious graft cases to rock South Africa since the departure of former president Jacob Zuma whose alleged corruption was vigorously condemned by the EFF.

The party, founded in 2013 after former Zuma ally Malema fell out with the then-president, has waged a vocal campaign against official corruption.

Shivambu denied ever receiving any cash from his brother for himself of the party.

"We never took money from VBS and anyone who thinks we did is mad," said Shivambu.

"There has never been any 10 million rand ($700,000) that came into my account... it's deliberate, part of the propaganda machinery, it's pure insanity -- it' madness." His brother Brian, 30, has also rejected the report's findings and threatened to sue.

The investigation into the bank was launched after VBS suffered a severe liquidity crisis and the bank collapsed into administration earlier this year.

The probe also revealed malpractice including the supply of overdrafts to well-connected clients and payments made to individuals in exchange for deposits from state-owned companies.

VBS Mutual gained notoriety in 2016 when it lent scandal-tainted former president Jacob Zuma $540,000 to repay taxpayers for upgrades he made to his private home. By 2017 the bank had 30,000 clients and deposits worth $55 million, according to local media.

President Cyril Ramaphosa, who took over after Zuma was forced to resign in February, on Monday denied accusations that he was forewarned about the looming crisis while he was still deputy president.