Over 225 applicants, primarily from Gauteng’s poorer townships, have instituted a R60 billion claim for damages against some of South Africa’s biggest banks.
GroundUp reports that the case revolves around a number of unlawful repossessions by the banks over the past 23 years, with the R60 billion figure based on the average estimated loss of home equity value, multiplied by the roughly 100,000 homes repossessed since 1994.
Nedbank, Absa, FirstRand Bank and Standard Bank are cited as respondents in the case, as well as the National Credit Regulator, the Minister for Justice and Constitutional Development, the SA Human Rights Commission and the High Court Rules Board.
Auction Alliance paid off bank officials, says report – paying referral commissions to bank officials at Absa, Nedbank, RNB/FNB and Investec.
WHILE mandated to market and sell bulk properties on behalf of Absa, Auction Alliance allegedly acquired some of the residential units for itself without disclosing this to the bank.
Auction Alliance is also accused, in the Greyling forensic report that Business Day has seen, of paying referral commissions to bank officials at Absa, Nedbank, RNB/FNB and Investec.
The report is the product of a forensic probe carried out by Allan Greyling and his team at Accountants at Law (A@L) in 2012. It has been buried away from the public eye ever since.
THE South African Reserve Bank seems to have little appetite to deal with the miscalculation of interest rates by Absa. The bank has been paying back its customers millions of rand because it overcharged them on their credit cards. I am told more than 50,000 clients were affected, with one client due a R90,000 refund.
One would have expected the Reserve Bank to move swiftly and assess how deep this goes. But the central bank’s response is that “in terms of section 33 of the South African Reserve Bank Act, (it) does not comment on individual entities. Complaints on interest rate charges are referred to the banking ombudsman as the (Reserve Bank), in terms of the Banks Act, does not have the legal powers to intervene between a bank and its client.”
I think the Reserve Bank is reading the act too narrowly. It does not know how widespread this problem is and immediately concludes that it should not intervene. What if it is widespread and affects other banks?
A few years ago, Absa miscalculated interest on a client’s car loan. A senior Reserve Bank official said — and I have it on record — that it was an “isolated incident”. I guess he was wrong, because it has happened again with another Absa lending product.
A miscalculation of interest can pose a risk to SA’s banking system. Imagine if a bank had overcharged clients interest to the tune of R2bn and these clients were suing to get their money back. This would be a problem for the bank as R2bn is a lot of cash.
Dealing with interest miscalculation should not be restricted to the National Credit Regulator and the banking ombudsman. The Reserve Bank is tasked with promoting the soundness of SA’s banking system, and should take on this battle.
Speaking of battles, all because of brinkmanship, about R500m owed to five large South African banks is now at risk and may not be fully recovered should there be a failure to sell African Bank Investments Limited (Abil) subsidiary Standard & General Insurance (Stangen). If other creditors are included, the sum owed to creditors is close to R1bn. Should Abil’s business rescue fail and a liquidation is granted, the biggest losers will be the creditors, including the banks.
The parties involved include Abil’s black economic empowerment (BEE) shareholders, business rescue practitioners and African Bank curator Tom Winterboer. Last week Winterboer, under pressure to create a “good bank” from Abil by February, walked away from acquiring Stangen.
Winterboer had offered R1.38bn for Stangen, but Abil’s BEE shareholders, Hlumisa and Eyomhlaba, thought they were being fleeced as Stangen produced half-year profits of R786m. The shareholders wanted at least R4bn for Stangen to recover something of the R1.5bn they had lost over the past nine years.
The sale of Stangen would have realised about R2.6bn for Abil shareholders if cash at Stangen is taken into consideration. The BEE shareholders, although they believe they are not the spoilers, essentially torpedoed the deal. They knew they stood to get nothing from Stangen and decided to play hard ball. Essentially, close to R1bn would have gone to the creditors and another R1.3bn would have gone to preference shareholders.
However, it seems that the parties who wanted the Stangen deal to go through for R1.38bn underestimated the hand of the BEE shareholders. Because Hlumisa and Eyomhlaba had already lost R1.5bn, they felt business rescue was aimed at helping creditors rather than ordinary shareholders.
Winterboer is not a loser. But the African Bank “good bank” has lost out on making close to R1bn in capital in the first two years, which is what Stangen was expected to bring in.
In Winterboer’s words: “The capital expectation over the first two years was a R955m contribution through recapitalisation of the bank. After taking account of other impacts of not needing to fund the acquisition of Stangen, the actual capital reduction is of the order of R640m, which will be compensated by the good bank taking a larger amount of cash across from the existing African Bank.”
Winterboer felt it was better to make an arrangement with another insurer to underwrite the unsecured loans advanced by African Bank, as he could not afford delays. That is his choice. He could not be forced to buy something he felt was too expensive.
Robin Hood to the rescue!
A whole lot has been written about Rael Levitt the embattled CEO of now disgraced company Auction Alliance. The whole scandal erupted after a complaint was lodged by billionaire businesswoman Wendy Appelbaum with the Consumer Complaints commission. Stories have appeared in both the mainstream and financial press. Levitt stepped down as CEO which has added further fuel to the fires that are raging around both the auction industries and financial and legal professions. It seems that this would be a battle of Goliath versus Goliath and would not have any impact on the man in the street. Not so however.
It’s a veritable can of worms that has left many people all the way down this particular food chain feeling very uncomfortable and nervous. Who wouldn’t be with SARS and various other bodies all rallying around to uncover the truth? It’s the stuff of good gangster movies and who knows, perhaps a movie in the making. Most people would simply shrug and walk away because they feel they have no recourse against this issue and trying to get their story heard let alone justice being served.
Consumer Guardian Services (Pty) Ltd (CGS) has discovered that various banks in South Africa have illegally overcharged Bond account holders in excess of R1 billion in illegal fees. These fees include non taxed legal fees; bond interest rates calculated on these illegal fees as well as overcharged interest on wrongly calculated bond balances.
According to Johan Muller (Managing Director) of CGS, a Cape Town based company this practice of illegally overcharging clients has been in existence for more than 20 years. To make matters worse, according to a publication by the National Credit Regulator, ABSA, First National Bank (FNB), Nedbank and Standard Bank agreed in December 2010 that no homes will be attached and sold until 30 June 2011.
Despite this undertaking, more than 1400 homes per month have been sold on instruction by these banks through the Sheriff of the Court since December 2010. To add insult to injury various Sheriffs are working in tandem with private syndicates who buy these properties, in some instance at 30% of the debt value and immediately then re-sell these properties to third parties.
Johan Muller who personally settled in excess of R90 million of overcharged interest with South African Banks, has embarked on a mission to expose these ill gotten profits and rightfully recover the overcharged amounts. The problem which most home owners face once the sheriff sells the property to the syndicate, the client is blacklisted for hundreds of thousands of rands.
CGS has successfully interdicted the transfer of many of these ill gotten properties on behalf of many clients based on the fact that the bank has made errors on the balances claimed from the client. Certain banks are buying their own properties back for a nominal amount, but nevertheless hold the bondholder responsible for the balance. Muller has personally been offered bribes from syndicate members in excess of R100, 000 “just to make the file go away”! He has also received many calls and threats from sheriffs who complained about his interference with sales of execution of properties.
Muller has knowledge of certain attorneys acting on behalf of banks, sheriffs and syndicates enriching themselves at the expense of the distressed home-owner. Muller has first-hand experience of certain sheriffs owning up to 3 luxurious homes and up to 9 cars. CGS employs various attorneys to assist home owners in their defence against the banks and the cancellation of execution sales by the sheriff.
For further details contact Johan Muller on 021-3000 150 or facebook: consumer guardian services.