VBS was reckless with R7.8m Nkandla loan
THE high court application by the liquidator of VBS (Venda Building Society) Mutual Bank to recover millions owed to it by former president Jacob Zuma, has revealed how the bank was reckless while conducting its business before it collapsed.
Other than taking a huge financial gamble in 2016, by lending money to a man beyond his working age (Zuma was 74 at the time), the bank also took a gamble by giving out the home loan with a rural property as a guarantee.
The R7.8 million loan was met with outrage and the bank was accused of reckless lending, but it stood its ground saying it conducted thorough due diligence on Zuma’s affordability.
More outrageous this week was how the bank, according to papers that have since been leaked to the public, used Zuma’s Nkandla rural home, as collateral even though the home was built on communal land that is owned by the controversial Ingonyama Trust.
The trust is currently facing a court battle over rental agreements with some residents in KwaZulu-Natal.
It is also facing pressure of disbandment, with those against it arguing that the permission to occupy does not grant residents total ownership of the land.
With that, it is urged that the land cannot be used as collateral to get a bank loan or any other form of finance that can be backed with a property on it.
Despite that, according to the leaked section of the home loan agreement seen by Independent Media which was signed with Zuma in 2016, VBS agreed to attach the “Nkandla Zuma Homestead in KwaZulu-Natal”.
Speaking to Independent Media, accounting analyst Khaya Sithole said nobody knows how the liquidators hope to get the law to back it to attach the Zuma homestead as it is sitting on communal land.
“Everybody is just speculating that maybe the lawyers will find a loophole. ”
Sithole said VBS was engaged in reckless lending and one of the ways Zuma may get out of this loan agreement was to argue that they were reckless to lend him money.
“The key question here was whether he could afford to service the loan.
“The second one is what is the security… I think he can get out of this by accusing them of (being) reckless because it doesn’t make sense,” he said.
The bank lent Zuma R7.8m which was needed to pay the state after former public protector Thuli Madonsela ruled that some of the security upgrades at the former president’s Nkandla home were not supposed to be paid for by the state.
Zuma’s lawyers, Dan Mantsha and Muzi Sikhakhane, did not respond to calls nor did his spokesperson, Vukile Mathabela.
Again as Zuma’s legal troubles mount, an exchange between Zuma’s lawyers and the bank shows that in May this year he, through his lawyers, made an unfulfilled undertaking to settle the arrears of more than R500 000 but later reneged.