TAKEN FOR A RIDE
Behind the R699 scam
LIEZL Barclay of Sasolburg was unemployed and desperate for a car when she was enticed, two years ago, to buy a Tata Indica light passenger vehicle through the R699 scheme.
This week, the R699 scheme, which was offered by the Satinsky Group, unravelled in a storm of allegations that it was nothing more than a Ponzi scheme designed to dupe consumers such as Barclay.
In Barclay’s case, the scheme allowed her to slash the monthly instalment from R2 500 to R699 provided she drove around with a sticker on the back of her car punting the scheme to other motorists.
Now that the scheme has apparently gone belly-up, Barclay says she cannot get rid of the car. Worse, she still owes about R100 000 on the vehicle, and Tata will offer her only R60 000 for the vehicle.
Barclay, 31, is one of an estimated 17 000 motorists living mainly in Gauteng, KwaZulu-Natal and the Western Cape, who were caught up in what has been described as the biggest scam the motoring industry has seen to date.
For the promise of a monthly instalment of about R699, motorists drove around with the stickers, which they bought through Satinsky, advertising the scheme.
By doing that, they were guaranteed a payment of R570 a month from Blue Lakes, Satinsky’s Chinese business partner headquartered in Hong Kong.
If a potential buyer phoned Satinsky’s call centre and quoted the code from one of the vehicles, the owner of that vehicle would get R3 000.
Satinsky offered two options: Earn as you drive and earn as you own. Motorists were required to upload pictures of the vehicle and mileage every month to get the rebate.
Warning signs emerged last month when Satinsky told motorists it had dissolved the management agreement with Blue Lakes and entered into a new rewards programme.
This spelled disaster for many motorists, who had relied on the monetary rebate to afford the full vehicle instalment.
Motorists had already been complaining for months that the rebate had dried up without explanation.
Barclay, a married mother of a two-year-old, says the company reneged on her rebate pay- ments in May, June and July last year before simply cancelling her contract on the basis that she had not uploaded pictures and captured mileage properly. She then established a complaint group on Facebook.
Barclay says she has now found a teaching job, but still cannot afford the full instalment of just over R2 500.
“Every month, I have to borrow to get by . . . we’re paying much more now.”
Barclay said the scheme initially seemed to work. A friend had bought a vehicle through the scheme in 2010 and was paid promptly.
Since the scheme imploded, Satinsky Group and Blue Lakes have kept a low profile.
Albert Venter, Satinsky’s CEO, said he had no comment.
Many of the motorists now face the prospects of having their cars repossessed by major lending institutions.
Wesbank declined to participate in the scheme, saying it doubted its authenticity and sustainability.
Other banks have jumped to clear their names following the criticism that applications were tweaked to enable the applicants to receive the green light despite not qualifying.
Trevor Browse, managing executive for Motor Finance Corporation (MFC) at Nedbank, said it was not privy to or involved in the advertising rebate agreements with the customers. “These are only entered into once the bank finance contract has been signed and accepted by the car buyer and the vehicle value paid out to the dealership.”
Browse said MFC assessed the client’s application for finance based on the full vehicle value, instalment amount and affordability within the National Credit Act.
“At no stage is any form of dealership rebate, subsidy or lead fee factored into MFC’s financing decision.
“We encourage the affected customers to contact Just Group Africa to seek a resolution.”
Standard Bank said it only granted loans to customer if all the credit and affordability criteria had been met and it did not consider the advertising kickback when it assessed customer affordability.
“Standard Bank does not have a view or information on customers of Satinsky/ Blue Lakes as agreements with them are made separately and without Standard Bank’s knowledge.”
It said it would consider rescheduling loans to assist customers.
Some of the motorists may face tax implications.
Barclay, and another motorist who spoke on condition of anonymity, claimed to have not received tax certificates for the current year.
Marika Muller, SARS spokesman, said it would assess each case individually.
Emil Brincker, director and national tax practice head at Cliffe Dekker Hofmeyr, said: “Even if the scheme was invalid, there is case law to the effect that the customers may still be taxed on an illegal transaction, for which there was precedent in law.”
Trade union federation Cosatu said it would ask banks to extend the period of repayment so that the amounts remained at the affordable level of R699 “because this mainly affects working people, many of whom are Cosatu members”.
It said government had to take action against banks in terms of the National Credit Act.