VBS wants Zuma to pay up or risk losing Nkandla homestead
Bank’s curators say former president owes R7.3m
THE curators of VBS Mutual Bank, who are suing former president Jacob Zuma to recover R7.3 million that he owes the institution, could face tough legal arguments if they want to execute on his Nkandla homestead if he fails to pay up.
According to court papers Independent Media have seen, the curators have issued summons out of the Pietermaritzburg High Court in which they seek payment of the R7.3m plus interest, or an order declaring the Nkandla property specially executable.
However, they could face legal hurdles since the homestead is on Ingonyama Trust land.
The Ingonyama Trust Board is cited as a defendant in the court papers, but the bank said no relief was sought against it.
According to the court papers, VBS gave Zuma a loan of more than R7m in 2016 on condition that he bond the Nkandla property with them and that the bank could foreclose on the property if he defaulted on the repayments.
Zuma used the loan to pay back the government what he owed for upgrades to his homestead.
This was after former public protector Thuli Madonsela ruled that some of the upgrades at the Nkandla home should not have been paid for by the state.
She then ruled that Zuma should refund the state for the upgrades, including for the installation of the infamous “firepool”, cattle kraal and chicken run.
At the time it was granted, the loan raised eyebrows and the bank was accused of reckless lending, but it stood its ground, saying it had conducted thorough due diligence on Zuma’s finances.
In the court papers, the curators said they had corresponded with Zuma and later with his attorneys after he fell into arrears last year.
The bank said “sporadic repayments” were then made, which were not in accordance with the agreement.
Paul Hoffman, of the Institute for Accountability in Southern Africa, told eNCA yesterday that he could not say whether a sale in execution on the Nkandla homestead would happen.
“Selling the Ingonyama Trust property in order to satisfy the debt of Jacob Zuma’s might be stretching the law a little bit,” he said.
Hoffman told Independent Media that VBS would only be able to execute on the former president’s rural property if there was a valid bond in place.
This would be the case if the owner of the property, the Ingonyama Trust Board, through its sole trustee King Goodwill Zwelithini, had consented to a bond being taken on the property, or if Zuma claimed that the land belonged to the Zuma clan and not to the trust.
But in their court papers, the curators have attached what appears to be a lease agreement that Zuma signed with the trust in 2011.
Hoffman added that Zuma had many strategies available to defend himself, including raising the defence that VBS was a reckless lender.
“They lent money to someone who could not pay it back, someone whose children’s school fees were paid for by other people.
“If he wins that argument, that will be the end of their (VBS) case. ”
Accounting analyst Khaya Sithole agreed that it was not known how the bank’s curators hoped to attach the Zuma homestead because it was situated on communal land.
“Everybody is just speculating that maybe the lawyers will find a loophole… It’s a big problem because nobody knows what the procedure would be.
“But I think what the curator was trying to do was simply threaten to repossess the house to get Zuma to pay out,” he said.
Sithole agreed that one option Zuma had to get out of the loan agreement was to argue that VBS had been reckless to lend him the money.
“The key question here is whether he could afford to service the loan – that is question one. 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,” Sithole said.
It was not immediately clear whether Zuma and the Ingonyama Trust would oppose the court action. Zuma’s lawyers, Dan Mantsha and advocate Muzi Sikhakhane, did not respond to calls. Nor did his spokesperson, Vukile Mathabela.
Attempts to get comment from Ingonyama Trust were unsuccessful.