By Pinky Khoabane
Jacques Celliers, CEO of FNB
SIX Months after failing to submit its expert witness report in the interest rates discrimination case in the Equality Court, First National Bank has finally submitted its report which is an exact replica of a report it used 6 years ago in the trial against Emerald Van Zyl. Van Zyl is the financial investigating consultant who, in 1998, discovered that Saambou was charging its clients interest in advance in contravention of the Usury Act.
What this meant was that clients were charged interest on the entire bond before they even used it. Then further interest was calculated at the end of each month. The net effect was that clients who were scheduled to repay their bond in 20 years found it was extended by another 10 years.
First National Bank bought Saambou’s home loan book when the latter collapsed in 2002. Although FNB obtained the mortgage book of Saambou for R1 after the bank collapsed on 9 February 2002, it obtained the Low Cost Housing mortgage book by securitisation in 1998/1999. This was confirmed by the Curator of Saambou, Mr T.J. Louw, in his founding affidavit as follow: “On my date of appointment (9 Feb 2002) Saambou had directly or indirectly sold to other banks mortgage loans to a value of approximately R 2.6 billion, all of which are now held by FirstRand Bank Limited”.
Based on the statements of Low Cost Housing clients, it’s clear that FNB started to administer the Low Cost mortgage book from 2 February 1998. The main discrimination started in February 1999. FNB was therefore the proud owners of the Saambou mortgage book of Low Cost Housing when the discrimiantion started. It is therefore responsible for the discrimination and should refund every low cost housing client, because they collected the illegal interest.
In 2005, it acknowledged that Saambou had overcharged clients in interest rates and reimbursed some of them. Van Zyl however disputed FNB’s calculation – a matter which went to court and which he lost. He today represents thousands of Black clients who took out home loans with Saambou on the eve of democracy and whose accounts were taken-over by FNB during the acquisition.
In a class action represented by Magdalena Pietersen, Lukas Maarman and Soon Boesak, thousands of low cost housing bond holders – all Black and living in townships – have accused FNB of charging them interest rates higher than those of their counterparts who hold high-cost home loans. The bank is also accused of denying them the benefits of interest rate cuts. Furthermore, a large percentage of them were charged interest rates above the permissible amount in terms of the Usury Act. Liliandah Chokwe, for example, was charged 21.5% on her home loan at a time when banks were allowed to charge upto 14% interest and no more. This was a shocking 7.5% more than was allowed in terms of the law.
This latest delay forms part of FNB’s series of delaying tactics in the case. Late last year it queried the jurisdiction of the Western Cape Equality Court where the matter was to be heard in March this year. When that failed, it constantly failed to meet the deadlines for submission of the expert report. And when it finally produces the report, it happens to be a duplicate of what it already had six years ago.
In a pre-trial meeting of 22 September 2016, it was decided that the expert reports would be filed by 30 November 2016. At the pre-trial meeting on 23 February 2017 is was noted in paragraph 5.3 as follows:
“The experts that will testify about the calculations will meet on a date before 28 April 2017 to record the matters of common cause and the disputed matters. A minute of the meeting will be prepared and filed”.
At present, the complainants have not received notification from FNB related to the experts meeting. FNB has not submitted the re-calculations of interest to back their assertion that the complainants were not over-charged. The complainants fear the financial institution will use this tactic to ask for yet another postponement at the next pre-trial meeting before Honourable Judge Fortuin on 5th June 2016 due to the fact that the meeting between the experts did not take place.
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