By Pinky Khoabane
Marius Marais, CEO of FNB’s Home Loans & expert witness who lied under oath
First National Bank (FNB) has pulled yet another tactic in its attempt to delay the hearing into whether it discriminated against Black clients in its low cost mortgage book. In a class action in the Western Cape Equality Court, Magdalena Pietersen, Lukas Maarman and Soon Boesak, represent thousands of low cost housing bond holders – all Black and living in townships – who 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.
In it’s latest ploy, the bank has refused to acknowledge Emerald van Zyl as an expert witness for the complainants. The complainants’ attorneys have refused to sign the minute “that has now been substantially amended” following a pre-trial conference held recently.
FNB’s attorneys claim van Zyl is a business consultant who recalculates interest rates charged on clients and has no banking experience.
“After 23 years of successfully testifying in courts for hundreds of clients who had been overcharged by banks, FNB now tells me it cannot accept my witness report,” an exasperated van Zyl says.
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.
In 2005, FNB admitted to the dubious accounting practices of Saambou and moved to rectify the problem but a trio of forensic experts including Gregory Johnson, Dr David Klatzow and Van Zyl alleged that the amount FNB paid-out addressed only a fraction of the problem – just R154 million. Media reports at the time described van Zyl as a “long campaigner against the overcharges”. At the time, he was said to have stopped 164 sales in execution arising out of supposed arrears in the bond book FirstRand took over from Saambou. “Only two of the clients he has represented have been found to have been in arrears,” www.security.co.za. wrote.
“I do not need banking experience as I apply the laws related to moneylending transactions. I also don’t need banking experience to uncover lies in their (FNB) internal documentation,” van Zyl explains.
FNB Caught Lying? Perjury?
FNB has in previous court papers maintained that Saambou’s interest rates were not linked to prime which, van Zyl says is the bank’s way of giving the impression that it could charge whatever it wanted when in truth, there was a set rate beyond which banks couldn’t go. He uses a statement made by Saambou’s Chief Executive Officer Mr J.P. Myburg to illustrate the inconsistencies.
“In 1999, Myburgh confirmed that interest rates were linked to prime,” he says. An excerpt from a financial statement by Myburg in 1998/99 financially year, originally in Afrikaans, reads as follows: “The year started with the expectation of declining interest rates. The international liquidity crisis had a very serious effect on our interest rates and within 5 months the prime-rate increased from 18.25% to 25.5%. In addition, the interest rates on home loans did not move in line with the increase in prime rate as historically before. Only part of the increase was passed to our clients while the bank absorbed the rest”.
In another example of fabrications, FNB’s expert witness Marius Marais, who is also Chief Executive Officer of FNB Home Loans, in his expert witness report in paragraph 4.5 and under oath, wrote: “Saambou did not have an official basis rate.” This, van Zyl contends is part of the campaign to paint a picture of a bank which could charge as it wished and therefore give weight to why it charged low cost housing clients interest rates higher than permissible in terms of the Usury Act.
In internal documents circulated at Saambou at the time, Myburg confirms the existence of a basis rate. In an internal publication Flintnuus, Myburg is quoted as saying (translation by van Zyl in papers in the Equality Case): “Many thanks to all the branch managers for their input provided on Flitsnuus 18/92. Your contributions were helpful and appreciated. Differential interest rates are now part of our environment and those institutions who managed it the best, will benefit the most. We must therefore adapt to the new playing field”. In paragraph 5 of the same document, Myburgh continues: “The official Basis Rate is 19% per year for home loans”.
Van Zyl has lodged perjury charges against several FNB experts who lied under oath during his trial against the bank.
Background to Saambou/FNB Saga
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 follows: “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 discrimination 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.
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 produced the report, it happens to be a duplicate of what it already had six years ago.
The matter has been postponed to 28 August 2017.