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Racist banks stealing from the poor, claims financial investigator

Emerald van Zyl says banks started discriminating against black bondholders years ago, charging more for their home loans and motor vehicle loans than those for white people.

Emerald van Zyl says banks started discriminating against black bondholders years ago, charging more for their home loans and motor vehicle loans than those for white people.

Published Apr 6, 2022

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CAPE TOWN- Discrimination by South Africa’s banks has only one purpose, and that is to increase their profits, according to financial investigations consultant Emerald van Zyl, who has been looking into banks and their businesses for at least 30 years.

Speaking in an exclusive interview with Independent Media’s investigations unit, Van Zyl revealed that he’d had clients who were paying up to 40% more on their mortgages due to the banks’ discrimination tactics.

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“I was informed by an employee of Wesbank -- he was a manager -- that Wesbank was discriminating against black people. And I have put on Twitter that all the black people who have motor vehicle finance from Wesbank must forward me their contracts. I have since received a lot,” he said.

This comes as the Sekunjalo Group, its chairman Iqbal Survé and related entities have approached the Competition Tribunal and the Equality Court to challenge the move by South Africa’s big banks to close the Group’s and related entities’ bank accounts.

Survé has said that the banks have a serious case to answer, as the group’s constitutional rights had been violated. He is therefore asking the Equality Court to declare that the banks’ conduct constitutes unfair discrimination, and that their specious decisions to close the group and its related entities’ bank accounts should be overturned.

Van Zyl said the matter of discrimination at a banking level was not a new one, explaining that, for example, at some point nobody knew what interest rates they were paying, even though the law states that if the interest rate is increased, clients need to be informed within a period of 90 days.

“Twelve years ago, I also discovered that banks are discriminating against black bondholders, and that really motivates me to fight them because they were charged 5% more for their home loans, and on motor vehicles 9% more, than white people.

“I was very successful in discovering that the Land Bank was overcharging their clients. They admitted that I was right, and it stopped at that stage. I stopped three, four farmers in the Hex River Valley. And the Land Bank stopped all the execution sales of farms and rectified the accounts,” he said.

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Van Zyl said after Saambou Bank collapsed, FNB bought their low-cost housing book, and that was when the discrimination started.

“And when I received the database, I gave it to Munro Actuaries to investigate. They found that black people were paying more than white people. And if you look at the graphs that I’ve got here, that were leaked to me, it is clear. And this one here of CJ Fourie, high-cost housing … You can see the yellow line is the prime rate and the white line is the client’s rate, you can see it runs nicely together,” Van Zyl said.

“Then I used one of the clients, Mr Ncube … and the white is the rate that they charged him and the yellow is the prime rate, so you can see how the gap grows there to about prime plus 3%. When I did the calculations on this, the overcharge on Ncube’s account was R132 000. While that was in 2012, this is still a clear indication that FNB discriminated against their low-cost housing clients,” said Van Zyl.

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Affordable housing interest rates
Low cost housing interest rates

Van Zyl, who also goes by the alias “Bond Recalculator” on social media, said this discrimination basically started in 1989/90, when Herman le Roux, who worked in the Department of Trade and Industry’s usury section, pointed out to banks that capitalising interest on accounts in arrears was not in line with the directives of the Usury Act; it must be calculated simply.

He said in 1990 someone wrote to the then minister of finance, who informed the banks that the calculation of interest in advance was illegal, and that the law did not say how interest should be calculated.

“The banks at that time were expecting millions of rand in refunds, and they approached the government and asked if it could retroactively amend the Usury Act to make the capitalisation of interest on interest legal.”

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The Usury Act Amendment Bill was tabled in Parliament and the schedule was added to the Usury Act legalising the R5 fee, and with that fee in place, there was no need to charge black bondholders a higher rate than white bondholders.

“Over the years, this became what they called an administration mortgage bond. It is not. It is there that black people are charged the same interest rate. When the National Credit Act was promulgated in 2007, that fee went up to R50,” said Van Zyl.

Van Zyl and Survé are not the only ones to take on the banks for collusion and abuse of dominance. In what has been described as a “fight against boundless public power exercised by banks and other financial institutions”, law firm Godrich Gardee Attorneys (GGA) has called on any clients who have experienced alleged racial or any other form of discrimination to join a class-action suit against the country’s financial institutions.

GGA attorney Godrich Gardee said the action being taken by the Sekunjalo Group was a “trigger for a space we need to get into as soon as possible”.

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