Durban - Liquidators of the VBS mutual bank are knocking on former president Jacob Zuma’s door demanding that he honour his debt with the bank, but an accounting analyst says he may argue that the bank was lending recklessly.
Other than taking a huge financial gamble in 2016 by lending money to a person who was in the sunset of his political career and beyond his working age (Zuma was 74 at the time of the loan), the bank also took a gamble by offering the home loan against the security of a rural property.
The R7.8million loan was met with outrage and the bank was accused of reckless lending, but it stood its ground saying it had conducted thorough due diligence on Zuma’s affordability.
Stirring more anger this week was the revelation of how the bank, according to papers since leaked to the public, used Zuma’s rural Nkandla home as collateral even though it was built on communal land owned by the controversial Ingonyama Trust.
The trust is currently facing a court battle over rental agreements with some residents in KZN. It is also facing pressure to disband, with those opposing it arguing that permission to occupy does not grant residents total ownership of the land.
It is argued that the land cannot be used as collateral for a bank loan or any other form of finance that can be backed by having a property.
Despite that, according to the leaked section of the loan agreement signed with Zuma in 2016, VBS agreed to attach “Nkandla Zuma Homestead in KwaZulu-Natal”.
Accounting analyst Khaya Sithole said no one knew how the liquidators would convince lawmakers that they needed to attach Zuma’s homestead as it was located on communal land.
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