The First National Bank (FNB) could face a lawsuit of R50 million for allegedly discriminating against its black customers by charging them too high interest rates on Saambou home loans.
This was after financial investigator Emerald van Zyl threatened a lawsuit against the bank for discriminating and failing to apologise to its black clients for charging them too much interest rates, compared to their white counterparts.
However, FNB said the claims were false, callous and irresponsible.
The majority of Saambou bondholders were civil servants - teachers, police officers and government bureaucrats in the low-income housing category - who were deliberately targeted for home loans during a massive drive by Saambou between 1989 and 1993.
The overcharging is related to the period from 1990 to 1999 and it occurred because Saambou calculated interest monthly in arrears before it became a bank in 1990.
This was in contravention of the directives of Usury Act of 73 of 1968, to allow banks to recover monthly admin fee of R5 (VAT excluded) and that the maximum interest rate as published in the government gazette from time to time will be 2% lower on mortgage loans.
Saambou failed to correct its calculation until 1999.
Saambou Bank collapsed and was placed under curatorship when FNB acquired its home loan books in February 2002. FNB also bought out Saambou operations and acquired Saambou’s traditional housing book, comprising 60 000 accounts and valued at R8 billion.
The bank also took over about half of Saambou’s low-cost housing book, comprising about 20 000 accounts worth about R1 billion.
In his letter issued to Alan Pullinger, the chief executive of First Rand on January 2023, van Zyl said from January 1999 and after FNB took over the low-cost mortgage book, the interest rates were periodically increased up to 3.75% per mortgage loan which means that poor black people with low-cost housing were paying up to 40% more on their monthly installments.
“Due to this prohibited conduct, I assisted 179 in stopping the sale in execution of their homes for the reason that these poor black homeowners could not afford these inflated installments due to inflated interest rates,” said van Zyl.
He said FNB also admitted that he was correct that the calculation of interest in advance was against the directives of the Usury Act, Act 73 of 1968, and said that all Saambou Bank mortgage loans will be recalculated in the correct interest methodology on Carte Blanche programme on September 10, 2005.
Van Zyl said in June 2006, FNB announced it would refund R154 million to prejudice Saambou mortgage clients due to the wrong interest methodology. He said the correctness of these calculations were disputed by himself and forensic auditor, Greg Johnson.
Van Zyl said he re-calculated 6 000 mortgage accounts and a total of 3 000 summonses to the value of R 200 million were served on FNB in the Northern Gauteng High Court.
Van Zyl said when he submitted his cost of the re-calculation of R1.8 million FNB responded on social media: “Interest re-calculator uses race card against FNB for personal gain to the tune of R1.8 m.”
He said the bank misled the court that the interest rates were not linked to prime and that he did not avail himself to help his legal team after he was allegedly poisoned with arsenic in a cup of coffee on the eve of the hearing in 2013.
“FNB refused to pay my cost and sequestrated my estate to recover their legal cost of R3.4 million and from the following documentation, you will see that I was correct that FNB discriminated against poor black clients in low-cost housing and that FNB lied under oath and misled the Honourable Court.”
“And here is the truth the interest rates of Saambou Bank were linked to prime interest rate,
I refer you to the 1998 Annual Financial Report which was recently leaked to me, which I attach hereto as Annexure C1 & C2.
In his comment in “BEDRYFSOORSIG” the chief executive Johan Myburgh said that during the financial year interest rates increased from 18.25% to 25.5% and for the first time the interest rates on home loans did not move hand in hand with the prime rate as historically in the past”.
“The reason why the interest rate did not move with the prime rate to 25.5% was because the maximum interest rate on mortgage loans was 24%.
This is clear evidence that the interest rates of Saambou Bank were linked to prime and that Mr. Dawie Botha and Mr. Marius Marais perjured themselves and lied under oath to mislead the court. I am at present proceeding with charges of alleged perjury against Mr.Botha and Mr. Marais,” said van Zyl.
In another letter issued on November 1, van Zyl said he would proceed with a R50 million lawsuit against FNB, which is a division of First Rand for failing to apologise to the black clients for discriminating against them. He said the bank also failed to issue an apology to himself for defamation, loss of income and sequestrating his estate for money he did not owe at all.
FNB media denied the allegations, saying the claims of racism are false, callous and irresponsible.
The team said: “Since 2013, different courts including the North Gauteng High Court, the Supreme Court of Appeal, and the Equality Court, have dismissed cases alleging racial discrimination in interest rates against Saambou Bank clients.
In 2013, the North Gauteng High Court determined that, after all the evidence had been led and witnesses cross-examined, the claims that Saambou charged black clients higher interest rates than white clients were "completely unfounded". The Court ordered punitive costs against Emerald van Zyl.”
“The North Gauteng High Court also found that Emerald van Zyl "showed no respect for the exposure of the fallacy of his conclusions of racism" and that he "clearly shows a malicious disregard for the facts and an overriding desire to continue his vendetta" against FNB.
Emerald van Zyl was reprimanded for having "over-confidently made false allegations regarding a field he is wholly unqualified to venture an opinion on".
The Bank cautions against any attempts to disseminate information on baseless allegations of racial discrimination.