Former president Jacob Zuma has been in default on a multimillion-rand loan he received from VBS Mutual Bank to pay back the state for upgrades made to his Nkandla home in the past year and now stands to lose the property.
Zuma has been failing to fully service the loan from the bank since August 2018, according to a summons filed by liquidator Anoosh Rooplal in the high court in Pietermaritzburg. The bank collapsed in 2018 after a R2bn fraud by its directors was revealed.
The former president, who has said he is too poor to fund his numerous court cases, now owes just more than R7.3m, according to the court documents.
Zuma “failed to effect payment of the contemplated and agreed monthly instalments and is in breach of the provisions of the loan agreement” concluded with VBS, Rooplal said.
VBS, which was started as a mutual bank in the former Venda homeland, made national headlines in 2016 when it emerged that it had lent Zuma more than R7m, meant to pay back the state for the Nkandla upgrades. That followed a ruling by former public protector Thuli Madonsela that Zuma unduly benefited from state resources, after the government had paid more than R200m for upgrades at his family home.
After his removal from office in February 2018 Zuma pleaded poverty, saying he could no longer pay his legal fees in his corruption case dating back to the arms deal of the 1990s. This was after the high court in Pretoria said he was not entitled to state funds to fight a personal legal battle that had nothing to do with his official duties.
Earlier in 2018 he went as far as to tell his supporters outside court that he had to sell items of clothing to raise money for legal fees.
The court papers show that Zuma had agreed, in the loan agreement, to pay just under R70,000 a month for 240 months. The agreement states that in the event of a default or breach, VBS could initiate debt enforcement procedures and obtain a civil judgment enforceable against Zuma and foreclose on the immovable property bonded.
In the court papers Rooplal said that as of August 21 2018, Zuma was in arrears with his monthly repayments by almost R110,000. At the time, a letter of demand was sent to him and subsequently Zuma made “sporadic repayments”, but these were less than the agreed monthly instalments.
On May 6 2019, the VBS liquidator sent an e-mail to Zuma’s lawyers demanding urgent payment of the full arrears, according to the court papers. The next day the attorneys confirmed in writing that Zuma would settle the arrear amount by May 31 2019. Zuma failed to do this.
In June 2019 Rooplal again sent Zuma’s lawyers a letter giving the former president 20 days to cough up the money. Again, no payment was made.
According to the liquidator, Zuma was in arrears of R558,691.47 as at the end of August and the full amount outstanding was around R7.3m.
Attempts to reach Zuma’s lawyers for comment were unsuccessful. Zuma’s spokesperson, Vukile Mathabela, told Business Day that he had made contact with the former president’s legal team over the court papers and was waiting to hear from them.
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