Publications
Partners
President Jacob Zuma and his family have decided against donations from benefactors and ANC members to help him pay back his R7.8 million Nkandla bill.
They have opted for a home loan instead.
Zuma’s family has been at the centre of efforts to secure the loan on their Nkandla property with VBS Mutual Bank, which prides itself on being the only black-owned bank in the country.
City Press has learnt from family associates and several people close to the discussions that negotiations were at an advanced stage after the bank and Zuma’s lawyer, Michael Hulley, agreed to terms at a meeting in Sandton last Wednesday.
However, Zuma will first have to settle the outstanding balance on his current home loan with First National Bank before his private estate can be refinanced.
Talks between VBS and the Zuma family started in the first week of this month at a meeting at the five-star Michelangelo Hotel. The family was represented by Zuma’s nephew Ray Zuma – Khulubuse Zuma’s older brother.
City Press has learnt that the family had been wary about the debt being settled “in a political way” and was firmly of the view that the money offered by ANC leaders and members to help the president settle the bill should be declined.
One of the options on the table was for Zuma to refinance the property that has increased in value owing to the R246 million in security upgrades paid for by the state.
“The house was bonded when it was still small,” said a highly placed source. “Now it [has been] upgraded.”
Another meeting was held on July 15, at which it emerged that Ray Zuma had convinced the family to rally behind his proposal.
Zuma has consistently maintained that he was unaware of the runaway costs incurred by the security upgrades on his home, and believed he should not be liable.
City Press was told that Zuma’s wives had also bought into the plan. The refinancing deal would kick in once the family had settled the outstanding loan. The option of a deposit was also discussed.
On July 20, a senior VBS official met with Hulley, who was acting on Zuma’s instructions after the family persuaded the president to accept their proposal.
Hulley, City Press has learnt, also supported the arrangement and agreed that receiving money from sympathisers was not ideal, and Zuma completed the application forms last Friday.
If Zuma’s bill were settled by donors, it would expose him to donations tax. He would also have to declare who they are in terms of the code of executive ethics. Politically, it would pose questions about what the benefactors gained in return, which would never go away.
The Constitutional Court ruled that Zuma had 45 days to pay the money after the amount was determined by National Treasury. His repayment deadline is September 25.
VBS has declined to comment.
“With reference to your email and issues raised therein, please be advised that it is our obligation, as a licensed financial services institution, not to disclose confidential customer matters,” said spokesperson Gugu Mthembu.
Zuma’s eldest son and family spokesperson, Edward Zuma, said he had no knowledge of the loan discussions, but undertook to make enquiries with other members of the family.
Hulley declined to comment on specific questions. However, he said Zuma “has always acknowledged the Constitutional Court judgment and that he is making arrangements so that he can pay it”.
“There is an acknowledgment that he is personally liable for the debt. That means he will explore whatever avenues he is able to so that he could settle the bill.”
Hulley said Zuma acknowledged that there were those who wanted to help him pay, but “out of respect to the process of the Public Protector and the ruling of the court the president is going to have to settle that on his own”.
If approved, the home loan would make Zuma one of the bank’s biggest clients.
Once the outstanding loan was paid, the Zuma family would need to obtain a permission to occupy (PtO) certificate from their traditional authority, granting them usage rights of the land and property.
A PtO is not registrable in a deeds registry, and most are issued for occupation as well as land use.
The land on which Zuma’s homestead is built belongs to the Ingonyama Trust, which administers land traditionally owned by Zulu King Goodwill Zwelithini on behalf of the Zulu nation.
In 2012, the Mail & Guardian reported that Zuma first applied for a home loan from FNB on Nkandla in 2001 when the property was worth between R650 000 and R750 000, according to a bank valuation and insurance assessments.
The loan was granted in December 2002.
Although the terms and conditions of the VBS loan could not be confirmed, City Press has learnt that Zuma will be treated like any other client and asked to supply six months’ bank statements as proof of income and undergo a credit check.
WHAT IS VBS MUTUAL BANK?
On its website, VBS states it is able to grant home loans for repayment periods of up to 30 years.
VBS describes itself on its website as a black-owned specialist corporate finance and retail bank. It was established in 1982, initially operating as the Venda Building Society.
It has four branches, located in Thohoyandou, Sibasa, Louis Trichardt and inner-city Johannesburg. A corporate office was opened in Rivonia, Johannesburg, in 2014.
The bank’s largest shareholders are the Public Investment Corporation (25.26%) and Dyambeu Investments (25.22%).
The bank is also involved in R550 million in financing for black industrialists who formed part of the country’s digital broadcast migration project, as well as independent power producers.
