Fake court orders probe 'tip of iceberg'

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Cape Town - The probe into the alleged fraudulent issuing of garnishee orders is merely the tip of the iceberg of a nation-wide problem, according to Neil Roets, CEO of Debt Rescue.

Recently four employees at the Palm Ridge Magistrate's Court in Alberton were investigated in this regard.

With some 20 million credit-active consumers collectively owing R1.45 trillion, there is a very real incentive for court officials to fall prey to bribes offered to them for fake garnishee orders, according to Roets.

"The problem had been around for a long time, but is escalating dramatically as consumers are falling deeper into debt and credit grantors becoming ever more desperate to collect on unsecured loans," Roets said.

“Virtually anybody with a basic knowledge of how the court system works can falsify a garnishee order by duping an employer to deduct money from a worker and to pay it into an account stipulated on the 'court order'.”

In one example the "orders" obtained instructed the employer of five Meyerton factory workers to deduct amounts ranging from 12% to 25% of their low-income salaries each month.

The Justice Department has confirmed it is conducting a forensic investigation into the matter.

Clerks of the court were often the main culprits.

“It is common knowledge in the credit industry that garnishee orders can be obtained fraudulently upon payment of relatively modest bribes," said Roets.

According to Peter Allwright, director of Horizon Forensics, industry experts had indicated there were about three million emoluments attachment orders in place.

He said a 2012 investigation by law firm ENS uncovered rife abuse of these orders. It revealed that 59% of the orders contained invalid or incomplete information, invalid case numbers, were fraudulently obtained or incorrectly served.

"Clerks of the court are being bribed, or organisations themselves are duplicating the stamps, signatures and case numbers and completely bypassing the courts," he said.

"Often the financially vulnerable were targeted by these fraudulent orders, because they did not have the resources to get legal advice."

Roets said they came across cases on a regular basis when deeply indebted consumers come to them for debt counselling.

A significant number of the orders that they investigated in the past had been fraudulent. Some were in fact issued by clerks of the court, who had been bribed to ignore the legal process and simply issued them on the spot.

“While we welcome the investigation at the Palm Ridge court, investigators need to look at the wider picture across the country. Poor people are being massively defrauded on a daily basis,” Roets said.

It is not only smaller micro lenders who were involved in the bribery.

“We know for a fact that some banks take shortcuts to obtain garnishee orders – often without the knowledge of the person who it was issued against," he said.

“While the law, strictly speaking, does not require the person to be present in court, there is a whole procedure that has to be followed before a credit grantor can resort to docking the employee’s salary."

There has to be proof of the fact that the credit grantor had sent letters of demand and informed the consumer that a garnishee order would be taken out against him or her if the debt was not settled within a prescribed period.

 - Fin24

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