Cape Town - There was spontaneous singing and dancing on the streets of a small town in the Eastern Cape when a local microlender was taken into custody. But the joy was short-lived.
The National Credit Regulator (NCR) raided local microlender RCL Financial Services at the end of November last year and found ID documents, bank cards and SA Social Security Agency cards, taken from debtors, on the premises. The Joubertina head of the company, Wilna Moolman, was arrested and taken to the local police station.
Local businessman and owner of the Royal Cash & Carry Evan Ford said dozens of locals celebrated in the street outside the police station.
"These people have been threatened and exploited for 15 years," said Ford. He said that over the years some of his clients laid charges against RCL Financial Services in terms of the National Credit Act, but the authorities took no action.
Hours later, however, Moolman was released. The NCR has reacted angrily to this, and laid a complaint against Liesl Debbes, the local prosecutor. However, it is not clear which authority insisted on Moolman’s release from custody and the Hawks are apparently investigating.
Like many other small and impoverished communities Joubertina, situated inland from Plettenberg Bay, has fallen prey to unscrupulous microlenders.
A team from the Rhodes Law Clinic headed by Professor Jobst Bodenstein found that apart from illegally taking people's ID documents and bank cards, contracts were often not issued for loans. Loan amounts and terms were being fudged, with one elderly lender ending up paying more than R1 000 on a loan of only R200.
A report by the Rhodes Law Clinic showed that another person, dependent on an old age grant, borrowed R600 in 2011 and ended up having to pay R4 611 to a local microlender.
The company deducted R200 from her account since 2011 and contended that another loan was made in January 2013. But the signature on the contract for that loan clearly did not match hers.
A young woman took out a loan of R2 000 in November 2012. The microlender then deducted R500 a month from her account and continued with the deductions until she paid R3 507, with administration fees running up to almost R800.
The Rhodes University Law Clinic interviewed 80 people during a meeting about the microlending practices in Joubertina
“One by one, these individuals shared their bad experiences of the microlender (RCL Financial Services). I got a sense of hopelessness, utter frustration and a lack of knowledge of their basic rights,” said Bodenstein.
The law clinic has assisted more than 30 poor people from Joubertina with legal advice, and has also requested the NCR to institute action for damages on their behalf.
In response, the NCR raided the offices of RCL Financial Services in Joubertina at the end of November 2013.
Ryno Karelsen, the owner of RCL Financial Services, contends that the NCR is investigating Moolman in her personal capacity and that his business is above board.
“She did some wrong things (‘verkeerde goedjies’),” said Karelsen, who owns another microlender in Kareedouw. According to him, Moolman falsified loan contracts and he is also taking legal action against her.
But Karelsen lashed out at the NCR, saying that representatives searched his offices without a valid search warrant and that Moolman’s arrest was unlawful.
Ford said the arrest has released a “seismic wave” across the rural Langkloof, with many more locals now wanting to lay charges.
Joseph Selolo, senior legal adviser of the NCR, said his organisation is still finalising its report about RCL Financial Services.
Bodenstein said the abuses in Joubertina are probably also happening in many other cities and villages. The Rhodes Law Clinic is planning to assist communities in other regions in the Eastern Cape through community workshops and legal advice.
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