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Garnishee order system 'deeply flawed'

Johannesburg - The statement made by former AngloGold Ashanti CEO Bobby Godsell that as a mine manager he would have refused to accept garnishee orders to collect money from workers on behalf of unsecured lenders like Capitec and other creditors has once again raised the issue of the deeply flawed nature of these orders.

Currently chairperson of Business Leadership SA Godsell has called for a national debate on garnishee orders.

"I would have said, sorry Capitec, or whoever, I am not your debt collector - you granted that debt, go and collect it yourself," he told Sake24.

Fred Steffers, newly appointed chairperson of Centurion-based PS & S, a payment systems companiy, said there was a growing outcry from consumers who were having their salaries docked by forged and fraudulent garnishee orders.

"We know from widespread media coverage that a considerable percentage of these orders are outright forgeries manufactured by creditors, complete with fake authentication stamps. Many more are procured from corrupt court officials, who produce completely 'valid' garnishee orders even though there had been no formal court order issued," said Steffers.

A garnishee order is a court order requiring employers to deduct money owed from salaries on behalf of a creditor before the salaries are paid.

Steffers said a much fairer system would be for the employer and the employee to enter into a discussion with creditors to establish what amount the employee was able to pay every month and to then have the money deducted by debit order through a payment systems company.

"We know from media reports that high debt levels among mineworkers could have played a major role in unrest at Lonmin's platinum mining operations at Marikana near Rustenburg in North West last year, which ended in the deaths of 44 people," said Steffers.

Walter Volker, CEO of the Payments Systems Association of South Africa said a viable alternative to garnishee orders would be what is termed "early debit orders".

"This type of debit order is paid out to creditors immediately after salaries are paid into the accounts of employees thus ensuring that there is sufficient money in the account to cover the outstanding amounts owed to creditors."

Steffers said the debit order industry played a significant role in smoothing financial transactions, making it easy for consumers to buy goods and services by telephone.

It was also a significant player in the overall economy contributing billions of rand to GDP, Steffers said.


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