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FNB: We couldn't have given Zuma a bond for Nkandla

Phillip De Wet, Nickolaus Bauer

Court documents show that President Jacob Zuma received a (relatively small) home loan from First National Bank. But the bank says that is impossible.

Court documents show that President Jacob Zuma received a home loan from First National Bank. (Madelene Cronje, M&G)

In May 2005 Judge Hillary Squires found that businessman Schabir Shaik was involved in making corrupt payments to Zuma. That finding had consequences that continued to cascade through South African politics over the following years. But buried towards the end of the long document were a couple of phrases that only gained importance in recent weeks.

" ... [I]t is common cause, or amply proved, that it was [Vivian] Reddy who eventually arranged for the payment of the bulk of the cost of Zuma's Nkandla home for it was Reddy who arranged the bond … by the time Reddy applied for the bond on Zuma's behalf … The first application for the Zuma bond was for R650 000 ... "

That high court finding, which has never been overturned, does not name First National Bank (FNB), but the indictment it is based on does. Zuma was granted a "bank loan obtained from First National Bank", the National Prosecuting Authority said, later referring to it as "a home loan bond" and "the FNB bond".

But on Tuesday FNB said that could not be true.

"FNB does not grant home loans to individual applicants for housing developments that are carried out on tribal land, as the properties are not held under separate title. FNB cannot register a bond over the individual homes," said Jan Kleynhans, chief executive of FNB Home Loans, in a written response to questions. "Legally, people who currently live on land owned by a tribal authority have no claim to ownership of the land."

Several types of loans
Zuma's residence in Nkandla stands on land owned by the Ingonyama Trust, the body that administers Zulu tribal land. The trust has confirmed that Zuma holds a formal lease on the portion underneath his compound, but does not hold the title deed.

That does not necessarily preclude a different form of financing from FNB, however.

"In principle, the bank grants several types of loans to customers, such as personal loans, rights of cession and traditional mortgage loans," Kleynhans said.

"Only on reasonable grounds does the bank grant such loans which are not traditionally bonded [mortgage loans] and where there is an adequate form of security on the loan. 

"These loans are reviewed on a case-by-case basis and granted based on low risk and minimal exposure to the bank." The bank would not specifically discuss Zuma's affairs, citing client confidentiality.

'Still paying a bond'
In South Africa, a "bond" describes a mortgage loan, in which the bank has the option to seize and sell the property in the case of a default in repayment. The difference between that and another form of loan, one without security, or secured against other assets, is largely technical, but could become a political football – because last week Zuma told Parliament that he was paying off the former.

"I engaged the banks and I am still paying a bond on the first phase of my home," said Zuma, speaking off-the-cuff during parliamentary questions. " … I am still paying a bond to this day."

While that matches the Shaik court documents, and statements made by Reddy during a rare interview with the Mercury this week, it contradicts FNB's policy.

In a statement on Tuesday, the presidency said evidence of the bond would be "readily made available to an authorised agency or institution empowered by the law of the land", but not to the media for reasons of client confidentiality, and respect for Zuma's privacy.

The granting of the bond – or loan – coincides with presidential spokesperson Mac Maharaj's tenure as a director of FirstRand, the holding company for FNB. Maharaj did not respond to questions on whether he did or could have influenced the grant of a loan, and FNB refused to comment on similar questions.


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