Banks wash their hands of killer taxis
The four major banks take no responsibility for the illegally converted taxis that have injured and killed many people, and which they have financed. Instead, they lay the blame at the feet of the regulators and dealerships.
This emerged when they gave evidence to the public protector during hearings on the issue this week.
After a four-year investigation into how the panel vans had been converted into taxis that were structurally unfit, Thuli Madonsela subpoenaed Absa, FNB’s subsidiary WesBank, Nedbank and Standard Bank to explain why the banks had financed the illegal vehicles.
Absa insisted it had a stringent process when providing finance to taxi owners and there was almost no way the killer taxis could have been financed.
But, according to evidence provided by the department of transport during the 2009 Western Cape legislature hearings, the bank had financed 123 converted taxis.
The managing executive of Absa vehicle finance, Marcel de Klerk, told Madonsela that their operating model at the time (2005 to 2009) was to create centres of excellence and that one would have been the taxi finance division.
“We had approved dealers according to certain criteria and we went into quite a lot of detail in the process of providing finance,” he said.
Former Absa banker Hennie de Beer, who has championed the issue of illegally converted taxis, left Absa after he had notified the bank that there were problems with the vehicles. By then, De Beer calculated, about 4 000 converted taxis had already been sold.
In an email dated March 2009, De Beer refers to the fact that banks had been warned of the danger of the converted panel vans.
“Toyota SA did warn the industry in writing more than two years ago not to finance converted panel vans. Many banks preferred to ignore Toyota’s good advice for the sake of dealer relations and money,” reads De Beer’s email.
According to him, his plea fell on deaf ears and he subsequently quit. A few weeks later, a converted panel van was involved in a fatal accident near Durban, with three fatalities and nine people injured.
The Western Cape legislature’s report compiled in 2010 found that, although Absa claimed it had only financed two of these taxis, the number was much higher.
Before Madonsela, Absa laid the blame at the dealerships’ door, stating that the only way the bank could have financed such vehicles was if the dealers had misrepresented the information.
“The dealer should be here to explain how they did it [turn a three-seater into a 17-seater],” said De Klerk. “But the dealers we have dealt with, I really don’t believe that the dealer could have hidden that kind of latent defect. I would be really surprised.”
Madonsela had a tougher time with Wesbank, which refused to be questioned during the open hearings.
Wesbank’s Imtiaz Cassim said, when they found out that these taxis were illegally converted, the bank “chatted” to their dealers, who might have misrepresented that they were selling minibuses and not panel vans.
“When we found that they were panel vans, we approached the dealers but we didn’t throw the book at them. We wanted to have a chat with dealers because, in some instances, they came back to us and told us that the reason why they presented it as a proper taxi is because they had legally converted the panel van through the correct channels,” he said.
Furthermore, Cassim told Madonsela, Wesbank did not have any relationship with Toyota Financial Services, which had financed about 419 of the converted taxis, according to the legislature’s report, which also states that Wesbank directly financed 149 of the killer taxis.
But Wesbank’s spokesperson, Rudolf Mahoney, said the bank had financed only 73 of the taxis since 2005. “Wesbank has a minority stake in Toyota Financial Services. TFS is the preferred financial services provider for Toyota dealerships.”
According to the report, Wesbank holds a 33% stake in TFS.
Meanwhile, Nedbank’s Motor Finance Corporation (MFC) claims to have financed only two of the vehicles, despite the fact that the legislature’s report states that the department of transport found that 139 had been financed.
The MFC’s managing executive, Trevor Browse, testified that the main reason for the problem was the lack of clarity on whether or not the panel vans were legal, and that they were “mere victims” in the conversion process.
“If we had a clear and concise action plan, I think we could have remedied this situation. We needed to have dealt with the problem as we got it,” he said.
The bank’s communication head, Esme Arendse, said they stopped financing the vehicles in August 2009. The biggest vehicle financier at the time, Standard Bank, spoke only about how it had investigated five potential cases in which the bank financed the taxis.
But, according to Toni Fritz, the head of Standard Bank’s Vehicle and Asset Finance, there was only one case the bank could confirm as a converted panel van and that was a deliberate misrepresentation by the dealer.
“In the one case, it was absolute misrepresentation because the bank is looking at it in an integrated system. But we aren’t sitting on the shop floor, and the system is telling us that it is a taxi with the number of seats in it,” said Fritz.
According to the 2009 legislature report, the bank had financed 248 converted panel vans.