President Jacob Zuma first applied for a home loan on his Nkandla residence in 2001, when it was worth between R650 000 and R750 000 according to a bank valuation and insurance assessments.
By December 2002 he had been granted that home loan by First National Bank (FNB), despite being in dire financial straits, not having a formal lease on the land, and a bank policy not to bond property owned by tribal trusts.
Mac Maharaj, now Zuma’s spokesperson and a fierce defender of the president, was a highly-paid director of the bank at the time.
But although the existence of the loan, which Zuma could still be paying off, strongly suggests that he did not lie to Parliament, the numbers still don’t add up.
The existence of the loan, and some of the details around it, were confirmed in the original indictment against Schabir Shaik, Zuma’s financial advisor. The document formed the basis of the case that ultimately saw Shaik convicted for what amounted to a corrupt relationship with Zuma.
In the indictment the National Prosecuting Authority (NPA) lays out evidence of attempts to finance the construction of the Nkandla compound. The loan was only granted, the National Prosecuting Authority said, because of a R400 000 surety signed by businessman Vivian Reddy, a known Zuma funder.
Reddy on the weekend confirmed that he lent Zuma money for the first phase of construction, and the loan has since been paid back.
According to the Shaik indictment, however, the arrangement was somewhat more complex than that. Reddy guaranteed just under half the loan amount, and also serviced the bond from his private account with monthly payments of R12 117.11.
“There is an agreement that Reddy will pay the monthly instalments for the first year, whereafter Zuma will apparently take over the financial responsibility,” the prosecuting authority said in its papers at the time.
“Without [Reddy’s] surety the application would not have been approved due to the financial profile of Zuma and the fact that the property in question forms part of tribal land,” the NPA said.
Depending on the interest rate granted and the size of repayments since Reddy made R100 000 in payments, the bond could still be active. The presidency has thus far refused to provide details.
At R900 000 the bond represents only a fraction of the amount of money Zuma claims has been spent out of family pockets. According to documents from the department of public works Zuma’s contribution to construction costs should be in the region of R10-million, and independent assessments of the buildings, which Zuma said the family paid for, suggest the cost could be even higher.
In response to questions, the Ingonyama Trust (the body through which Zulu king Goodwill Zwelithini indirectly controls tribal lands) confirmed that Zuma holds the lease on the land underneath his family compound, but that this was only formalised in 2010.
Banks do not grant bonds on land under tribal control, typically because it can not guarantee it will be able to recover lent money if the lender defaults.
FNB did not immediately respond to a request for comment on the mechanism of such loans, but on Thursday last week chief executive Michael Jordaan said client confidentiality precluded it from talking about the details of individual loans.