Banks bent over backwards for Zuma

He splurged with little regard for his inability to pay off his deepening debt.

This is according to evidence collated by audit firm KPMG and presented in its 2006 forensic report.

Watch our live video with the investigative team behind this story

Zuma was elected as ANC national chairperson in 1994 and ANC deputy president in 1997. He was South Africa's deputy president between 1999 and June 2005. During this period, he spent far in excess of his salary, buying properties and cars on credit, repeatedly exceeding his bank overdrafts' limits and defaulting on his debts.


Read more on the 'kept politician'

Zuma corruption: South Africans have a right to know
Secret report reveals how millions flowed to Zuma
Zuma corruption: Of battleships and Nkandla
All the president's willing benefactors: Part one
All the president's willing benefactors: Part two
Other politicians at the Zuma trough


Contrary to sound practice, the banks often tolerated his actions. At least in the case of Absa, this was explicitly – though internally – justified on the basis that Zuma was "politically" and "strategically" valuable.

On numerous occasions Zuma, often through Schabir Shaik as his "financial adviser", promised the banks that his various benefactors would repay his debts, and in some instances they did. But inevitably Standard Bank, Absa and Nedbank, among others, got their fingers burnt.

Zuma's banking troubles first peaked after Standard Bank bonded a property of his in 1995. The bank had extended the bond despite Zuma having defaulted on a bond with a different bank months before.

By 1997, the Standard Bank bond was in arrears and Zuma's overdraft on a cheque account there exceeded R100 000. The bank put its foot down, cancelling his credit card and obtaining a court order against him, but it abandoned this order in 1998.

Disappointment
In 2002 Standard Bank appears to have dropped its pursuit of the R128 300 overdraft and in 2005 it wrote off Zuma's bond account – just less than R200 000 – as bad debt.

This did not stop FNB from granting Zuma a R900 000 bond for Nkandla after a senior bank official wrote: "I am sure that the powers that be will assist us where we need to bend the rules a little." Zuma benefactor Vivian Reddy had to stand security, though.

From 1996 to 2004, Zuma also built up a R214 000 overdraft at Nedbank, which politely noted its "disappointment" at Zuma's lack of response to their queries.

But Zuma's relationship with Absa was most telling. When Zuma opened his account in 1998, Absa business centre manager Raymond O'Neil attempted to justify the decision despite Zuma's bad credit record with Standard Bank and Nedbank, which he specifically noted.

O'Neil wrote in a memorandum that Zuma was likely to be elected South Africa's deputy president the following year and Nelson Mandela was going to settle his debts. Apparently quoting Zuma, O'Neil said that Zuma's "bank balance was the last item on his mind, with more important matters regarding the country and the province to focus on".

According to O'Neil: "We recommend the opening of [the] Unique package account for Minister Zuma, based on his strategic positioning and importance to the group." Within three months Zuma's account was in overdraft and he had, once again, exceeded his overdraft limits.

As Absa's patience wore thin in 2000 and bankers noted in records that Zuma's conduct was "unacceptable", there was indeed a R2-million cheque received from Mandela, but apart from R100 000 that stayed in his account, the rest immediately flowed out.

Although Zuma's financial position tended to be cash-starved at the time, in 2001 Absa signed him on as a Absa Private Bank client, which is usually reserved for those with more than R1-million to invest in markets.

Once again this was noted to be a political decision, seemingly in line with chief executive Nallie Bosman's view, stated in bank records, that "in terms of all financial matters" Zuma was considered "a strategic client".

But soon after this Zuma was hugely overdrawn, much to some bankers' chagrin. According to a note by one of them: "The conduct leaves much to be desired, but we have little option but to live with this client in view of his position."

 

* Got a tip-off for us about this story? Email [email protected]

The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.

Advertisting

Study unpacks the ‘hidden racism’ at Stellenbosch

Students say they feel unseen and unheard at the university because of their skin colour

Workers’ R60m ‘lost’ in banks scam

An asset manager, VBS Mutual Bank and a Namibian bank have put the retirement funds of 26 000 municipal workers in South Africa at risk

‘Judge President Hlophe tried to influence allocation of judges to...

Deputy Judge President Patricia Goliath accuses Hlophe of attempting to influence her to allocate the case to judges he perceived as ‘favourably disposed’ to former president Jacob Zuma

SAA grounds flights due to low demand

SAA is working to accommodate customers on its sister airlines after it cancelled flights due to low demand
Advertising

Press Releases

MTN unveils TikTok bundles

Customised MTN TikTok data bundles are available to all prepaid customers on *136*2#.

Marketers need to reinvent themselves

Marketing is an exciting discipline, offering the perfect fit for individuals who are equally interested in business, human dynamics and strategic thinking. But the...

Upskill yourself to land your dream job in 2020

If you received admission to an IIE Higher Certificate qualification, once you have graduated, you can articulate to an IIE Diploma and then IIE Bachelor's degree at IIE Rosebank College.

South Africans unsure of what to expect in 2020

Almost half (49%) of South Africans, 15 years and older, agree or strongly agree that they view 2020 with optimism.

KZN teacher educators jet off to Columbia University

A group of academics were selected as participants of the programme focused on PhD completion, mobility, supervision capacity development and the generation of high-impact research.

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.