BANKS have three basic sources of cash: shareholders' funds, depositors' funds and other loans and the revenue they earn on these.

This is aided and abetted, of course, by those endless, complicated schedules of exorbitant fees which no one, including those who design them, appears to understand.

Banks are licensed by the state to accept, and safeguard, our deposits and are expected to abide by high standards of probity and responsibility.

Theirs is a sacred obligation, one which is a pillar of any modern economy and whose balanced and moral behaviour is essential if society is to function efficiently.

It was thus disturbing to learn in the brilliant*1 Mail & Guardian report on the KMPG investigation into the financial affairs of President Jacob Zuma and others how some of our major banks played fast and loose with shareholders' and depositors' money to curry favour with our political elite.

These bankers ladled out millions to a proven and reckless spendthrift*2 with an appalling credit record, a known defaulter notorious for spending well in excess of his means on properties, cars and so forth while consistently dishonouring his obligations, like any common schlenter.

They advanced him money for one reason only: to buy political capital.

Those banks - Standard, Absa and FNB - are as guilty as sin of influence peddling, a crime in the US and other jurisdictions.

In the full knowledge that Zuma was a totally unreliable borrower, this is what Absa business centre manager Raymond O'Neil put in writing to his colleagues and superiors: "[Zuma's] bank balance was the last item on his mind, with more important matters regarding the country and the province to deal with."

O'Neil went on: "We recommend the opening of the Unique package account for Minister Zuma based on his strategic positioning and importance to the group." This was after O'Neil acknowledged that he was aware of Zuma's bad credit record with Standard and Nedbank.

It gets worse*3. O'Neil then told his bank that Zuma was likely to be elected deputy president and that Nelson Mandela was going to settle his debts. Mandela did come to the party with R2-million for Zuma, which then disappeared into various corners but for a paltry R100 000 left in the permanently overdrawn Zuma account.

Absa went further and signed Zuma up as a "private client", a status then reserved for those with at least R1-million spare for investment. Zuma never had R1 to spare, never mind R1-million.

His private client status was noted in the bank's records as a political decision, which the M&G says was "seemingly in line with [then] chief executive Nallie Bosman's view, stated in bank records, that 'in terms of all financial matters' Zuma was considered a strategic client".

This "strategic" client immediately plunged into a huge overdraft which elicited this comment: "The conduct leaves much to be desired, but we have little option but to live with this client in view of his position."

Standard Bank, which apparently escaped unscathed from Zuma's shenanigans, cancelled his much- abused credit card and obtained a court order against him.

This did not deter FNB from approving a R900 000 bond against the fabled Nkandla compound, chicken feed, of course against the R240-million odd of taxpayers' money now sunk into that remote hideaway*5.

In support of this bond an FNB official wrote: "I am sure that the powers that be will assist where we need to bend the rules a little*6."

Asked for comment last week FNB responded: "When evaluating risk in a loan application there are cases where we apply management discretion and judgment to determine lending decisions.

There are some loan applications that require discretion and our objective remains to ensure we are making the correct decision in determining the likelihood of repayment of the loan. Reference to bending the rules should be interpreted as management applying its discretion."

It is sad to see our great institutions sinking into that stinking pit of corruption*6 that many of our ruling political elite inhabit. What a sad example they have set.

* This article was first published in Sunday Times: Business Times

 

Related articles

• THIS IS THE BUSINESS: US may rely less on ugly regimes

With acknowledgement to Stephen Mulholland and Business Day. 

*1       Brilliant, indeed.


*2      This is the least of his attributes.

If the NPA had done its job, the author could say

"he is a proven and appalling criminal".

Meantime I can say that the NPA's conduct was appalling and criminal.


*3      Yes, it gets worse.


*4      No, Mandela did come to the party with R3-million for Zuma.

Where did Mandela get this money: from Thyssen, Ferrostaal, Tony Georgadis, Thomson-CSF, British Aerospace, Saab?

All of the above?


*5      Watch that space.


*6      Like Willie Hofmeyr and Mokotedi Mpshe bent the rules a little.

They are bent.


*7      It is sad to see our great institutions sinking into that stinking pit of corruption.

But give credit where credit is due, the National Prosecuting Authority is a great*8 institution that Bulelani Ngcuka built.

It's now owned by President Zuma.

*8      In the sense of large.

Otherwise it is feeble.