Loan Firm’s “Irresponsible Staff”

Business partners Charl Jordaan and Clinton Baumeister, owners of the loan firm Southern Devlopments, stood their ground against loan seeker Hilda Motale’s claim – but got it in the neck from Commissioner Neville Cohen.

Council worker Ms Motale needed a R10000 loan for corrugated iron and timber for her Transkeian home, and was only too happy when canvassers engaged by Southern Developments approached FNB on her behalf.

Of the R10000, she was given R1000 cash allegedly to pay the builder, and expected R9000 worth of corrugated iron and timber. For this she was to repay Southern Developments R512 a month.

However, all she got was materials worth R3 965, which landed her in the Small Claims Court demanding R5035 (the difference between the R3965 value of material supplied and the R9000).

Jordaan and Baumeister explained their system – after the canvasser had explained the ins and outs to Ms Motale, a consultant took over and explained again, they said.

After the consultant had done his bit, both Jordaan and Baumeister took pains to explain to her the hidden costs, including a raising fee for obtaining the loan for her, plus interest, and only then did she sign documentation and accompany Jordaan or Baumeister to the bank.

Ms Motale told the court: “People came to my work and asked if anyone wants to borrow money for building materials. They said they will give me R10000, and I must pay R512 per month. I said okay.

“In the Transkei, the materials they delivered was too little. I asked the lady at the shop why she give me short materials, and she says the people in Cape Town gave her the order.”

Questioned, Jordaan and Baumeister agreed that Ms Motale had paid them R9000 for materials worth only R3965.

Commissioner: “What happened to the balance of R5035?”

Baumeister explained the business structure and overheads.

Mr Cohen told Jordaan and Baumeister: “This is a moral issue, and what I don’t like is that your canvassers go to people who do not understand.

“The consultants then get unsophisticated people to sign documents, thus profiteering from people who don’t understand what’s happening.

“I don’t think people who do understand would sign contracts like this.

“I don’t think your canvassers and consultants are responsible enough.

Commissioner Cohen dismissed Ms Motale’s claim, and explained: “You cannot expect materials worth R9000 if you borrow R9000 from a bank because it includes a raising fee and interest.”

“Your contract with Southern Developments is valid, and I cannot just throw it out. You must continue your monthly payments, but you must also go to the bank and explain the circumstances.