Leasing company accused of rip-off

HARARE - African Century Leasing, a company involved in lending to Zimbabwean businesses, has been implicated in a scandal in which its clients are accusing it of rigging interest rates to maximise their profits.

Stan Matiza, the managing director of African Century Leasing (African Century), a registered Harare-based leasing company based at 153 Josiah Chinamano Avenue which provides asset finance to the productive sector of the Zimbabwean economy, said yesterday that the complaints were coming from customers who have failed to repay their loans.

“It’s a few individuals who are trying to avoid their own obligations,” Matiza told the Daily News. “We have over a 1 000 clients. We pride ourselves in being an institution of integrity. Certainly, there is nothing like that. We apply the rule of the law consistently.”

The disgruntled businessmen claimed seven in 10 customers were being ripped off by the big leasing company in the multi-million dollar scam, it was claimed yesterday.

The accusations came from at least six companies, some of which collapsed after failing to service the allegedly inflated loans.

They said they were mooting a class action against African Century, and hope to fuel a consumer power revolution that will force the lending house to stop the usurious rates and offer better value — or lose customers.

The move poses further problems for the banking sector in the wake of ongoing public complaints against financial delinquency and overcharging through exorbitant bank charges.

Most banks have been posting record profits in an ailing economy, aided by high charges and poor value interest rates.

Some of the customers claimed African Century’s inflated charges on loans have proved to be a gold mine for the lender, a charge staunchly rejected by Matiza who insists it was a case of sour grapes by businessmen who have had their properties attached.

The businessmen claimed the leasing company has been able to cash in on customers’ reluctance to pore through their bank statements and financial illiteracy, making them a captive market.

One aggrieved customer showed this paper how the lending house hiked monthly repayments on a loan from $18 000 to $21 000, meaning the expressly agreed interest rate of 20 percent was hiked to 34,76 percent unilaterally by the leasing company.

Another client said they had been overcharged $3 000 per month on one loan, suffering a potential prejudice of $220 000.

They also accused the financial institution of accessing money offshore at less than 1 percent and making margins in excess of 3 500 percent per annum without due regard to the prevailing harsh macroeconomic climate here.

The clients are arguing that “this fraud” was being done in applying and calculating interest rates.

“The police would definitely treat this as fraud as they applied an interest rate which was totally different from what was agreed on,” one disgruntled businessman told the Daily News.

“They are getting away with this unjust and fraudulent enrichment. The law and any other reasonable man would deduce that there is non-disclosure or fraudulent misrepresentation by African Century of a very material fact, the interest rate.

“Wherein we agreed on specific rates per annum of 15 percent on one loan and 20 percent on the other three, African Century went on to charge me 25,69 percent and 34,67 percent respectively. We are trying to argue that, and justifiably so, that the agreement must be set aside and the State prescribed rate of 5 percent be applied as there is no union of the minds regarding a material component of the agreement, which in this case is the interest rate.”

Another customer who said he was “ripped off” said this was “economic sabotage” as the lending house was deliberately applying higher unagreed interest rates to cause the demise of local companies. The businessman accused the leasing company of calling up the usurious loans failure, which then results in them getting writs against the distressed companies and ensuring they fold their operations, pushing hundreds out of employment.

The African Century scandal is focusing attention for the first time on the banking system and how it really functions.

Another businessman said indigenisation proponents would be inclined to view this as sabotage of upcoming black businesses so that they are continually painted as uncreditworthy and perpetual bad debtors.

Todson Gomo, CEO of the Affirmative Action Group (AAG), said the practice is “very, very, very bad.”

“Its improper, its illegal, they shouldn’t be doing that,” Gomo told the Daily News yesterday, further urging the “fleeced” businessmen to approach the black empowerment group to help them get redress.

Under Section 8 Subsection 1 of Chapter 14;14 of the Money Lending and Rates of Interest Act, “No lender shall stipulate for, demand, or receive from the borrower interest at a rate greater than the prescribed interest rate.”

Another client said the African Century’s capacity to pull off this scam depends on financial illiteracy by clients, who do not conscientiously look at their loan statements.

While shareholders understand how this scam works and are getting richer and richer, Zimbabwe is descending into a country with rapid de-industrialisation, record unemployment, mass poverty and hunger.

Another client said the bank was behaving like an “unscrupulous pyramid scheme-type financial institution which does not fully disclose the cost of borrowing to unsuspecting clients.”

“Their shareholders must be smiling all the way to the bank,” he said. “Where in the world would one get such a return on investment per annum, even in a war zone? Even Finance minister Patrick Chinamasa is in the newspaper day-in-day-out complaining about sabotage by financiers and the high foregoing interest rates. Chinamasa is even declining finance from South Africa at 8 percent per annum saying it is too high, what about a fraudulent 34,67 percent?”

Depositors have pleaded for genuine banking sector reform but this may not be accomplished without root and branch reform including uprooting unscrupulous bankers at the heart of the establishment network.

Another official claimed the  interest bank fixing scam goes far beyond African Century and involves other banks as well.

 

Comments (5)

Just pay back the money gents. Its all in the agreement you took the money now face the pain

ndaba - 12 February 2015

THIS STORY IS THE TIP OF AN ICEBERG AS AFRICAN CENTRUY IS CERTAINLY RIPPING PEOPLE OFF. I AM FULLY AWARE THAT THEY GOT DEVELOPMENT FUNDING FROM NORFUND AT A RATE OF 2% INTEREST AND WERE SUPPOSED TO CHARGE PEOPLE NO MORE THAN 11%, BUT THEY ARE CHARGING THIS EXTORNISTIONIST RATES. MR EDITOR, PLEASE BRING THIS UP AGIN IN YOUR PAPER AS THEY HAVE TO RESPOND IF THIS IS NOT RRU OR NOT.

MaMoyo - 13 February 2015

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.