Nedbank’s 11-page code of ethics says all the right things – the bank’s declared values include respect, integrity, observance of the law, and being “people centred”. Johanna (Cathy) Brinkhuis (48), a sausage maker from Strand, Western Cape, may be forgiven for thinking this is a load of pious crap.

In 2005 Cathy needed a loan so she could pay off some debts (she was basically looking to consolidate her debt). She didn’t need much, mind you, just a few grand. So she went to Nedbank, the bank “that makes things happen”. And on 15 August 2005 Cathy signed an agreement that granted her an aptly named “classic loan”, of R4,800, repayable over 24 months, taking her through to August 2007. The interest rate would be 82.5% (no that’s not an error), and the monthly payments would be R466. This meant that Cathy would receive R4,800 and pay back R11,183 over two years.

Her first repayment of R466 went through on 30 September 2005, but some seven months later, Cathy lost her job. She went in to the Nedbank branch and was told to keep paying what she could. Although the bank’s financial history document shows that a number of Cathy’s payments were reversed, by May 2007 she had nevertheless paid R6,824, by which time the outstanding balance stood at R5,814.

Payments became more erratic after that, although Cathy did manage to pay a further R3,040 over the next two vears. This meant that by June 2009 she’d paid Nedbank R9,865 – R1,319 short of the original amount. But the outstanding balance had by that time risen to a nasty R16,664.

It was then that Nedbank ran out of patience. On 19 June 2009, Nedbank obtained a judgment against Cathy for payment of the sum of R16,664. The bank also obtained a garnishee (emoluments) order. For those of you who live in the rarefied world where words commission of R3,214 (10% on each instalment paid), as well as further legal costs of R1,334 – making a total of R31,915. This is repayable by way of 77 instalments of R443 per month, ending on 17 December 2015, with a final instalment of R218.

Which means that a low-paid worker who borrowed R4,800 in 2005 will have paid R41,780 (the R9,865 already paid plus the R31,915 now due) when she finishes paying Nedbank in 2015.

There’s been considerable publicity concerning the recent judgment by Judge Ben du Plessis, who held that the total of the interest and costs cannot exceed the amount that the debtor owed when they defaulted. As we understand it, this rule only applies to agreements signed after June 2007, when the National Credit Act came into operation.

Nedbank may make things happen for its shareholders and senior executives, but in the process it also ruins the lives of some of its clients.

Noseweek was particularly keen to hear something from Nedbank on the morality of this situation, and asked the bank for comment. Communications officer Tamara Matsoyiyane reported that Nedbank was investigating, but when Noseweek went to press, over two weeks later, nothing had yet been heard.

Nedbank may make things happen for its shareholders and senior executives, but in the process it also ruins the lives of some of its clients.

Conan Doyle, owner of the Kwikspar in Strand and Cathy’s employer, who brought this matter to our attention, was outraged to see a bank put an unsophisticated shop-worker, who earns R735 per week, through the wringer. (Yes, our reporter did think it was a wind-up when he received a message to say that Conan Doyle had a lead).

Doyle also made it clear that garnishee orders are bad news for employers. In his experience, garnishee orders typically lead to the particular employee leaving in order to win another few months’ grace – and the employer has to find a new worker.

So everyone suffers. Except the bank. And its attorneys.

This article was taken from the November 2009 edition of Noseweek.