One of South Africa’s largest debt collections firms, Coombe and Associates, is being fingered for widespread, systemic garnishee malpractice and abuse.
The alleged abuse includes excessive interest charges of 60% imposed on accounts, excessive legal charges, a legally dubious interest cost imposed on the legal charges and the apparent inflation of principle debts.
As a result of the alleged malpractice consumers are being charged up to near eight times their original loan amounts in order to clear their debt.
Affidavits also allege fraudulent activity and alleged misrepresentation and intimidation of supposed unsecured loan defaulters as well as the abuse of jurisdiction.
The national firm which employs at least 12 full-time attorneys and has its head office in Pretoria, has strongly denied the allegations.
Several major unsecured lenders including Capitec, African Bank and Bridge and some of the big four banks have used or continue to use Coombe.
Moneyweb is in possession of numerous copies of Coombe garnishee statements, summaries of projected future payments due and affidavits submitted to the Law Society of the Northern Provinces which describe unethical and abusive practices.
The documents have been collected independently from three garnishee auditing firms, two individual loan defaulters and a registered debt counselling practice.
These six sources, as well as a law clinic operating in the Western Cape, all claim that Coombe is involved in various forms of institutionalised garnishee abuse and malpractice.
The auditing firms include Summit Garnishee Solutions and Garnishee Audit Services, as well as a third which has requested to remain anonymous from fear of violent reprisal.
The debt counselling entity is Debt Masters. The legal aid clinic has requested to remain anonymous and the identity of the individual defaulters has been protected due to the sensitive nature of the material provided.
In addition, an attorney with intimate knowledge of Coombe’s practices has made the allegation that agents working for Coombe may have been bribing payroll administrators.
The attorney claims to be in the process of collecting evidence to support this claim.
He believes that the administrators have been bribed to load garnishee orders onto the payrolls of various companies and to ensure that garnishee payments continue to be deducted from employee salaries.
Coombe is “unscrupulous in its costs and has no consideration for whether a defaulter will be able to afford them or have sufficient money left after the garnishees go-off in order to survive,” says John Steyn from Debt Masters.
Steyn also believes that Coombe is flouting the in duplum requirements of law through its excessive charges.
According to the affidavits in Moneyweb’s possession, it is claimed that Coombe has affected at least one fraudulent garnishee against an individual and that its agents have mislead a second individual in order that they sign consent to judgments and acknowledgment of debt forms.
Summit Garnishee Solutions claims to have numerous affidavits stating the same, which suggests that the practice is more wide-spread than anecdotal according to Kem Westdyk at Summit.
“The company seems to obtain most of their EOS’s (emoluments attachment orders) by way of ‘consent to judgement’ documentation being signed by the judgement debtor … we can supply affidavits of consumers stating acts of misrepresentation and misleading, committed by the people that came to them asking them to sign the documents,” says Westdyk.
“The courts out of which the emolument attachment orders are issued is seldom the court that has jurisdiction in terms of section 65(J)(1) of the Magistrate Court Act. Employers often ask us “We are based in Cape Town, why on earth do we get a court order from Kempton Park,” says Westdyk.
In Gauteng, it is said that Coombe tends to use the Kempton Park and Krugersdorp magistrates for garnishees.
These courts are suspected of issuing a grossly disproportionate amount of garnishee orders, suggesting some level of malpractice at the courts which is being abused by Coombe.
The University of Pretoria’s Law Clinic, which has conducted extensive research into garnishee abuse, has identified these courts in what it suggests may be hubs for garnishee malpractice and jurisdiction abuse.
A Western Cape Law Clinic has named Coombe and Associates as a firm that “causes havoc in respect of the issuing of Emoluments Attachment Orders, despite the procedure in the Magistrates Court Act”.
The clinic stated that the manner in which Coombe agents got debtors to sign consent judgements and EAO’s (garnishee orders) “is beyond belief.” It also stated that all the Coombe garnishees which it is investigating have been issued at courts which do not have jurisdiction over the employer.
“Therefore the consumer/debtor’s right to access to justice is grossly infringed. Our clients cannot afford to travel for instance to Kimberley (from Cape Town), if their income as farm worker is an average of R400 per week. Neither can they afford the services of an attorney – even on pro bono basis. To appoint a correspondent willing to litigate on our clients’ behalf is another problem and Legal Aid offices are only few and far between.”
The abuse of jurisdiction is a widely evidenced practice in the garnishee industry used to deny those which have garnishees affected against their salaries an opportunity to contest their validity.
Steyn states that “in my cases they have used the Wynburg court for people in Bellville and Stellenbosch”. Kem Westdyk from Summit Garnishee Solutions has also noted Coombe’s abuse of jurisdiction as has Noelene Niclas from Garnishee Audit Solutions.
Complaints website Hellopeter has 364 records for Coombe, many of which are complaints relating to garnishee orders.
Moneyweb also has reason to suspect that Coombe was identified for malpractice during an audit conducted by law firm Edward Nathan Sonnenburg (ENS) in which gross garnishee irregularity had been uncovered. However, requests for the release of data or information from ENS pertaining to the audit, or confirmation that Coombe has been identified during the audit, have been refused on the basis of “client confidentiality.”
Capitec refused to answer questions relating to its use of Coombe as a collections entity, including whether it had picked up issues of malpractice during the period in which Coombe had been used as one of its debt collectors.
In an emailed response, it stated that “Capitec Bank has provided no new collection work to the firm since October 2012. We presently are managing the old collections book to conclude with them”.
African Bank’s Leon Kirkinis has stated that “we take the relationship with our customers seriously, and if any wrongdoing to our customers is conducted by these firms on a systemic basis, we will immediately terminate their services, and take the necessary action.
With regards to the firm in question (Coombe) we have in the past been alerted to specific instances where a transgression has occurred and these have been rectified.
“We are presently conducting an investigation into certain recent allegations that have been made, and once completed we will take the necessary action.”
In discussions at Moneyweb’s offices on Monday, representatives of Coombe refused to discuss the merits of the allegations contained in this article. Coombe had instead requested that the publication of this article be postponed pending the outcome of an external audit which it believes will exonerate them.
“There are a lot of allegations in the article which we feel do not reflect properly on how Coombe should be viewed,” said Arnoud van den Bout, an attorney at Coombe.
Van den Bout said Coombe is very confident of the legal foundation of their garnishee orders and confident of the processes it uses when issuing such orders. “We are in the process of instructing a big audit firm to do an audit which will show that our processes are correct,” he said. “We are sure they won’t find anything.”
When pressed to provide a response to the specific allegations made in this article, Alanza Flemix-Jordaan, a director at Coombe said simply: “We will have to go and investigate each and every one of them … but the allegations made are totally wrong interpretations.”
When asked to comment on the ethics of charging a 60% interest on a garnisheed amount or of charging a defaulter a net R54 101 to repay an original R6 500 loan, Van den Bout responded as follows: “How can an attorney ethically represent a murderer … we have to act on the instructions of clients.”