ANGLO American Platinum (Amplats) and seven of its employees have launched a legal battle against salary deductions for outstanding debt, which could have far-reaching ramifications for tens of thousands of impoverished South Africans and the way the debt is collected. Amplats is challenging a law firm and an administration company involved in debt administration, alleging in papers before the High Court in Pretoria that they are practising unlawful overcharging. It is also mounting a constitutional challenge against the fees law firms charge when acting as administrators. Emoluments attachment orders — deductions of debt from salaries or wages at the source, often incorrectly called garnishee orders — compel employers to deduct monies owed to creditors that have obtained judgments against debtors. Their abuse has long been criticised for allowing workers who can least afford to forgo their full wages to become indebted for long periods. Amplats argues that the 12.5% fee charged by administrators, stipulated in the Magistrate’s Court Act, which governs attachment orders and debt administrators, must apply also to attorneys doing administrator work. They cannot charge what they wish or circumvent the 12.5% cap by subcontracting their duties and adding that cost to the debt. Amplats CEO Chris Griffith argued in his affidavit that this could turn some heavily indebted people into indentured labour, working to pay off administrators as well as creditors — often for indefinite periods. This fundamentally affected the debtors’ right to dignity as they remained trapped in a poverty cycle. Hannatjie Pienaar, one of three respondents, and representing the law firm and administrator company targeted by Amplats, denied allegations that the companies charged an average 44% of the payments received from the seven Amplats employees. She contended that the charges stipulated in the workers’ affidavits were miscalculated. The University of Pretoria’s Law Clinic estimated in 2013 more than 435,000 employees in the private sector had emoluments attachment orders against their salaries, and 240,000 in the public sector. No formal figures are available on the extent of the practice. Data in the Credit Bureau Monitor for the third quarter of last year showed 10.5-million South Africans had impaired credit records, 105,000 more than the previous quarter. Mr Griffith said credit was useful in lifting people out of poverty but there were dangers inherent in the abuse of credit by those extending it and recovering it on behalf of creditors. The misuse of the credit industry and the legal regime with it can be the cause of frustration, social unrest and a denial of fundamental rights, he said. The increasingly heavy indebtedness of the mining workforce may have fuelled the five-month strike for higher wages in the platinum industry last year and the violent events that culminated in the killing of 34 strikers by police near Lonmin’s Marikana mine in August 2013, he said. The National Credit Act and the Magistrate’s Court Act govern the formal repayment of debt and protection of debtors. Mr Griffith said debt administrators, due to a possible lack of clarity in the statutes that govern their roles and lax regulation of their activities, exploit many of the heavily indebted people placed under their care. The University of Stellenbosch’s Legal Aid Clinic and 15 consumers brought an application to the High Court in Cape Town in October, seeking to have emoluments attachment orders declared unconstitutional and unlawful. The respondents are several credit providers, a firm of attorneys, the minister of justice, the minister of trade and industry, and the National Credit Regulator. Mr Griffith said Rustenburg Platinum Mines, a wholly owned Amplats subsidiary, believed due to a possible lack of clarity in the statutes that govern their roles and lax regulation of their activities, (debt collectors) exploit many of the heavily indebted people placed under their care. Reana Steyn, deputy ombudsman at Credit Ombud, said it was unfair to tarnish all credit providers and their collection agents with the same brush of the inappropriate behaviour of a few agents abusing their role or poorly managing the process. There are companies who use this method for collection responsibly and within the law, and consult with clients and don’t overcharge, but they stand to be punished for those operating illegally, she said, adding the case brought by Stellenbosch University was likely to be joined by credit industry players. Credit Ombud was involved in a task team investigating attachment orders that submitted a report to Treasury suggesting new rules and a code of conduct for the industry. These have yet to be brought into effect. Of the roughly R3m recovered by the Credit Ombud after complaints by debtors about overpayment, most pertained to incorrectly applied attachment orders, Ms Steyn said. Many of the amounts recovered for overpayments were for small loans ranging from hundreds to a couple of thousands of rand.
Posted on: Fri, 09 Jan 2015 16:44:43 +0000
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