OWEN, WINNIE, OWE COLLAPSING SAVINGS SCHEME

MBABANE – Two Cabinet ministers are allegedly failing to make good on loans they took with a savings and credit cooperative society in which they are members.

Minister of Labour Winnie Magagula and Minister of Public Service Owen Nxumalo both allegedly have outstanding loans with Temnotfo Savings and Credit Cooperative Society Limited, which is now being liquidated because of members’ failure to repay money they borrowed.

The cooperative belongs to bankers and the two ministers are former employees of banking institutions.
The loans granted to them were unsecured, which means that they were approved without the need for collateral.

In such loans, instead of pledging assets, borrowers qualify based on their credit history and income. The lenders (in this case the cooperative society) do not have the right to take physical assets (such as a home or vehicle) if borrowers stop making payments on unsecured loans.

Papers seen by the Times SUNDAY reflect that of the two ministers, it is Minister Magagula whose outstanding loan has been placed under the category of ‘loss’ – a grade 5 category that depicts the worst position possible.

 The minister’s member number in the cooperative society is 1467 and it is shown that she has an ordinary loan of E32 261 and the same amount is outstanding. The definition of the ‘loss’ grade, which the minister falls under, is that ‘these are loans which are considered uncollectible after exhausting all collection efforts, such as realisation of collateral institution of legal proceedings, etc’.

not cost-effective
The definition says the “characteristics of this are accounts where prospects of recovery are deemed to be nil or not cost-effective, accounts where the probability of full or part recovery may be affected at a later date through liquidation of security or assets will require long term efforts”.

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