28 teachers implicated in SNAT Co-op loan fraud

MBABANE – Twenty-eight teachers who are members of the SNAT Savings & Credit Co-operative Society were allegedly implicated in a fraudulent loan scheme uncovered in January 2017.

The co-operative says the transactions involved the manipulation of loan records and passbooks to obtain loans to which the members were not entitled.

The allegations are contained in an answering affidavit filed by Vusani B. Dlamini, Chief Executive Officer of SNAT Savings & Credit Co-operative Society, in opposition to an application by Vulamasango High School teacher Vuyisile Makhathu before the High Court. Makhathu wants the High Court to issue an order compelling the SNAT Savings and Credit Co-operative Society to account for more than eight years of salary deductions.

Makhathu alleges deductions in favour of SNAT Savings and Credit Co-operative Society have been made from her salary since 2017, but that the statement of account later provided to her begins only in 2023.

According to Dlamini, an investigation conducted after the alleged fraud was discovered identified 28 teacher members as having been involved in the fraudulent loan transactions.

Makhathu, who is challenging deductions made from her salary in favour of the co-operative, is alleged by SNAT to have been one of the 28 members. Dlamini states that her name appears at number 15 on a list identifying the teachers implicated in the transactions.

The co-operative alleges that the scheme involved its former employee, Mihla Mamba, who was then employed as a clerk in the Loans Department.

Dlamini states that Mamba was subsequently subjected to disciplinary proceedings, found guilty and dismissed from employment for fraud and dishonesty.

According to the answering affidavit, the alleged fraudulent activities began to emerge in early January 2017 after Faith Msibi, a teacher at Ka-Boyce High School, approached the co-operative to complain that a loan she had applied for had not been paid to her.

The co-operative allegedly examined Msibi’s paperwork and manual passbook and discovered that the records had been manipulated.

Dlamini states that Mamba was the officer who had handled Msibi’s loan and passbook. Mamba allegedly denied knowledge of the manipulation and prepared a report, which was attached to the answering affidavit.

The discovery prompted a wider investigation into the loan transactions and the extent of the alleged irregularities.

The answering affidavit states that the investigation subsequently established that 28 teacher members were implicated.

At the time, loan applications were allegedly processed manually. Members were required to submit prescribed hard-copy loan application forms together with their red passbooks.

Dlamini alleges that the implicated teachers took their manual passbooks from the Loans Department and worked with Mamba to make entries showing that outstanding loans had been paid or cleared.

The alleged entries created the impression that the members had settled existing loans and were therefore eligible to apply for new loan facilities.

“The manipulation of the passbooks enabled members to obtain additional loans despite having outstanding liabilities,” argues Dlamini. The veracity of these allegations is still to be tested in court.

Makhathu is alleged to have obtained loans totalling E173 940.30 through the scheme. Dlamini alleges that Makhathu colluded with Mamba and that her passbook was manipulated or forged before she applied for and obtained the loans.

The co-operative disputes Makhathu’s claim that she was merely one of the members affected by irregular transactions carried out by an employee.

Dlamini states that Makhathu was directly involved in the fraudulent loan applications and that the loans were personally applied for by her, advanced to her and used by her.

The answering affidavit further alleges that the list identifying the 28 teachers was provided to Makhathu more than once when she requested information concerning the investigation.

Dlamini alleges that Makhathu did not attach the list to her founding affidavit in the High Court proceedings.

The co-operative, which is represented by S.M. Simelane and Company, regards this as an omission of relevant information and disputes her characterisation of herself as a victim of the alleged fraud.

Following the discovery of the transactions, Dlamini states that SNAT reported a criminal case of fraud to the Manzini Police.

The 28 implicated teachers were subsequently called to a meeting of the co-operative’s executive committee.

According to the answering affidavit, the decision to call the teachers to the meeting followed consideration of the number of members implicated and their relationship with the co-operative.

At the meeting, each of the implicated members was allegedly asked how they proposed that the matter should be resolved.

Dlamini states that Makhathu, together with several other implicated members, proposed that the loans allegedly obtained fraudulently should be consolidated and repaid as a single loan.

The proposed repayment mechanism involved deductions from the teachers’ salaries through the Treasury Department.

In Makhathu’s case, the answering affidavit states that she completed and signed documents authorising deductions from her salary.

The documents were submitted to the principal secretary in the Ministry of Finance – Treasury Department in 2017.

The Treasury Department allegedly thereafter deducted money from Makhathu’s salary each month and remitted the installments to SNAT for approximately two to three years.

The co-operative says the arrangement was not an interim measure pending the outcome of an investigation, as Makhathu alleges in her founding affidavit.

Instead, Dlamini maintains that the consolidation was an agreed repayment arrangement entered into after the alleged fraud had been discovered.

He states that Makhathu did not complain during the repayment period that the deductions were unauthorised.

The answering affidavit further states that the E173 940.30 represented the consolidated balance of the loans and did not include interest and other loan-related costs.

Dlamini explains that the monthly instalment of approximately E4 044 was allocated between interest, the reduction of the capital debt and insurance.

The co-operative therefore disputes Makhathu’s contention that she has been required to repay more than she owed because of the alleged fraudulent loans. Dlamini acknowledges that she has repaid more than E173 940.30 but maintains that this did not amount to an overpayment because the original consolidated amount excluded interest and other charges.

The dispute over the alleged fraud forms part of a wider disagreement between Makhathu and SNAT concerning the deductions from her salary. The matter is pending before Judge Sabelo Masuku.

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