Scandal-ridden VBS Mutual Bank gifted former president Jacob Zuma an R8.5m bond which he could not afford, and at least nine months before any documents were signed to give the bank security over the loan.
Basic calculations show that Zuma could not have afforded the bond on his R2.87m a year salary alone.
Zuma used the VBS bond in September 2016 to pay back a portion of public funds used for "security upgrades" to his Nkandla homestead after he was ordered to do so by the Constitutional Court.
The mortgage facility given to Zuma has been described as a "sham transaction" in court papers before the Supreme Court of Appeal. The papers highlighted that Zuma only signed documents giving VBS security over the bond some nine months after the money was paid.
This is revealed in an SCA bid by Venda princess Masindi Mphephu filed last year, in which she is seeking to overturn a Limpopo High Court ruling setting aside her bid to be recognised as the rightful heir to the Venda throne.
Her uncle, Toni Mphephu-Ramabulana, was recognised by Zuma and traditional authorities as the Venda king following the death of Masindi's father, Tshimangadzo Mphephu.
Masindi filed an application seeking to introduce new evidence in her SCA bid, being the Zuma bond agreement, which she says illustrates that VBS gave Zuma the bond on "unusually favourable terms" allegedly in exchange for Zuma recognising Mphephu-Ramabulana as monarch.
Mphephu-Ramabulana was this week cited in the explosive final investigation report into the collapse of VBS Bank by Advocate Terry Motau, titled The Great Bank Heist.
VBS was placed under curatorship in March and Motau mandated to investigate soon thereafter. He found wide-scale fraud that led to R1.8bn being siphoned out of the bank.
The Venda king was among more than 50 beneficiaries of this fraud scheme. Motau found he had received roughly R17m.
The details of the court bid were first published by the Sunday Times in February this year.
She obtained an interdict in September 2016 to stop the coronation of her uncle from going ahead – just days after Zuma paid back the funds for Nkandla.
The VBS report did not mention the Zuma bond.
Detailed questions sent to Zuma via his spokesperson Vukile Mathabela went unanswered.
On September 12, 2016, the Presidency issued a statement confirming that Zuma had paid an amount of R7.8m to the South African Reserve Bank.
Crucially, the statement reads: "The President raised the amount through a home loan obtained from VBS Mutual Bank on its standard terms."
Annexures to Masindi's court papers show that the bond was, however, anything but standard.
Accepting that the funds were made available to Zuma in September 2016:
• Zuma only signed a power of attorney authorising a Pietermaritzburg conveyancing attorney to appear on his behalf before the registrar of deeds on March 28, 2017, six months after he got the money from VBS and repaid the funds.
• The mortgage covering bond note is signed and stamped by the registrar of deeds on June 1, 2017, nine months after the funds were made available to Zuma.
A title deed search on Zuma's name shows the value of the VBS bond as only R7.1m, despite him receiving a total mortgage facility of R8.5m.
In 2016, Zuma was earning R2.8m a year, or roughly R230 000 a month.
Using a standard calculation of a 10% interest rate with a zero deposit, Zuma would need to make monthly payments of R180 000 if the bond is over five years, R112 000 over 10 years, R91 000 over 15 years or R82 000 a month over 20 years.
Any of these amounts are close to, or in excess of, one-third of his monthly salary, making it highly unlikely he could afford the bond.
News24 has established that Zuma has been meeting his monthly obligations in terms of the repayments.
He did not respond to questions seeking to establish who has been assisting him to make these repayments.
Zuma signed over his 40-year lease of Nkandla, for which he pays R8 000 a year to the Ingonyama Trust, as security for the bond.
But a detailed reading of the clauses in the lease show that VBS would not be able to lay claim to the property.
Essentially, if Zuma defaults, the bank would not be able to seize the property to recover the outstanding amount as the lease, valid until 2051, prohibits this.
"What is also unusual, to say the least, is that the bank (VBS) was willing to lend [a] very substantial sum to President Zuma approximately 9 months before its security in the form of the registered bond was in place. I am advised that this would be most unusual practice on the part of a lending financial institution," Masindi's founding affidavit reads.
"It accordingly appears that the VBS Mutual Bank granted President Zuma a R8.5m mortgage loan facility on unusually favourable terms, based on a form of security provided some nine months late and not amounting to any security at all. Indeed, I question on the basis of the anomalies… whether the entire after-the-fact arrangement for security for the loan is not a series of simulated transactions or a sham."
News24 contacted the conveyancing attorneys who registered the bond on behalf of Zuma. The Pietermaritzburg-based attorney, who spoke on condition of anonymity, said she picked up no red flags with the bond.
"It is up to the bank to exercise its discretion in when it makes the funds available," she said.
She emphasised that she was simply instructed by Pretoria-based attorney Mpho Masibigiri to appear before the registrar of deeds in Pietermaritzburg, and at no stage did she deal with VBS Bank directly.
Masibigiri, she stated, would have received her instructions directly from the bank.
Masibigiri confirmed this when contacted on Friday afternoon. She also stated that it was between the bank and the client to decide when the funds were paid – but conceded that the manner in which VBS handled its mortgage facilities was different to the way other banks did.
"With VBS it happened from time to time [that the money was made available before the bond documents were finalised]," she said.
"The other banks are too strict," she told News24 when asked if this is out of the ordinary.
VBS' curator, Anoosh Rooplal, said he could not discuss details of transactions between the bank and its clients.