nedbank sets auditors on its old law firm 
23 May 2008

Nedbank’s chief risk officer, Philip Wessels, said yesterday that the legal firm had suspended one of its lawyers in connection with the matter as Nedbank brought in forensic auditors PricewaterhouseCoopers to carry out a full investigation.   The bank declined to substantiate the financial prejudice, but Wessels said the loss was “not material”.

Findlay Niemeyer is one of the law firms appointed by Nedbank to collect funds from the sale of repossessed houses and register the properties that the bank had bought and sold.  The legal firm, which has been working for Nedbank since the 1930s, is handling 6 000 outstanding cases, of which 4 800 are facing foreclosure.

Nedbank’s MD for home loans, June Tudhope, said that about 60%-70% of foreclosure matters never reached the sale-in-execution stage as homeowners usually made arrangements to make up their arrears. “Between 200 and 300 houses a month on average are eventually sold at sales in execution,” she said. “Nedbank proceeds with sales in execution only as a last resort, with many clients rehabilitating themselves before the process has run its course,” Tudhope said.

Wessels said the “irregularities” surfaced after the attorneys failed to “adequately explain the long delays” in the registration of “sold properties in possession and in the handling of client foreclosures”.  It had also failed to account for rates and taxes paid by the bank on the transfer of properties in possession.

Following queries raised by the bank, the law firm told Nedbank that it had uncovered accounting irregularities in its foreclosures department on accounts under the control of one of its attorney partners. “The irregularities were uncovered during the course of a preliminary investigation conducted by the law firm’s senior partners,” Wessels said.
“Given the fact that the investigation is still in its early stages, it is not possible to provide an accurate estimate either of the extent or the impact of the irregularities, but the impact is not considered to be material.

“Findlay Niemeyer has advised us that the attorney in question has been removed from his duties, and that the matter has been reported to the law society, the Attorneys Fidelity Fund and to the professional indemnity insurance that covers claims against them,” he said.  “Based on the investigation thus far it is highly unlikely that there has been any negative impact on the accounts of clients who were indebted to Nedbank and whose files had been handed over to the law firm for collection. 

"Nevertheless, should we determine that these clients were impacted in any way we will see to it that they do not suffer any financial loss as a result of this regrettable situation,” Wessels said. 
 
Regis Nyamakanga, www.businessday.co.za