Risks are mounting that Cambist investors will have to repay their gains and now they’re wondering what happened to the garnishee specialists’ guarantee trust fund.
Former Cambist manager Magda van der Merwe claimed to Business in 2012 that in order to protect their buyers’ 19.5% returns, Cambist had a business trust to buy back nonperforming debt contracts and sell performing contracts from its reserves.
She insisted again in November 2013, to Bruce Whitfield on CNBC Africa’s Tonight programme, the 19.5% guarantee was not simply an undertaking.
“It is definitely a guarantee. Everyone that has purchased that contract at a 19.5% return will get their 19.5% return until the end of that contract because that is a legal contract,” she insisted.
“We have a trust in which we also buy Cambist contracts and where we keep enough capital – 10% of everything that is sold on the Cambist platform – to stand in for any of these 1.53% falloffs (defaults),” Van der Merwe explained.
Van der Merwe promised Cambist would not be at risk should salary attachment orders ever be abolished. But in a newsletter this month, Cambist notes that the drastic decline in offer amounts received on Cambist portfolios is “directly related to the new factors arising in the market”: recent High Court rulings and ongoing exposure of abusive practices that are making emolument attachment orders (EAO) more difficult to obtain.
Cambist has raised the increasing risk of its buyers having to repay all instalments received through EAOs, “as is already seen with a number of debt contracts belonging to Cambist buyers”.
“Even though the debtor owes the money, it must first be paid back and thereafter a new collection process can be initiated afresh at high cost through an ill-functioning court system,” Cambist says in its recent newsletter.
“We do not foresee better/ higher offer amounts [for Cambist portfolios] in the future. In fact, we have noticed that purchase prices have declined steadily over the past few months.”
Van der Merwe has since moved on. When asked to comment on why Cambist has not upheld its guarantee as she promised, she said via e-mail: “I am fully aware that the platform has had problems, but have no knowledge about it.” Van der Merwe said her last month at Cambist was September 2014. Attempts to contact Cambist were unsuccessful.