In an unprecedented ruling on Tuesday, Windhoek High Court Judge Claudeen Claasen ordered a review of the decision by the state-owned agriculture lender Agribank to reject an N$4.5 million loan application by convicted fraudster Roger Mberira.
Judge Claasen ordered Agribank to review, within 60 days, Mberira’s application to purchase a farm in the Gobabis area which was declined in 2017 after a character due diligence check returned negative results.
Mberira, who was convicted of motor vehicle theft in 2003 and fraud in 2006, approached the court in 2017 after his loan application to buy farm Net Tevrede no.72 situated in the Gobabis district of Omaheke Region, was rejected by the bank.
Agribank wrote to Mberira in April 2017 informing him that his application for a loan to buy a farm was in the process of being finalised.
He claimed that in the meantime, the bank asked him to pay a 10 percent deposit of N$450,000 to the seller of the farm and to obtain a waiver certificate from the Ministry of Land, which he did.
Trouble started when Mberira’s application was recommended for approval to the Agribank’s Board Credit and Investment Committee, which instructed that a character due diligence review be conducted.
It was at this stage that it was discovered that Mberira had been previously convicted of theft of a motor vehicle and fraud. The bank also found out that he was charged with murder and robbery although these charges were later dropped.
It was further discovered that Mberira had been involved in a fistfight the weekend before his application was set to go for consideration.
An Agribank employee then contacted Mberira to receive clarity on the charges against him. Based on that employee’s report and the results of a background review, the credit and investment committee declined his loan application.
The committee and the bank, however, refused to provide Mberira with the reasons for their decision on the basis that it was not an administrative decision.
In a letter to Mberira’s lawyers, the bank wrote in part that: “Agribank, like any other bank in Namibia, is under no obligation to provide your client with any reasons for his loan application being declined and accordingly refuses to provide you with any reasons save to state that after due consideration of your client’s application he did not meet the criteria set by the bank.”
After the filing of a review application, the bank gave Mberira’s previous convictions, acquittal in the murder and robbery case and the fistfight, as reasons for the rejection of the loan application.
In his submissions to the court, Mberira had argued that the bank failed to give him a hearing before an adverse decision was taken against him based on new/changed policy considerations after he had successfully applied for an N$220,000 loan from Agribank in 2013.
“In so far as the right to make representations is concerned, it is common cause that the applicant was not invited to make representations to the respondents before the decision adverse to his interest was taken,” Mberira’s lawyer argued in court.
“It is further common cause that the applicant was an existing client of Agribank who was complying with the terms of the existing loan agreement and which was not required to provide a character certificate.”
Mberira’s main argument was that in deciding whether or not to grant the loan, under the affirmative action scheme, according to its agreement with the Government of the Republic of Namibia, Agribank performs an administrative act, which is subject to a judicial review.
Agribank argued in court that Mberira’s loan application was declined because of his record and criminal inclination, as well as the potential risks associated with him.
“The applicant appears to be inclined to commit certain crimes and or to misbehave. There was an association of risk involved in servicing the loan,” it said.
The bank’s lawyers further argued that it is their client’s prerogative to accept certain risks.
“If the second respondent [Agribank] decides that it is not prepared to accept certain risks, the second respondent cannot be forced to do so.”
The lawyer’s further argued that Agribank’s power to grant or refuse a loan is not administrative action but discretionary power.