It’s peaceful around here this morning. I’m in Stellenbosch running a financial modelling course for the Faculty and Institute of Actuaries, in conjunction with the Actuarial Society of South Africa. The sun is shining, the skies are blue and although the wind is getting up, it is still a pleasant day. But that has nothing to do with why it’s quiet.
Why Rudco has always been a bad idea
Some commentors on previous posts about Rudco suggested that there was no risk to dealing with Rudco. As some background, Rudco has been offering fixed-rate home loans at 6% per annum, often to borrowers who have already been blacklisted. My initial posts highlighted how lending money, long-term at a fixed rate of 6% per annum doesn’t make any sense from an economic perspective. Hence, the business is non-viable, and thus borrowers should stay away.
How borrowers could and did lose money
It since emerged that “borrowers” were required to pay fees and instalments to Rudco before receiving their loan. Now if that doesn’t ring warning bells, I don’t know what will.
Rudco liquidated and clients lose money
Now to put this story to bed, since I would rather move on to more interesting risk, optimisation and value generation stories and ideas. Yesterday, the National Credit Regulator succesfully obtained an order from the High Court to place Rudco into liquidation. This was a direct result of not having met the 6 December 2007 date for an independent audit report (pdf from NCR website) outlining that they did in fact have the money to provide the loans, and to refund the money received from clients before they were granted their loans. Who knows if there is any money available to refund these clients.
Which finally settles the questions about Rudco. I’m just amazed at how some commentors were still pushing Rudco as recently as Wednesday. At one stage it was suggested that I have a personal vendetta against Rudco (I really don’t care about them). I wonder what the motivation of these blinkered commentors was?