Wonga CEO bails out 'quietly'

THE resignation of Wonga SA CEO Kevin Hurwitz from the online unsecured-loans provider several months ago has been kept hush-hush as the business fights fires in South Africa and the UK.

THE resignation of Wonga SA CEO Kevin Hurwitz from the online unsecured-loans provider several months ago has been kept hush-hush as the business fights fires in South Africa and the UK.

His departure followed the exit of South African co-founders Errol Damelin and Jonty Hurwitz in June and November respectively. Niall Wass, CEO of Wonga in the UK, dumped the company this year after a six-month stint.

Although the group claimed Hurwitz's resignation was common knowledge, the market did not know until last week that he had quit .

In the UK, Wonga has been flirting with controversy.

The loan provider has been accused of making hefty profits from the UK's poorest people with "payday lending" - providing short-term loans at interest rates as high as 365% over 18 days.

Last week, UK regulators told Wonga to write off £220-million debt of 330000 struggling customers who would not have qualified for loans under tougher new affordability checks.

Wonga SA said this applied to the UK business only.

In June, the "fast little loans" provider was smacked with a £2.6-million fine by UK authorities for trying to trick its 45000 customers into repaying loans by sending them fake lawyer's letters on the letterheads of fictitious law firms.

Wonga SA spokesman Debbie Sharwood denied that the group was keeping the resignation a secret as its suppliers had been notified.

Hurwitz said his resignation was "common to recruitment people and people involved in that process".

They both believed that as a private company, Wonga did not need to make big announcements.

Hurwitz said Wonga grew very fast, and became "very corporate" for him.

Wonga reached break-even point "several months ago".

Hurwitz said he still believed in the business "but it is something I do not want to do on a day-to-day basis anymore". He is being retained in an advisory capacity until a replacement is found.

In July, the National Credit Regulator (NCR) charged Wonga for contravening the National Credit Act.

Sharwood said the company was in the capable hands of Jody Baumgarten, head of finance, and Mark Ruddock, managing director of Wonga's international consumer lending operations, based in Canada, who were heading Wonga SA until a CEO was found.

Wonga offers first-time borrowers up to R2500 over 48 days at a hefty interest rate of 27%. Repeat customers can then borrow up to R8000.

The company got into trouble with the NCR because it did not obtain proof of borrowers' income and living expenses to determine if they could repay the loans.

It also did not keep records to support its "affordability assessments", or the records of steps it took after customers defaulted.

The regulator said Wonga was required to remove any adverse information it had listed at credit bureaus on its customers' credit records.

Any judgments taken against its borrowers must be rescinded - at Wonga's expense.

Sharwood said all required documents had been filed with the NCR.