05 Apr Shameful and a breach of human rights – says President of Samoa Law Society
We need a review of our laws and legal processes to ensure that these “financial victims” are not mistreated.
An esteemed lawyer, and President of the Samoa Law Society, has condemned the existing legal process, where small debtors who cannot pay their loans, are sent to Tafaigata Prison. She has also called for better monitoring of finance companies, the interest rates they charge and the terms they offer.
Su’a Hellene Wallwork said of the current situation, “This is a shameful part of our laws and legal process in Samoa which needs reviewing.”
“This procedure is a contravention of Samoa’s obligations under the International Covenant on Civil and Political Rights (ICCPR).”
Samoa ratified the ICCPR in 2008. Article 11 states, “No one shall be imprisoned merely on the ground of inability to fulfill a contractual obligation.”
Su’a explained the existing process, “Creditors can obtain judgements from the Courts against debtors. When a debtor does not comply with the repayment order set out in the judgement, then the creditor can take enforcement action.”
“Enforcement of such judgments here in Samoa is mainly by warrants of arrest/committal (ie. Tafaigata prison).”
Su’a told Samoa Planet, “In my view, these “debtor prisons” are actually a breach of human rights and should not be used as a form of enforcement of judgment debts.”
“It’s a very draconian procedure, but still used all the time because it is an effective method of extracting money.”
“Once a person is locked up, then their aiga runs around looking for money to pay their debt.”
“The anecdotal evidence I have on this issue is that it affects quite a few women. Usually, these women are mothers taking out small loans for White Sunday then again by Christmas time, and also when school starts for the year. It is not difficult for the borrower to be in trouble with repayments shortly after this period.”
“At the very least an arrested judgement debtor should be taken before a Judge for a final decision to be made regarding imprisonment.”
“As it is, a judgment debtor can end up in prison without ever having seen a Judge or the inside of a courtroom. Unfortunately, many debtors do not turn up to Court (for various reasons) when their cases are called so they are totally unaware of the procedure.”
Su’a describes going to the District Court on a Tuesday afternoon – which is designated ‘Debt Collection’ day. What stands out for her? How empty it is.
“You go to the Supreme Court, and it’s full and busy with people whose cases are being called, and their families. But this is empty. The only people there are the creditors. When names of the debtors are called, nobody has turned up. You would expect maybe half of the cases at least to have someone be there, but no.”
Her concern? Are debtors actually getting copies of the court documents being filed by the judgement creditors?
Su’a added, “This topic is even more important now that we have a few of these instant finance companies here in Samoa. The interest rates they charge are quite high so once the borrower falls behind in the repayments it becomes almost impossible to pay off the small loan in full on the same repayment schedule.”
Su’a recognizes there is a great need in our country, for easily accessible small loans. “The instant finance companies do provide a much needed service for our people. They make it easier to get a loan for those members of our communities that cannot get loans from the main financial institutions.”
“However, I believe we need to put more systems in place to ensure more financial awareness on the borrower, and more obligations on the lender to properly explain the loan terms and to check/ensure that the borrower can meet the repayments.”
“More importantly, we need a review of our laws and legal processes to ensure that these “financial victims” are not mistreated.”
Last week the public was in an uproar over reports that a breastfeeding mother of 9 – Tafiau from Letogo, was taken to Tafaigata Prison on one such Warrant of Committal (WOC). Her 2-month old baby later joined her. Tafiau was to be held there for 4 weeks or until the amount listed on the WOC was paid in full.
Tafiau’s sister-in-law Iupeli, told Samoa Planet that Tafiau had borrowed $200 in 2015 from a couple in Vailele who operate a loan scheme offering small loans for interest rates of 20% per week.
According to Iupeli, Tafiau did make a $200 bulk payment within a month, but was unable to keep up with the weekly interest being added to her balance. “After the bulk payment she would pay $20 here and there and if she got a bingo win, she would pay $50 on those weeks.” The moneylenders filed for enforcement action in March 2017, wanting payment of $1,091.00.
However, Tafiau’s case is not an isolated one. Far from it.
Samoa Planet knows of at least one finance company that has charged their small-loans clients interest rates between 136% to 300% per annum.
Assistant Commissioner of Prisons and Corrections, Ulugia Sauafea N. Aumua confirmed that Tafaigata Prison has many civil prisoners held there on WOC’s that are debt related.
Indeed, there are so many WOC’s being served, that there is an office-section at the Samoa Police station in Apia, totally devoted to them.
Su’a said of her visit there, “I was quite surprised. It’s like police are being used as debt collectors.”
When asked about what other options are available for creditors and debtors, Su’a explained, “In New Zealand, you can’t arrest someone for judgment debts – you would use bankruptcy proceedings or liquidation proceedings for debt recovery. These debt recovery options are also available here in Samoa.”
Such options though would probably require the assistance of a lawyer and for many debtors, that would be a cost they cannot afford.
What laws presently exist regarding the monitoring of finance companies?
According to the Financial Institutions Act, the Central Bank may “extend its prudential supervision to non-bank persons or institutions as listed in Schedule 2.”
However, as of December 31, 2015, the Act’s Revision Notes refer to Schedule 2 being blank.
“Please note that the non-bank persons and institutions which are to be specified in Schedule 2 have never been listed or specified since insertion of Section 30A by the Financial Institutions Amendment Act 2001. As such Schedule 2 remains blank until further instructions from the administering Ministry.”
When it comes to interest rates, the Central Bank of Samoa Act 2015, Provision 55 regarding Interest and Credit, outlines how the Bank can choose to act.
“The Bank may require…other financial institutions, or insurers to comply with:
a) the permissible purposes, aggregate callings, maximum amounts beyond which the approval of the Bank is necessary, the maximum maturities, and maximum and minimum rates of interest chargeable for –
i) making of advances, whether by loans or overdrafts, and investments;
Clauses iii) and iv) have to do with “issuing letters of credit; and granting acceptances and other forms of credit…