South African Wonga founder st

South African Wonga founder steps down as loan firm is hit by scandal

The former CEO of Britain’s biggest payday loan firm,, stepped down from being the chairman of the company two weeks ago – just in time to avoid a major publicity scandal, in which Wonga is currently finding itself enveloped

South African Wonga founder st


South African-born Errol Damelin’s recent departure from is seen as a planned and preempted measure of damage control, as several counts of criminal charges, including blackmail, false representation, and fraud could possibly be brought against the loan company, which has found itself in the spotlight over the past few days.

Britain’s biggest payday lender was slammed for using potentially illegal methods to try to obtain outstanding debts, including bullying debtors with phony letters from fake debt collection agencies. Mr Damelin had been head of the loan firm since its beginning in 2007, when the policy of sending out these bogus letters had first been introduced and had remained common company practice for several years to follow.

45,000 Wonga customers are now to receive a total of £2.6 million in compensation after the UK’s Financial Conduct Authority had ruled that the company’s practices were against lending guidelines.

Each affected customer will receive a £55 cheque in return for having been inundated with communications from bogus debt collectors in the past such as “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”.

The financial burden of paying these fines may only be a small pinch for serial entrepreneur Damelin, whose personal wealth is estimated to be no less than £34 million. Along with his business partner Jonty Hurwitz, also a South African, the two founding fathers of are expected to share a personal wealth of over £60 million between them.

But further trouble might still be in the pipelines for Wonga and its company directors, as consumer groups have demanded a police inquiry into the company’s dubious practices, stating that there are indications for criminal intent in the payday loan firm’s underhanded approach to clawing back funds. Some have even called the company’s tactics akin to bullying.

Shadow consumer affairs minister Stella Creasy MP joined those calling for a full police investigation, adding that the act of pretending to be a solicitor is a criminal offense.

“Aside from potential fraud, harassment of a debtor is a criminal offense. News that Wonga was sending fake solicitor letters to cash-strapped customers who couldn’t afford their fees to frighten them and charging them for these is further proof of the need for Britain to rid itself of these legal loan sharks.” admitted to some of its wrongdoing, by saying that 200,000 customers were overcharged due to a “technical error”.

The company suffers to gain back public confidence for its British operations, but continues to succesfully offer payday loans in other territories where it operates, including South Africa. Famed for its TV commercials featuring hand puppets depicting elderly office workers, Wonga is perceived to put a human face to short-term lending practices though its recent actions may imply otherwise.

Tim Weller, Wonga’s interim chief executive, meanwhile publicly apologised for the practice of sending fake letters to collect debts. He added:

“The practice was unacceptable and we voluntarily ceased it nearly four years ago.”

By Sertan Sanderson, 2014