The New Face
The New Face
South Africans have a penchant for celebrating their fellow countrymen’s success overseas. Stories of boytjies who make it in London or New York never fail to generate a warm glow. So when a tale of four thirty-something South Africans making waves in the financial services and property markets in London hit the South African press in 2001 you can be sure that there were warm glows all round. These four were Gavin Rabinowitz, Jacques Tredoux and Neil Hasson, who had ‘built up a heavyweight financial services company’ called Credo, according to the Financial Mail Focus of 23 November 2001.
Then, in the June 2002 edition of Property News, the same writer, Ian Fife, told how another South African, the former Old Mutual chief investment officer Liliane Barnard, 38, had joined them. She was ‘one of SA’s most respected young property people, inundated with job offers since she left Old Mutual early this year’. Barnard was going to launch Credo’s ‘₤50 million (then R750 million) office fund of London properties for South African investors’. She was also ‘on their investment committee, as (were) ex-Investec property chief David Kuper and ex-lord mayor of London Sir Anthony Jolliff’.
Not bad for a bunch of South Africans who had only been going for four years. To have the ex-lord mayor of London, who was also listed on their website as a magistrate, a former president of the London Chamber of Commerce, adviser to HRH Prince Charles on unemployment, chairman of the advisory board to the governor of Yunnan Province in China, member of the investment advisory board of ABN AMRO ventures… to have such a heavyweight on board when you’re doing property deals must take some doing!
Barnard said she’d ‘chosen Credo because it’s a smart, no-nonsense group with integrity – “a young Investec”’. The article revealed that Barnard was also a director of PLS Pangbourne, and would remain so. PLS Pangbourne was the Jo’burg-based property loan stock (hence the PLS) outfit that acquired the CBD and Pioneer Property Funds from Sage for about R90 million in 2002 and sold them in the same year to ApexHi in exchange for units worth R137 million.
Credo’s plan was to ‘raise money first … and then buy properties’ (www.sapoa.org.za, June 2002). They clearly had faith in their ‘reputation in the City for their ability to structure prime investments with strong cash flows’ (Financial Mail , 26 April 2002). After all, as the same article pointed out, they’d just completed the ‘sell-out syndication of Old Mutual’s ₤94,1 million (R1,5 billion) London headquarters’. In total, they’d done about ₤200 million (R3,5 billion) worth of property deals in that short space of time.
If the presence of the ex-Lord Mayor of London on their investment committee was interesting, it was nothing compared to the name of one of the directors that turned up on their website: the name of Charles Zell Rangecroft, ‘chartered accountant and former partner for 40 years of Grant Thornton Kessel Feinstein and at present a consultant to Radcliffe’s Trustee Company SA (a division of the Investec Trust Group)’. Now Rangecroft also happens to have turned up somewhere else on the globe, which is going to bring this whole story together: Rangecroft is listed as a director – and the treasurer – of Bernard Glazer’s holding company, Amarena Holdings Inc., at the time of its incorporation in Panama in 1975. The other director at the time, and the secretary of the company, was Julius Feinstein.
The resident agent was given as the Panamanian law firm Arias, Fabrega & Fabrega, and now watch how it spins:
Confidential internal papers known as the ‘Frankfurt Documents’ escaped from the vaults of the European-American Banking Corporation in 1973 (Corporate Information Centre Brief, July 1973). They revealed how a consortium of 40 banks from Europe, America and Canada had made secret loans totalling more than $200 million to South Africa over the previous three years. The secrecy arose as a result of the Bank Campaign of 1966-1969 in which lobby groups – mostly religious – had successfully campaigned against a group of 10 American banks with whom the apartheid government had a $40 million revolving credit facility.
The banks involved in the credit facility included Chase Manhattan and First National City Bank, and the lobby groups had caused the withdrawal of some $25 million worth of funds from these institutions. According to the documents, European-American was the main organiser of these loans. European-American was jointly owned by six of the largest banks in Europe: Deutsche Bank of West Germany; the Societe Generale, France; Midland Bank, UK; Amsterdam-Rotterdam Bank NV of the Netherlands; the Societe-Generale de Banque SA of Belgium; and the Creditanstalt-Bankverein of Austria.
Iscor and Eskom were generally the fronts for these loans, and would issue paper in exchange. A total of Rx billion in loans was made to Iscor at this time. A internal memorandum classified ‘secret’ from the South African Secretary for Finance to the Secretary for Foreign Affairs, dated 26 April 1974, stated that ‘The European-American Banking Corporation … is … continuing to arrange extensive loans to South Africa; in the most recent case the funds are being channelled through a subsidiary in Panama.’
So, the money was coming in through Panama, and obviously arrangements were necessary to pay it back. The great advantage of Panama was that its laws did not require companies to be audited – a strategy designed to attract banking and investment business to complement all the cash that the drug industry sucked in. Of course, when planes fly out with drugs, they seldom fly back empty. Usually, they carry guns. Or, conversely, when military supply planes fly out, for example to Vietnam or Afghanistan, they don’t fly back empty either…
You don’t have to believe that, but Panama was definitely a route via which South Africa received not only its cash, but also its arms – and via which it made its repayments outward, and Glazer, with his mining royalty cash machine, was at the centre of it.
Exactly one year after Glazer died, South African Breweries directors decided ‘it was “desirable” to assign all the “right, title and interest” in the “Carling” (Black Label) trademarks from Southern Investments NV in the Netherlands Antilles (a Caribbean tax haven), to Avalon International Inc, a Panamanian company with its offices at Arias, Fabrega & Fabrega, Bank of America Building in Panama City’ (noseweek 51, November 2003). On the face of it, this was an simple loan-back scheme.
New York Mafia kingpin Mayer Lansky perfected this technique: He used to send the skim from his casinos in America out of the country by a variety of methods, from the more simple priest-carries-briefcase option to a more elaborate trick that involved cashing in an unused first-class air ticket at some foreign destination. Once the money was overseas it would be deposited into a Swiss bank account in the name of a Liechtensteinian anstalt (a company that was allowed to have anonymous shareholders); the anstalt would then ‘loan’ the money to one of Lansky’s American companies. He could then get more money out – legally this time – through the interest payments on the loan and the repayment of the capital. South African Breweries was doing the same using the Black Label trademark, which vested ultimately with a company called Niagara 18 in Holland (noseweek 51, November 2003)
At the same time, Breweries was collecting royalties from the sale of Black Label in the so-called ‘independent homelands’, where Sol Kerzner (who was on the board of SAB at the time[CONFIRM]) had been allowed to set up casinos. The combined cash business of beer – sold mostly through shebeens – and casinos must have been too tempting for words. What better way to launder the skim than to repay the government’s foreign loans – and have them overlook your tax returns in exchange? Glazer was clearly running the same operation with mining royalties. (These days, of course, the ruling party has not been given access to the same system, which may explain why the number of cash-in-transit heists has rocketed since 1994.)
The arms from Panama might have been flown in, but they’d have come to South Africa by ship. This begs the question, who did that shipping? A person well known to the writer insists that in the mid-1960s Glazer – yes, a South African! – leant $1million to Meyer Lansky via his (Glazer’s) cousin Dennis Bileca; the amount was used to finance the Mary Carter Paint Company, which, in 1966, won a gaming license for Paradise Island and developed the 500-room Paradise Island hotel, complete with a gaming casino, showroom and a bridge linking the island to Nassau. By May 1968, the resort had become so successful that the island subsidiary of the Mary Carter Paint Company had overtaken the parent paint company and was reborn as Resorts International, Inc., which Sol Kerzner later acquired and eventually sold. In 1994 Sol Kerzner, in the form of Kerzner International, infused new capital into the Bahamas with the development of the Atlantis Resort.
On the board of Kerzner International is Peter Buckley, chairman and CEO of Caledonia Investments, a UK investment trust listed on the stock exchange. (Kerzner, in turn, is a director of Caledonia.) Holding nearly 40% of the share capital of Caledonia is the Cayzer Trust Company Ltd, founded on the wealth of the Cayzer family, which owned the Clan Line Steamers – they of the red-and-black funnels – that plied the Cape route from Great Britain to India from the late nineteenth century. The Clan Line grew into one of the largest cargo-carrying fleets in the world until in 1955 it merged with Union Castle to become British & Commonwealth Shipping Company Ltd (B&C;). With the growth of affordable air travel and the advent of containerisation in the sixties and seventies, the Cayzer’s decided to diversify. They added Servisair to their already useful Dock Services operation, thereby controlling everything that got loaded and offloaded in both the harbours and airports of Great Britain. They also formed a small airline and a helicopter company, but ultimately the shipping revenue was diverted into the stock market and the investment trust replaced the original business.
Sir Nicholas Cayzer, who became chairman of B&C; in 1958 following the death of his uncle, Lord Rotherwick, was also the president of the UK-South African Trade Assaociation (Uksata), which was formed in 1966 and which ‘became a zealous apologist for Pretoria’ (Black & Gold: Tycoons, Revolutionaries & Apartheid by Anthony Sampson, p118); Sir Nicholas ‘usually saw the prime minister when he went to Pretoria’ (ibid). At the time ‘British and American businessmen also worked closely with a well-funded new lobby, the South Africa Foundation, which had been formed just before Sharpeville to improve the country’s image abroad’. It counted among its supporters Harry Oppenheimer, Anton Rupert and Charles Engelhard. (Dr Danie Cronje is Absa’s representative today.)
In 1987 Caledonia acquired a 20% stake in Close Brothers, presently the UK’s largest independent listed merchant bank which was a subsidiary of Consolidated Gold Fields for a short period from 1974 until a management buyout in 1978. A director of Gold Fields at the time, Lord Denman, is still an adviser to the board of Close Brothers today. Consolidated Gold Fields held shares in Crest International Securities – formerly Siberian Syndicate Ltd – which Glazer used to acquire Ashbourne Investments Ltd around the same time (see banking chapter). And guess who had a 10% share in The Siberian Syndicate Ltd in 1913 and sat on the board of that company? Arthur (later Sir Arthur) Fell, chairman of The African City Properties Trust Ltd. And where did the money come from for the management buyout of Close Brothers from Consolidated Gold Fields? Midland Bank (now HSBC).
Glazer had a series of numbered accounts at Midland Bank in the UK, which was one of the banks listed in the Frankfurt Papers as making loans to South Africa. A joint shareholder in European-American was Amsterdam-Rotterdam Bank (AMRO), which merged in 1990 with Algemene Bank Nederland (ABN) to become ABN-AMRO, which took over European-American in 1991, and on whose investment advisory board that ex-Lord Mayor of London from the Credo Property Group also sits. In mid-1985, at precisely the time when South African Breweries opened Avalon International in Panama, another group of South Africans were busy doing a deal in Holland that would set up a whole parallel structure: The deal involved Financiere Credit Suisse First Boston, through its subsidiary Sodefi AG, and Ian Kantor, then-chief executive of Investec Bank in South Africa. He’d resigned in April and moved to Holland, where he established Investec Bank AG in August 1985.
Which brings us back to Credo, because according to Liliane Barnard, Credo is ‘a young Investec’. Credo even has the chairman of the Investec Property Group, David Kuper, on its investment committee. It also has a former employee of Midland Bank (now HSBC) on its property management team, although this may be sheer coincidence. Credo Sterling Properties Ltd is registered in the British Virgin Islands. The London operation goes by the name of the Credo Property Group Ltd, while its international operation is run out of the Bahamas – or Panama, depending on which way you look at it.
An email from Sam Glazer – Benny’s son and the administrator along with Feinstein and Jaffe of his estate, to a Mr M Soames of Knight, Frank & Rutley dated 29 June 1992 indicates that it had been suggested to him that he should consider buying the troubled Canary Wharf in London. His reply went: ‘We certainly would not be interested in investing in a property which is mainly vacant and without any income flow. We are not in any hurry to make an investment and are quite prepared to wait for the right opportunity.
‘Perhaps the most appropriate investment for us would be a blue-chip property which a cash-strapped developer is forced to sell.’ Clearly there was lots of cash sloshing around in his pockets.
In a ‘rare interview on the eve of his retirement’, published in the Sunday Business Report on 5 April 2003, Julius Feinstein told reporter Winnie Graham that he was ‘strongly against the introduction of further legislation to control the auditing profession’. The way he saw it, enough was enough: There were already two industry watchdogs in the form of the SA Institute of Chartered Accountants and the Public Accountants and Auditors Board. If practitioners did not comply with standards and regulations they would be ‘severely dealt with’. Which begs the question: How does one deal with a person who has been entrusted with upholding the standards, but who has been the puppetmaster for one of the biggest and most well-organised asset strips the world has ever seen? The way the Hebrew University did it was to create the Julius Feinstein chair of accounting, ‘acknowledging his philanthropy and professional achievement’. Chevra Kadisha, (The Jewish Helping Hand) paid tribute to his firm for its ‘longstanding contribution and service to the Chevra Kadisha’. Perhaps all we can do is accept what he said as his conclusion to the matter: ‘“Fraud is rampant worldwide and not just in South Africa,” he said. “Man’s greed has made it a problem.”’ The article continues: ‘He is a man well known for his mentoring skills and many of South Africa’s top business leaders were nurtured by him. Among them are Liberty Life founder and chairman Donald Gordon, Sage chairman Louis Shill… Former finance minister Derek Keyes also worked for the firm for a while.’ Then comes the double whammy: ‘Feinstein sees himself as truly South African. He speaks sadly of the many talented people who have left the country to make their mark elsewhere. Neither he nor his family have ever been tempted to emigrate… [he] believes South Africa has a rosy future.’