5. From Russian mining to exhaust fitting

When Ford Motor Co ran into trouble just as the new millennium dawned, it decided to offload some of its unnecessary baggage. One of the companies it planned to dispose of was the pan-European exhaust fitment franchise Kwik-Fit, which it had acquired in 1999 for $1,6 billion (£1 billion). However, when the bidder’s auditors did a quick check they found a $5 million (£3,4 million) hole in Kwik-Fit’s books; apparently the company had not been accounting for its short-term creditors properly; the effect of this was to overstate its profits and the company’s overall value. Ford finally got rid of the company – to CVC Capital Partners, the European private equity arm of America’s giant Citibank – for $500 million (£330 million), taking a knock of over a billion dollars at a time when it could ill afford it.

Of course, the previous owner of Kwik-Fit, Sir Thomas (Tom) Farmer, pleaded ignorance. However, one would have to assume that the devious accounting arose during his tenure of ownership, not Ford’s. The public cried, ‘Another Enron!’, particularly since Farmer’s auditors had been Arthur Andersen, the global auditing firm that was brought to its knees by the accounting scandal that rocked the American power giant. However, a closer look at the history of Kwik-Fit shows that its core business was property ownership and that it used a company registered in England with a history of involvement in Russian and South African mining – and later of property ownership in England – to reverse list on the London Stock Exchange in 1981. Interestingly enough, Farmer acquired control of this company – it was called Crest International Securities – from our own Bernard Glazer.

Glazer’s point of entry into and original involvement in Crest is not known at this stage, as the records for Crest are missing from the Companies House file for the years 1959 to 1969. However, by the time Farmer reversed his three companies into Crest, Glazer held 30,9% of the issued share capital. It was this 30,9% that Farmer initially acquired, through a holding company called Angliana Ltd. Farmer’s subsidiary companies were called Tom Farmer Ltd (TFL) and Parben Ltd; the latter had a subsidiary called Arrowspeed. TFL’s assets consisted of 17 purpose-built workshop sites spread around England and Scotland, while Parben held 16 more. Interestingly, Farmer had acquired these properties in two blocks only a year before: The 17 sites in TFL were acquired from a company called Nationwide Properties (NW) Ltd; the 16 in Parben, from Trucaris Nominees Ltd. A share issue immediately after the deal saw a company called Ridgefield Nominees Ltd holding almost 50% of the issued share capital. Information on these companies is given below.

Whether Sir Tom was simply the most brilliant apprentice mechanic ever to qualify, or whether he had another ace up his sleeve is not known, but the official version of his history goes like this: Born in 1940 in Edinburgh, he left after completing his apprenticeship in 1964 and started his own business, Tyres & Accessory Supplies; he sold this a mere four years later for a whopping £450 000! After this meteoric success, he ‘retired’ to America, where he soaked up all the business skills he possibly could before returning to launch Kwik-Fit in 1971. Or so the Internet version goes (http://www.geo.ed.ac.uk/scotgaz/people/famousfirst 595.html). Perhaps his inspiring visit to the US lasted only a few weeks or months, but the fine print in the contract for the purchase of the shares in Crest states that he had been in business with his partner, Walter Alec Stenson, since 1968 ‘in businesses which have involved the identification and acquisition of suitable retail and wholesale outlets throughout the United Kingdom’. The 33 centres they introduced into Crest were all let on ‘25-year full repairing and insuring’ leases to a public listed company called Automotive Products Ltd. It’s not known whether Farmer was running his Kwik-Fit franchise through this company, but it does state further on that ‘neither TFL nor Arrowspeed is engaged in any other activity’.

The suspicion that Farmer’s business was a front that absorbed cash from some other kind of operation is heightened by the musical chairs that the directors played during the year that Bernard Glazer died and the fact that Crest emerged from that year with a new holding company despite not having recorded with Companies House any notices to shareholders nor minutes of meetings nor resolutions passed. But before we take that journey it may be more useful to go right back to the beginning.

Crest International Securities was incorporated in England in 1913 as The Siberian Syndicate Ltd. It took over the ‘undertakings and assets’ of a company that had been registered under the same name in 1905; the reason for this transfer is not known, although it may have been for secretarial reasons. The Memorandum of Association granted it the status of an investment holding company with a special interest in mining and mineral rights. The main asset it took over from its namesake was 50 632 shares in the Spassky Copper Mine Ltd, which was in Russia. The same draft extel card that relayed Tom Farmer’s history gave Crest’s history as follows: The company was incorporated in 1913 in order to pursue mining activities in Russia, but this object was frustrated by the Russian Revolution, following which the company invested its funds primarily in other mining companies.’

To stay with this period for a minute: The Siberian Syndicate’s address was given as 60 London Wall, which today is the address for the Baring Foundation, founded in 1969. According to the Baring Foundation’s website, www.bvcp.ru, ‘From the 1850s until [the Russian Revolution occurred in] 1917, Baring’s [was] the financial agent in London to the Imperial Russian Government.’

But more important for our story is that Arthur (later Sir Arthur) Fell was the biggest private individual shareholder in The Siberian Syndicate, with some 10% of the issued share capital; he was also a director. Fell was simultaneously chairman of the African City Properties Trust, which was at the centre of the Glazer property portfolio and which the Blue File alleges may have been a front for the cash from mineral rights. The only shareholder with a greater holding than Fell in 1913 was The Transvaal Agency Ltd, which gave a London address and held about 20% of the shares.

Details of Crest’s investments in mining companies are not known, given the big chunks that are missing from the files prior to 1970, but the company did emerge in that year with 63% of its shares being held by Standard Bank Nominees Ltd of 10 Clements Lane, London. There are no records of a Standard Bank Nominees Ltd ever having been registered in England. Today one of the most prominent shareholders on the JSE Securities Exchange – and one that has proved to be particularly prominent in the companies central to the Glazer case – is Standard Bank Nominees (Transvaal) Ltd. Could the Transvaal Agency Ltd and the two Standard Bank nominee companies mentioned above ultimately all be the same, with the same beneficial shareholders?.

A statement in the 1972 financial statements – the first on record – reveals that The Siberian Syndicate held shares in Consolidated Gold Fields Ltd, which it disposed of, along with all its other mining interests, during that year. Crest also had a cluster of South Africans on the board, three of which shared the surname Lubner. The Lubner family owned an eponymous furniture retail chain in South Africa, but their real wealth came through their plate glass manufacturing company, Plate Glass (PG, today PGSI); the company was a world leader in the field of auto glass and exported patents and materials to all corners of the globe, including America and Japan. In 1983 PG merged with the UK giant Pilkington Glass to form Glass South Africa, but Pilkington sold off this share in 1992 – to South African Breweries, which ended up with a 68% share; the brewery offloaded this share in 1999 to two Belgian companies, D’Ieteren and Cobepa; the latter is a listed investment bank active in the Benelux countries and Canada. Today the Lubner operation is one of the world’s largest automotive glass suppliers in the form of Beltron International.

It’s not known who the Consolidated Gold Fields shares were sold to, but it was a mining finance house and secondary banking activity was at its apex. President Nixon had closed the gold window in August 1971, a debt money system with floating exchange rates had been introduced; there was opportunity for profit and everybody wanted a piece of the action. Amidst the stampede, a small merchant bank called Close Brothers was bought by an investment trust called London & Western in 1972. Within a year this bank would try to buy Consolidated Gold Fields’s export finance subsidiary Tennant Guaranty; instead, Consolidated Gold Fields turned around and, through its subsidiary C Tennant, Sons & Co, bought the shares of London & Western, which held Close Brothers, for £2,7 million. A management buyout in 1978 would sever this link, but Close Brothers would continue to have an intimate relationship with Consolidated Gold Fields throughout the next three decades; this relationship continues today, with Lord Denman, for many years a director of both Consolidated Gold Fields and Close Brothers, still an adviser to the latter. (The MBO was supported by the Keeling family through their issuing house London & Yorkshire Trust, and their investment trust, called Safeguard. The directors paid for their share through loans from Midland Bank, which was the bank for Crest and other Glazer companies.)  Close Brothers also has strong links to the apparently anomalous bedfellows Anglo American and Kerzner International. These will be explained later.

The year 1972 was also the year that Lionel Casper and Brian Simmons acquired The Siberian Syndicate through their own investment trust, called London Cavendish, and changed its name to Crest International Securities Ltd. As the Ashbourne Investigation report makes clear, their major client at the time was Bernard Glazer, and their target was to form their own merchant bank, with Crest as the holding entity. Just like the former Samuel Montagu employees who formed London & Western and acquired Close Brothers, Casper and Simmons went after Ashbourne, with its merchant banking subsidiary ES Schwab. Sadly for them, though, the market turned just as they were about to make their bid for the company, and they were forced to stall.

Until the relaxation of exchange control regulations in England in 1979, a non-resident of the UK could not control more than 10% of the shares of a UK company. Glazer was a South African citizen, so his involvement would always have involved fronts. According to the Ashbourne investigation report, by 1972 Casper had acquired 30% of the shares of Crest ‘through purchases made by London Cavendish, certain of its investment clients and associates, and himself and Mr Simmons’. It’s not known who these ‘clients and associates’ were, nor what percentage of the 30% they held, nor what the total value of the holdings were.

Another interesting historical point is that the auditors for Crest were Annan, Dexter & Co, which became Dearden, Lord, Annan, Morrish and, later on, Dearden Farrow, who would be the auditors for Boohat Thirty-Nine, the company that acquired the shares of Volkskas International via Coptic Finance Ltd a short while before Glazer died in 1984. The address for The African City Properties Trust in Johannesburg, and one of its main assets, was Annan House. The chairman of Consolidated Gold Fields of South Africa Ltd from 1944 through 1960 was Robert Annan.

Ronnie and Bertram Lubner, along with most of the other board members who’d been with them, resigned from Crest following the takeover by Casper and Simmons.

Gerald Lubner remained, but he would eventually sue the company for breach of contract when his office was terminated prematurely.

Casper and Simmons attacked the market hungrily, and by mid-1973, just before it collapsed spectacularly, they had merged with another investment trust (London & Foreign) and held either 50% or 100% interests in ten companies, each of which held a property or listed securities portfolio; Crest was planning a merger with a second investment trust, Corporate Guarantee, with which it held – along with Bernard Glazer – a 43% share in Ashbourne; the latter company had about ten industrial and landholding subsidiaries of its own, plus its own bank. The Crest/Corporate/Glazer consortium was preparing to make its obligatory offer for the outstanding shares in Ashbourne when the UK property and stock markets collapsed in November 1973.

No financial statements were prepared during 1974 as they tried to sort out the mess, and in the financial statements for the 18 months ended 31 March 1975 Lionel Casper, the young 32-year-old chairman, explained the situation like this: ‘…the group’s financial position has reached a critical stage … [however] there is … some potential for recovery in the value of the group’s retained investments. The purpose of a reorganisation would be to stabilise the financial position of the Group, enabling the anticipated potential of these investments to develop to the advantage of shareholders. The principal asset upon which the future of the Group is considered to be based is the Group’s major property in Prinsengracht, Amsterdam. The proposals and means of effecting a viable reconstruction are in the course of being finalised, and it is hoped that shareholders will give it their unqualified support in due course.

‘Our special thanks … to Mr Bernard Glazer whose preparedness to capitalise his very substantial unsecured loan to the company (£213 322), which itself arose through the repayment by him of one of the company’s largest bank borrowings, has created a real possibility of a capital reorganisation.’

An orderly exit followed, with Bernard Glazer not only allowing them to capitalise his loans to the company, but also taking up new share issues until he held more than 30% of the company. Most of the assets were converted to cash, and it appears that just as Glazer bought Ashbourne through the back door using Incentive Investments – ostensibly owned by a Mr Faust, who by all appearances was nothing more than a company secretary – he also bought some of the companies from Crest through the back door: At the time of the transfer of ownership of Crest to Tom Farmer, a contract still pending was the sale of the share capital of one of its subsidiaries, Crest International Holland BV, to Faust NV for a cash consideration of DFl19 000 (equivalent at that date to about £4 150). An inspection of the files for Ridgefield Nominees will make for interesting reading and will answer the question: Did Glazer perhaps hang on to Crest as well? Nowhere does it say how, or how much, he was paid for his 30,9% share.

On the face of it there should be no grounds for suspicion: Glazer wanted to recoup his losses in the least disruptive way possible. By the time Farmer had moved in during early 1981 the company had four subsidiaries, all of which were dormant, and a net asset value of £318 000, mostly in the form of cash. After Farmer took over it shot up to £2,8 million and beyond. But the movement of directors and the chain of events that took place from late 1983 until early 1985 (Glazer died in July 1984) deserve further investigation.

In the financial statements for the period ended 29 February 1984, it says: ‘On 22 April 1983 all of the issued share capital of the company was acquired by Kwik-Fit (Tyres & Exhausts) Holdings plc and the company became a wholly-owned subsidiary of that company.’ Kwik-Fit was the tenant of a ‘warehouse and exhaust centre’ in Edinburgh which was the main property asset of Parben Ltd; in effect the tenant had taken over the landlord, which is not impossible. More importantly, the 1984 financial statements were only lodged with Companies House in February 1985, almost a year after the financial year end. There was a change of registrars during 1983, from Midland Bank to Ravensbourne Registration Services Ltd, and a new secretary, Robert Huthersall – who was not at this stage appointed to the board – replaced Brian Simmons on 12 April 1984.

Walter Alec Stenson, the chairman, and James Brown, the property director, also resigned prior to July 1984 and were replaced by Duncan Whyte, the new chairman, who was also a partner in Arthur Andersen, the company’s auditors, and one David Henry Ishmael Jenkins. Apart from Brown, all these movements happened officially on 30 Dec 1983 and the forms were lodged with Companies House on 12 Jan 1984. Tom Farmer remained on the board throughout.

Ervin Landau, who had been with the company for a number of years, and whose legal firm represented the company throughout the period – and still does today – resigned on 5 October 1984, as did David Jenkins, who had only been on the board for nine months. A handwritten date on the form submitted to Companies House is dated 10/10/84, but the form is not stamped); both were still listed as directors in the 1984 accounts, although those accounts were only lodged with Companies House on 6 February 1985. It’s unusual not to list changes of directorship that happen post-balance sheet, and the date of submission of the accounts suggests that this should have been possible.

These irregularities form a pattern similar to that which beset the other Glazer-owned UK companies around this time, including Ashbourne Investments, Coptic Finance, Incentive Investments and Volkskas International. It’s worth noting, too, that at the time of the takeover by Tom Farmer, Crest applied for admission to the Unlisted Securities Market (USM), which was an alternative to listing on the Stock Exchange that was aimed at the smaller company wishing to expand its business with the assistance of a public market in its securities but without being subject to the same degree of regulation as listed companies.

Pertinent as well is the fact that a share restructuring took place and yet in the files no mention was made of any such plan and no explanation was given. There were no contracts, no minutes, no resolutions passed and no circular to shareholders.

The annual return that followed this restructuring was dated 29 June 1984, but was only lodged on 14 January 1985. Companies House requires these forms to be submitted within fourteen days of the annual general meeting. However, no mention of such meeting was made in the 1984 accounts; the only oblique reference to a meeting is one made regarding the presentation of the Budget on 13 March 1984. The previous annual return was dated 5 April 1983 and was lodged 10 June 1983, two months after the aforesaid date. A ‘bulk list (over 10 pages)’ of shareholders was submitted with that earlier return, made up on 5 April 1983. It would be useful to view this list. (The 1984 annual return in fact showed one share in the name of Kwik-Fit Euro Ltd (a private company) and the remainder in the name of Kwik-Fit (Tyres & Exhausts) Holdings plc as aforementioned.) Another quirky fact that may have more relevance than we want to admit is that the name Kwik-Fit was not the genius of Tom-Farmer: Kwik-Fit (Tyre & Exhausts) Holdings plc (company #00362333) had been incorporated under that name in England on 12 July 1940, the year Tom Farmer was born! Its name was changed on 20 July 1987 to Kwik-Fit Holdings Ltd, at which time it was also changed to a private company.

The simple question is: Did Ridgefield Nominees Ltd dispense of its shares in Crest International Securities in exchange for shares in Kwik-Fit (Tyres & Exhausts) Holdings plc? Once again, who was the beneficial owner of these shares? Ridgefield Nominees was incorporated in 1972 and acts as a nominee for Henry Cooke, Lumsden & Co, a stock broking firm with a strong presence in the English midlands. Its auditors from 1976 were Thornton Baker, who in 1986 became Grant Thornton.

The first loss since Tom Farmer had come roaring in was made in the 1984 financial year; it amounted to £129 150. The annual accounts looked very different in other ways, too: In particular, fixed assets were reduced from millions to a nominal figure, investments in subsidiary companies were put at £1 093 060, while amounts owing by subsidiaries climbed from a nominal figure to over £7m. The company had become an intermediate holding company so there were no more consolidated accounts.

The 1985 annual return was made up on 1 October 1985 and lodged with Companies House on 4 October, three days later, rather more promptly than the 199 days that the 1984 returns had taken.

While all this was going on, a parallel show with an interesting twist had taken place: On 12 February 1980 De Beers announced that it had acquired 24,4% of the shares of Consolidated Gold Fields Ltd and had a right of first refusal over another 1%. It did not, however, ‘intend to acquire further shares which would require it to make a formal offer’. De Beers planned to ‘offer half its total holding to Anglo American Corporation of South Africa Ltd’. By the time this announcement was made the Secretary of State for Trade had, on the same day, appointed inspectors to investigate this ‘operation which has been referred to as a “raid” on the market’. (Department of Trade Investigation under Section 172 of the Companies Act 1948. Report by Bryan James Welch and Michael Charles Anthony Osborne.)

It turned out that all was above board, but here’s an interesting twist that requires further investigation: At the beginning of 1987 Caledonia Investments, the low-profile investment company controlled by the Cayzer family, acquired a 10% stake in Close Brothers. (Sir Nicholas Cayzer, it will be remembered from the property portfolio chapter, had had close links with the South African government in the 1960s through Uksata.) Later that year, Close Brothers ‘advised Caledonia on the disposal of its large shareholding in the financial and industrial conglomerate British & Commonwealth Holdings Ltd (B&C), for £427 million, of which a large proportion was deferred over several years. Some two years later B&C collapsed … but all of the deferred consideration then outstanding to Caledonia was safely received thanks to bank guarantees shrewdly negotiated back in 1987.’ Around the same time, in July 1987, Close Brothers ‘announced a simultaneous rights issue and share placing which together raised some £24 million of additional capital for the group. The share placing was with Caledonia Investments which thereby increased its stake in Close Brothers to around 20%.’

The same history according to the website of Caledonia Investments (www.caledonia.com) puts it this way: ‘Proceeds of a share buy-back undertaken by B&C (were) received ‘just three days before the infamous Black Monday of October 1987, in a move still regarded by commentators as one of the most prescient of its kind in recent history’.

In this same year, Sol Kerzner left South Africa ‘to settle in the UK and to focus on European interests’. (Sunday Times, October 2001) As of July 2003 Caledonia held 19% of Kerzner International and had voting rights on a further 10%; Mr Peter Buckley, chairman and chief executive of Caledonia, sat on the board of Kerzner International – and of Close Brothers. The chairman of Close Brothers was Sir David Scholey, who was also a director of Anglo American, which was due to receive half of the Consolidated Gold Fields shares bought secretly by De Beers in 1980. Another director of Close Brothers is Peter Sacheverell Wilmot-Sitwell, who was a partner of Rowe & Pitman, the stockbrokers when De Beers bought the CGF shares and who gave oral testimony at the investigation that followed. Following Rowe & Pitman’s merger with SG Warburg, Wilmot-Sitwell became chairman of SG Warburg Securities and vice-chairman of SG Warburg Group until he retired in 1994. He is currently chairman of Mercury World Mining Trust plc. A director of Caledonia Investments, which, as mentioned, holds 19% of Close Brothers, is Charles Allen-Jones, who was a partner for 33 years in the international law firm Linklaters, who were the solicitors in London for De Beers and supplied ‘a substantial amount of information’ to the investigation team.

Meanwhile, the clues to the true nature of Kwik-Fit’s operation appear to run dry, but in 1995 a company called Kwik-Fit Insurance Services was formed. It sold car, home, travel insurance, breakdown cover, legal expenses cover, term life assurance and payment protection. Now watch this: A director of Kwik-Fit Insurance Services Ltd is Eric Sanderson, former chief executive of the British Linen Bank, which Tom Farmer used to fund his acquisition of Crest; Sanderson was also on the management board of Bank of Scotland and on the board of a company called City Group, a company which ‘provides outsourced regulatory compliance and head office finance services to small listed companies’. Its clients are variously listed on the London, Luxembourg and Johannesburg Stock Exchanges. One of its clients is Falcon Investment Holdings Societe Anonyme, incorporated in Luxembourg. Its activities ‘comprise the function of central supervision and control of the group’s mining interests through a wholly owned subsidiary Falcon Mines Holdings Societe Anonyme. These interests include the Group investment in Falcon Gold Zimbabwe Ltd (Falgold), a 57,1% owned subsidiary, in Olympus Gold Mines Limited, a 66,67% owned subsidiary, and in Minera Falcon de Chile SCM, a 52% owned subsidiary. Falcon’s shares are listed on the Luxembourg, Johannesburg and Zimbabwe Stock Exchanges and are occasionally traded on the London Stock Exchange.’

Another client of City Group is Monteagle Holdings Societe Anonyme, a ‘financial holding company incorporated in Luxembourg [with] a portfolio of investments … in general trading, freehold properties, commercial agriculture and gold mining’. The company is listed on the Luxembourg, Johannesburg and London Stock Exchanges. It needs to be investigated whether either of these companies hold or control assets once belonging to Bernard Glazer and not declared to his beneficiary Michele.

One of the main clues to this suspicion is that another member of the board of City Group is Bryan Myerson, who qualified as a lawyer in South Africa in 1985 and, in 1994, established a company called Active Value Advisors Ltd along with another South African, Julian Treger. Active Value claims to ‘invest in undervalued publicly listed companies in the UK and Europe. However they are seen as aggressive corporate raiders in the City and in the past few years they have launched attacks on a European media company as well as Primedia in South Africa.

An April 2003 Active Value South Africa (Avasa) put together a consortium which spent R123 million to acquire a 20% stake in ‘embattled’ South African life assuror Sage. The Avasa consortium included ‘several well known South African investors’, including Transnet; Myerson claimed that the other investors in his consortium ‘could not be disclosed at this stage’. (www.moneyweb.co.za, 9 April 2003) Alongside the Avasa consortium, taking up the rest of a R350 million recapitalisation of Sage were its erstwhile backers Absa, Remgro and the Mines Pension Fund. At the time of this announcement, Sage also announced that it had ‘managed to sell’ its Bermuda operations to Old Mutual plc for an ‘undisclosed sum’. Myerson and Treger sit on a reshuffled Sage board, which is headed by Dr Danie Cronje of Absa, who was on the board of Volkskas International when Bernard Glazer resigned in 1982, some 18 months before he died under suspicious circumstances.

Another clue that the link between Glazer and Kwik-Fit continued after the Tom Farmer deal comes to us through a 100% Glazer-owned company called CCP Crest City Properties Ltd: CCP Crest was incorporated in 1977 with the registered address given as Barnett House, 53 Fountain Street, Manchester and Ervin Landau as a director. Landau was the eponymous partner in the law firm Halliwell Landau, which represented Kwik-Fit; he was also a director of Crest International Securities until October 1984; he resigned from that company a few months after Glazer died. During all this time Landau held one share in CCP jointly with Bernard Glazer, who also held the other 99 shares in issue. Glazer would be replaced by his holding company Amarena Holdings Inc in 1980 and Landau would be replaced as the joint holder of one share by “Executors of B Glazer (deceased)” in 1984. However, he remained on the board of CCP until 1988 when he was replaced by Bernard’s son Sam and Julius Feinstein, two of the three executors of the estate. Until this date, Landau continued to give his address and the address of CCP as Barnett House, Manchester. What’s interesting is that this became the address of Crest International Securities in 1984 when it was taken over by Kwik-Fit (Tyres & Exhausts) Holdings Ltd. Even more interesting is that Landau had listed Kwik-Fit (Tyres & Exhausts) Holdings as one of his directorships as far back as 1977, when he was appointed as a director of CCP! We know that this company was registered under the same name in 1940, so once again we ask, was Kwik-Fit really Tom Farmer’s idea? If not, what was its true purpose and what was Farmer’s true role? And what was Landau’s role, since he was clearly the point man between Glazer/Amarena and Kwik-Fit.

When Landau resigned from CCP in 1988 its address changed to 370/386 High Rd, Wembley, Middlesex, which was and still is the address of Landau Morley, the auditors for CCP. Possible connections to Ervin Landau and Michael Morley of Close Brothers are being investigated. At the same time, Crest International Securities moved with Halliwell Landau to its new address, St James’s Court, 30 Brown St, Manchester.

It may be sheer coincidence, but Societe Generale has a branch at Barnett House.

Societe Generale was one of the banks involved in secret loans to South Africa during the 1970s, when apartheid sanctions were in full force. Other banks involved in loans to South Africa which also had a presence in Manchester include ABN Amro, Citibank and HSBC (then Midland Bank). The British Linen Bank, which Tom Farmer used to finance his acquisition in 1980, also had a presence in Manchester. Two other banks of interest to our story which also have a presence in Manchester are Bank Hapoalim and Bank Leumi. Bank Hapoalim is Israel’s ‘leading financial group and largest bank with a global presence in key markets’; its name appeared as the banker for Crest International Securities along with Midland Bank in 1979. Bank Leumi, meanwhile, was founded in 1902 as the Anglo-Palestine Company by Dr Theodore Herzl, the founder of political Zionism ‘who prophesied the birth of the future State of Israel’, according to its website. Lord Mancroft, who came onto the board of the merchant bank ES Schwab – which became Volkskas International – after Glazer acquired it, was also a director of Bank Leumi.

There is no clue in the financial statements of CCP Crest City Properties as to what its real business was. In the valuation of Bernard Glazer’s estate by Kessel Feinstein done in 1984, CCP was ‘dormant’ with ‘its only asset being sundry debtors’; the value of its shares was given as being R48 058. The few statements that are available state that the company did not trade during the year and that the expenses of the company were ‘met by the members personally’. For most of the period until it was dissolved in 1997, the company applied for exemption from producing audited financial statements due to its dormant status. This is particularly relevant for the period leading up to the first disbursement in terms of Glazer’s estate, which fell due in 1994: No audited statements were produced for four years preceding that date.

A company within the same stable that reveals only marginally more of the real picture is Crest International Holdings Ltd. This company was a subsidiary of Crest International Securities until Glazer bought it out in late 1975/ early 1976. Crest, and later Glazer, held 80 of the 100 issued shares in this company. The other 20 were – and still are – held by a former director of Crest called Conrad Jeffrey Morris, who appears to be involved in various political lobby groups in Israel. One such group is the Israel Centre for Social & Economic Progress (Icsep), which was ‘founded in 1983 as an independent pro-market public policy think tank’ (www.icsep.org.il).

Crest International Holdings has 50% share in a subsidiary called Loncrest (Holland) BV which has two direct subsidiaries of its own: BV Holland Film and Beleggingsmaatschappij Paragon BV. Film has a subsidiary called Exploitatie Maatschappij de Munt BV. According to the 1993 financial statements, Paragon acquired the ‘economic ownership of the offices and shops, which form part of the so-called Plaza Building, in the Kalverstraat in Amsterdam’ in December 1983. Exploitatie held the legal ownership of the same property; Paragon apparently paid Exploitatie NLG7,1 million for the privilege of ‘economic ownership’.

The other 50% in Loncrest (Holland) BV is held by Ladbrokes plc, the UK betting and gaming arm of the Hilton Group. Ladbrokes entered the South African market in 2002 with an Internet operation that offered tax-free betting through its London offices, to the obvious ire of local bookmakers.

The bottom line for the companies falling under Crest International Holdings was their unusual accounting treatment, which is perhaps best summed up by forensic accountant Brian Watson, who studied them in 1996 on behalf of Michele Glazer’s attorneys at the time, Hofmeyr Attorneys. Brooks found that Crest did not operate a bank account and that large amounts of money were lent to its subsidiary Loncrest by Amarena, that these loans were recorded by means of book entries, that interest was charged on them, and that they were capitalized. This activity increased significantly from 1988, the year in which Landau was replaced on the board by Feinstein and Glazer junior. As Brooks pointed out, the administrators ‘coincidentally … undertook their first trip to Amsterdam during this time’. The administrators travelled to Holland in 1989, in which year Glazer Bros (the holding company for the Glazer Will Trust) also began to lend money to Crest.

On the face of it, the investment in the building was not a good one and was sucking money from Amarena. The administrators explained that they could not make a unilateral decision to sell it as Ladbrokes owned half and they’d been advised to hold onto it for a better price. According to the administrators ‘The price that was finally achieved set a new record … on the Kalverstraat’. However, Brooks found it ‘surprising that interest on the loan to Crest was accumulated. During the period … interest accounted for £1,3 million of the £2,2 million loans. In this was a genuine interest charge then the effect would merely be to inflate the figures of Amarena.’ One explanation that Brooks thought of for capitalizing the loan was that the other 20% shareholder, Conrad Morris, had not put in anything toward the loans  and the administrators were trying to ensure that Morris did not profit unduly by Amarena’s support of Crest. However, he reckons that it would have been ‘commercially expedient to liquidate Crest whilst Amarena’s exposure was still relatively small’. This might have saved the Trust some R13 million, which was written off in 1994 and 1995, just prior to the first disbursement, which was delayed until well into 1995.

Of course, Brooks did not have the bigger picture. He took the declared contents of the estate at face value. But he came close to the true state of affairs when he said that ‘the flow of funds between Amarena (and Glazer Bros), Crest and Loncrest cannot be positively identified.’ In a later point he states that ‘the cash, approximately R13,7 million, appears to have “disappeared”’. His final conclusion was this: ‘There exists a real possibility that: (a) cash was ‘moved’ from South Africa; and (b) removed from Amarena for some other purpose.’

The question that remains is, how long is the piece of string?