SA doubles down on double standards

The state was the biggest beneficiary from the collapse of the Tannenbaum Ponzi scheme

- Justin Brown

IRONICALLY, THE SOUTH AFRICAN government ended up being the biggest beneficiary from the col-lapse of Barry Tannenbaum’s multi-billion-rand Ponzi fraud rather than the creditors.

Readers will recall how hundreds of wealthy South Africans were tempted with too-good-to-be-true quick profits to invest large sums – some individuals invested tens of millions of rand – supposedly to be used to fund the importation of the raw materials used to manufacture drugs for the treatment of HIV/Aids.

The documentation was faked and simply served as a cover for a cash pyramid or Ponzi scheme – essentially, an illegal form of gambling. Money invested by later players is used to pay profits to earlier players. Those who enter early stand to make huge profits, the bulk of players who buy in later will probably lose all they invest when the collapses – which it inevitaby must when the scheme can no longer recruit larger and larger numbers of new investors.

Making matters worse for the numerous latecomers to the scheme – which was sold to them as a legitimate, though somewhat miraculous, investment – when it collapsed in 2009, SARS and the National Prosecuting Authority’s (NPA) Asset Forfeiture Unit (AFU), between them grabbed over R91 million found in the operators’ bank accounts.

A high court judge placed Tannenbaum’s local estate into provisional liquidation in June 2009, and the order was made final in August of that year. In July 2009, the AFU provisionally froze three accounts held by Darryl Leigh, one of Tannenbaum’s main accomplices.

NPA Gauteng spokesperson Phindile Mjonondwane said that the AFU had subsequently obtained four court orders against Leigh and another Tannenbaum accomplice, Dean Rees, which had garnered a total of R58.4 million.