Rob Rose's The Grand Scam Launched at Novel Books with Julian Rademeyer
Award-winning investigative journalist Rob Rose has spent a number of years researching this story, which has culminated in his book, The Grand Scam. Introducing the book at its launch on Thursday evening at Novel Books, Julian Rademeyer, author of Killing for Profit (an expose of the illegal trade in rhino horn in South Africa) described it as a rip-roaring tale that is no quick-hit book. Besides telling the stories of family, friends and some of the investors who lost money and were brave enough to relate their experiences, the book also contains nuggets of history, such as elements of the history of Krugersdorp, and of Tannenbaum’s grandparents, who were the founders of Adcock Ingram Pharmaceuticals. It seems that Tannenbaum wanted to emulate their success.
Rose told the audience that Tannenbaum also had need of a lot of money as he was an online gambler for years, spending over R62 million and only recovering about R20 million. He seems to have managed to hide this from his wife, who also claimed to be ignorant of the fact that Tannenbaum had placed numerous assets in her name.
One of Tannenbaum’s agents who recruited a number of investors was Dean Rees, a lawyer who had defended the architect of the Miracle 2000 scheme. He lived a flashy lifestyle, buying expensive cars and jewellery and once renting a yacht in San Tropez and courting investors on board with French champagne. Investors were told that they were investing in components of anti-retroviral drugs, and were shown fake invoices, Reserve Bank letters and bank statements. One Darryl Leigh also purportedly made R140 million as an agent for Tannenbaum.
All the investors were told that they were a small select group and that the scheme was very hush-hush, which was one reason it was able to last for so long. And victims did make some money out of it initially. The level of embarrassment for those who lost money also helped the success of the scheme.
Several of the victims were at the launch. June Kraus, an opera singer from New York, who settled in South Africa in 1986, described how she was approached by Tannenbaum and Rees. “I was told there were only 60 investors, and the scheme was very secret.” She sank her entire R6 million inheritance into the scheme. She related how she received statements showing that her investment increased very rapidly. “R6 million would become R20 million in a year. When Rees went to Switzerland I knew something was fishy.”
Rose told how close to a thousand people ploughed R12.5 billion into the scheme, including the former CEO of Pick n Pay, the one-time head of the Johannesburg Stock Exchange and the ex-boss of OK Bazaars. Bernard Hotz, the legal representative for several of the investors, was also at the launch and said that the authorities appeared to be paralysed. Extradition papers for Tannenbaum, who fled to Australia, were drawn up but never signed. The National Prosecuting Authority, rather than trying to bring back Rees and Tannenbaum, are now making noises about going after local investors for participating in an illegal scheme – “stabbing the wounded” as he put it.
Rose managed to have several conversations with Tannenbaum while researching the book, who was quite chatty and willing to talk about himself, but very cagey when confronted or put in a corner. He is now working in insurance in “Runaway Bay” on the Australian gold coast!
Asked if there would be any recovery for investors from the liquidation of the scheme, guests were told that R80-90 million had been recovered, but legal fees so far amounted to R47 million and SARS will take a further R30 million, so there may be a very small dividend for the victims.
In trying to understand how Tannenbaum could cold-bloodedly con people, including his family and close friends, a lawyer who interviewed him in Australia said that, unlike Madoff, Tannenbaum showed no remorse at all, which points to the likelihood of him being a sociopath.