400 Millionaires Defrauded
SA PIG | Noseweek
SA PIG | Noseweek
Noseweek.co.za Editor Martin Welz says their information shows that some 400 millionaires invested an estimated R2-billion and speculation that sums of up to R15bn are involved (gone up in such a short space of time?) with businessman Barry Tannenbaum, with the promise of great returns.Barry Tannenbaum, a grandson of one of the co-founders of Adcock Ingram, together with Johannesburg attorneys Dean Rees and Daryl Leigh, have been running a pyramid scheme promising massive returns on investments. Investors were told they would score between 15 and 20 percent in three months, and their money would be used to finance the import of chemicals which, among other things, were required for antiretroviral medicines for the treatment of HIV and Aids.
BARRY TANNENBAUM TAKES S.A. MILLIONAIRES FOR A R15 BILLION PONZI IN THE PARK
On Friday last week Johannesburg businessman Christopher Leppan applied to the Johannesburg High Court to have Barry Deon Tannenbaum, until recently of Rivonia, declared bankrupt.Barry is the famously pious son of Harold Tannenbaum, mega-rich founder of Adcock Ingram, South Africa's second-largest pharmaceutical company.
Leppan told the court he had been persuaded to invest in what was supposed to be a hugely profitable scheme devised by Tannenbaum to finance the importation of raw materials required for the local manufacture of pharmaceuticals – so profitable that Leppan was promised a 20% return on his money every 12 weeks.
That's more than 80% per year.
Tannenbaum said he had advance orders from various major drug manufacturers, so there was no risk. The deal seemed so good that Leppan invested close on R3 million.
But when earlier this month he asked for his capital and interest – by now totalling R5m, Tannenbaum's cheques, drawn on his personal account at RMB Private Bank in Pretoria, bounced. The bank informed Leppan that Mr Tannenbaum – who has recently emigrated to Australia – had closed the account.
The court made an order placing Barry Tannenbaum's estate under provisional sequestration.
Nothing too remarkable there – until you learn that Mr Leppan is one of hundreds of South Africa's millionaires who have been caught out by Barry Tannenbaum and his representatives in the country's biggest ever cash pyramid or ponzi scheme.
Leppan says in his affidavit he was given the name of one man who had invested R30m. Noseweek has the names of many others: one of them is former Pick n Pay CEO Sean Summers, who invested over R50m, and claims he is now owed over R100m. Just so he shouldn't feel too bad about it, the former CEO of OK Bazaars, Mervyn Serebro, invested R25m and believes he is now owed over R50m.
Between them, an estimated 400 investors are believed to have lost R2bn or more. All of it has disappeared, most of it via a Hong Kong bank account, to... well only Mr Tannenbaum and two or three of his local recruiting agents know where.
Many were so seduced by greed, that they emptied their offshore dollar and euro accounts into Mr Tannenbaum's account. Now they're frantically selling the fancy cars that they bought in a fit of euphoria only months ago. If you're looking for a good deal go to Investment Cars in Bryanston, who have a new stock of good-as-new Porsches, Lamborghinis, Rollses and Bentleys, only slightly used by Tannenbaum's victims, on offer. Poor Mr Serebro has even put his house up for sale. (See stories, "Too good to be true").
Last Thursday about 200 of the investors attended a meeting at the offices of attorneys Routledge Modise in Sandton. The meeting was chaired by a partner in the firm, Warren Drue – who introduced himself as a fellow investor. There to represent a whole clutch of Cape investors who had invested over R100m between them were attorneys Craig Delport and Richard Goudvis. Surprisingly, also there to address them was Tannenbaum's main Johannesburg agent, attorney Dean Rees.
It has been estimated by some of those in the know that Rees made “hundreds of millions” out of commissions he earned by recruiting investors for the scheme. In February, when Tannenbaum had already defaulted on interest payments two months in a row and some investors had started asking nasty questions, Rees hired a private jet and flew to Switzerland with his wife and two small children. It is believed that shortly before that he bought a house in Lausanne for several million Euros, and another in Barcelona.
Last week he was back in Johannesburg and booked into suite at the Michaelangelo (R10 000 a night). He attended Thursday's meeting of disgruntled investors, apparently hoping to persuade them that he was as much a victim as they were, and that he was "on their side" in attempting to recover their money. Despite his best efforts – and attorney Drue's attempts to protect him from unsympathetic questioners, the majority of investors present clearly weren't going to take Reeses word for it. His Prada shoes, Ed Hardy Jeans ($1 000 a pair) and spectacular gold watch did not help the situation at all. (Friends say he has a collection of “investment” watches equal to that of the late great Brett Kebble.)
Immediately after the meeting Rees booked out of the Michaelangelo and was on a flight back to Switzerland.
Almost as well-known as a Tannenbaum recruiting agent is Daryl Leigh, who previously worked as a legal advisor for Nedbank Corporate and then for the Development Bank. Unlike Rees, he has taken to the shadows and is refusing to talk to anyone. Last year it became apparent that he had suddenly come into money when he acquired not only one but two Lamborghinis (their colour didn't quite match, so he paid an extra R120 000 to have them resprayed to match) -- and a Bentley. Two months ago he hit the headlines when he allegedly diced a friend in a Porsche down the William Nicol highway. The friend went off the road and was killed -- and Leigh now stands to be charged with culpable homicide.
So we have all the usual cowboys – why aren't we surprised to find the Lowenthals, father and son, in there with the best of them? -- but Sean Summers and Mervyn Serebro! John Storey of Cobalt Capital. Nic Pagden ex City Group (for a rumoured R40m)? Bruce MacDonald of Zenprop (said to be in for R50m)? Tim Hacker and Johnny Rosenberg? They all claim to have first consulted experts and auditors who assured them all was well! (How come the bankers handling this extraordinary flow of cash off-shore did not notice and ring the alarm bells?)The bottom line: how come all these smart businessmen somehow, with all their lawyers and accountants, never got around to using some plain common sense and asking themselves: if Barry Tannenbaum can afford to offer 20% for an eight or ten week investment – secured by firm advance orders from South Africa's biggest generic drug manufacturer, Aspen, why wouldn't he take the same firm order contracts to his own bankers, RMB and Investec, and borrow the money there at an extravagant 4% for two months – and keep the remaining 16% for himself? Charitable feelings for his fellow millionaires?
SA Ponzi Documents OnlineAnd did any of them give a thought to the idea that they were confident of earning easy billions because of the implied vast profits to be made out of South Africa's desperate need for anti-retrovirals to deal with the Aids crisis?
Quite apart from the obvious questions which Messrs Tannenbaum, Rees and Leigh are going to have to answer, are the big questions that the public of South Africa will want all these legal experts and masters of finance and industry to answer. How do we face a recession with that level of business acumen?
How it Works
PONZI schemes, named after 20th century US fraudster, Charles Ponzi, operate as a pyramid scheme that promises healthy returns on investment. It fraudulently pays its investors with money received from new investors. When no more new investors are found, the scheme collapses. Ponzi, who operated in Italy and the US in the early 1900s, based his scheme on the sale of postage stamps. Wall Street financier Bernard Madoff recently pulled off a similar scam for years, until he was bust by authorities. Madoff pleaded guilty last month to 11 felony counts, including securities fraud and perjury. His scam cost investors billions of dollars. Tannenbaum allegedly used a method similar to Madoff’s, persuading investors to pour money into his companies — Frankel Chemicals and Frankel International — by offering handsome, but not unbelievable, returns. Investors, who relied on Tannenbaum’s reputation as a successful businessman, transferred cash to his personal bank account, believing it would be used in a legitimate chemical business. Investors received dividends until last month — when the money box was found to be empty.
Source: SA PIG
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America Is in Need of a Moral Bailout
By Chris Hedges, Truthdig
By Chris Hedges, Truthdig
Mar 23, 2009
In decaying societies, politics become theater. The elite, who have hollowed out the democratic system to serve the corporate state, rule through image and presentation. They express indignation at AIG bonuses and empathy with a working class they have spent the last few decades disenfranchising, and make promises to desperate families that they know will never be fulfilled. Once the spotlights go on they read their lines with appropriate emotion. Once the lights go off, they make sure Goldman Sachs and a host of other large corporations have the hundreds of billions of dollars in losses they incurred playing casino capitalism repaid with taxpayer money. We live in an age of moral nihilism. We have trashed our universities, turning them into vocational factories that produce corporate drones and chase after defense-related grants and funding. The humanities, the discipline that forces us to stand back and ask the broad moral questions of meaning and purpose, that challenges the validity of structures, that trains us to be self-reflective and critical of all cultural assumptions, have withered. Our press, which should promote such intellectual and moral questioning, confuses bread and circus with news and refuses to give a voice to critics who challenge not this bonus payment or that bailout but the pernicious superstructure of the corporate state itself. We kneel before a cult of the self, elaborately constructed by the architects of our consumer society, which dismisses compassion, sacrifice for the less fortunate, and honesty. The methods used to attain what we want, we are told by reality television programs, business schools and self-help gurus, are irrelevant. Success, always defined in terms of money and power, is its own justification. The capacity for manipulation is what is most highly prized. And our moral collapse is as terrifying, and as dangerous, as our economic collapse.
Theodor Adorno in 1967 wrote an essay called “Education After Auschwitz.” He argued that the moral corruption that made the Holocaust possible remained “largely unchanged.” He wrote that “the mechanisms that render people capable of such deeds” must be made visible. Schools had to teach more than skills. They had to teach values. If they did not, another Auschwitz was always possible.
“All political instruction finally should be centered upon the idea that Auschwitz should never happen again,” he wrote. “This would be possible only when it devotes itself openly, without fear of offending any authorities, to this most important of problems. To do this, education must transform itself into sociology, that is, it must teach about the societal play of forces that operates beneath the surface of political forms.”
Our elites are imploding. Their fraud and corruption are slowly being exposed as the disparity between their words and our reality becomes wider and more apparent. The rage that is bubbling up across the country will have to be countered by the elite with less subtle forms of control. But unless we grasp the “societal play of forces that operates beneath the surface of political forms” we will be cursed with a more ruthless form of corporate power, one that does away with artifice and the seduction of a consumer society and instead wields power through naked repression. I had lunch a few days ago in Toronto with Henry Giroux, professor of English and cultural studies at McMaster University in Canada and who for many years was the Waterbury Chair Professor at Penn State. Giroux, who has been one of the most prescient and vocal critics of the corporate state and the systematic destruction of American education, was driven to the margins of academia because he kept asking the uncomfortable questions Adorno knew should be asked by university professors. He left the United States in 2004 for Canada.
“The emergence of what Eisenhower had called the military-industrial-academic complex had secured a grip on higher education that may have exceeded even what he had anticipated and most feared,” Giroux, who wrote “The University in Chains: Confronting the Military-Industrial-Academic Complex,” told me. “Universities, in general, especially following the events of 9/11, were under assault by Christian nationalists, reactionary neoconservatives and market fundamentalists for allegedly representing the weak link in the war on terrorism. Right-wing students were encouraged to spy on the classes of progressive professors, the corporate grip on the university was tightening as made clear not only in the emergence of business models of governance, but also in the money being pumped into research and programs that blatantly favored corporate interests. And at Penn State, where I was located at the time, the university had joined itself at the hip with corporate and military power. Put differently, corporate and Pentagon money was now funding research projects and increasingly knowledge was being militarized in the service of developing weapons of destruction, surveillance and death. Couple this assault with the fact that faculty were becoming irrelevant as an oppositional force. Many disappeared into discourses that threatened no one, some simply were too scared to raise critical issues in their classrooms for fear of being fired, and many simply no longer had the conviction to uphold the university as a democratic public sphere.”
Frank Donoghue, the author of “The Last Professors: The Corporate University and the Fate of the Humanities,” details how liberal arts education has been dismantled. Any form of learning that is not strictly vocational has at best been marginalized and in many schools has been abolished. Students are steered away from asking the broad, disturbing questions that challenge the assumptions of the power elite or an economic system that serves the corporate state. This has led many bright graduates into the arms of corporate entities they do not examine morally or ethically. They accept the assumptions of corporate culture because they have never been taught to think.
Only 8 percent of U.S. college graduates now receive degrees in the humanities, about 110,000 students. Between 1970 and 2001, bachelor’s degrees in English declined from 7.6 percent to 4 percent, as did degrees in foreign languages (2.4 percent to 1 percent), mathematics (3 percent to 1 percent), social science and history (18.4 percent to 10 percent). Bachelor’s degrees in business, which promise the accumulation of wealth, have skyrocketed. Business majors since 1970-1971 have risen from 13.6 percent of the graduation population to 21.7 percent. Business has now replaced education, which has fallen from 21 percent to 8.2 percent, as the most popular major.
The values that sustain an open society have been crushed. A university, as John Ralston Saul writes, now “actively seeks students who suffer from the appropriate imbalance and then sets out to exaggerate it. Imagination, creativity, moral balance, knowledge, common sense, a social view—all these things wither. Competitiveness, having an ever-ready answer, a talent for manipulating situations—all these things are encouraged to grow. As a result amorality also grows; as does extreme aggressivity when they are questioned by outsiders; as does a confusion between the nature of good versus having a ready answer to all questions. Above all, what is encouraged is the growth of an undisciplined form of self-interest, in which winning is what counts.”
This moral nihilism would have terrified Adorno. He knew that radical evil was possible only with the collaboration of a timid, cowed and confused population, a system of propaganda and a press that offered little more than spectacle and entertainment and an educational system that did not transmit transcendent values or nurture the capacity for individual conscience. He feared a culture that banished the anxieties and complexities of moral choice and embraced a childish hyper-masculinity, one championed by ruthless capitalists (think of the brutal backstabbing and deception cheered by TV shows like “Survivor”) and Hollywood action heroes like the governor of California.
“This educational ideal of hardness, in which many may believe without reflecting about it, is utterly wrong,” Adorno wrote. “The idea that virility consists in the maximum degree of endurance long ago became a screen-image for masochism that, as psychology has demonstrated, aligns itself all too easily with sadism.”
Sadism is as much a part of popular culture as it is of corporate culture. It dominates pornography, runs like an electric current through reality television and trash-talk programs and is at the core of the compliant, corporate collective. Corporatism is about crushing the capacity for moral choice. And it has its logical fruition in Abu Ghraib, the wars in Iraq and Afghanistan and our lack of compassion for the homeless, our poor, the mentally ill, the unemployed and the sick.
“The political and economic forces fuelling such crimes against humanity—whether they are unlawful wars, systemic torture, practiced indifference to chronic starvation and disease or genocidal acts—are always mediated by educational forces,” Giroux said. “Resistance to such acts cannot take place without a degree of knowledge and self-reflection. We have to name these acts and transform moral outrage into concrete attempts to prevent such human violations from taking place in the first place.”
The single most important quality needed to resist evil is moral autonomy. Moral autonomy, as Immanuel Kant wrote, is possible only through reflection, self-determination and the courage not to cooperate.
Moral autonomy is what the corporate state, with all its attacks on liberal institutions and “leftist” professors, has really set out to destroy. The corporate state holds up as our ideal what Adorno called “the manipulative character.” The manipulative character has superb organizational skills and the inability to have authentic human experiences. He or she is an emotional cripple and driven by an overvalued realism. The manipulative character is a systems manager. He or she exclusively trained to sustain the corporate structure, which is why our elites are wasting mind-blowing amounts of our money on corporations like Goldman Sachs and AIG. “He makes a cult of action, activity, of so-called efficiency as such which reappears in the advertising image of the active person,” Adorno wrote of this personality type. These manipulative characters, people like Lawrence Summers, Henry Paulson, Robert Rubin, Ben Bernanke, Timothy Geithner, AIG’s Edward Liddy and Goldman Sachs CEO Lloyd Blankfein, along with most of our ruling class, have used corporate money and power to determine the narrow parameters of the debate in our classrooms, on the airwaves and in the halls of Congress while they looted the country. “It is especially difficult to fight against it,” warned Adorno, “because those manipulative people, who actually are incapable of true experience, for that very reason manifest an unresponsiveness that associates them with certain mentally ill or psychotic characters, namely schizoids.”
Source: Truthdig
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The 50th Law
Power, Seduction & War
Power, Seduction & War
Over the course of the past eighteen months I have started dozens of blog entries, only to find that the passage of a few days or a week made my ideas seem irrelevant. Events in the world were moving too fast for me to keep up with them. The main culprit here was the book I had been working on during this period, The 50th Law (due out on September 8, 2009), and my tendency to want to concentrate on only one thing at a time. In the months to come I plan to recycle several ideas that are worth salvaging from those aborted blogs, but for now I would like to simply describe the evolution of the new book and how it has altered my perception of many of the dramatic events we have witnessed in the past few years. (I will be posting this in four parts.) In early 2007, people in Fifty Cent's camp contacted me to set up a meeting between us. He was a big fan of The 48 Laws and was interested in collaborating on some kind of book project. I agreed to the meeting (who wouldn't), but I was initially skeptical about such a collaboration.
I am not someone who is normally drawn to the world of celebrities. By necessity, anyone who has reached the top has had to resort to all kinds of manipulative maneuvers, but most people in the limelight try to disguise all of that as best they can. They want to project to the public their angelic, spiritual side, highlighting the progressive causes they support, their inner goodness. Obviously a rapper would have a different angle, wanting to project an image of toughness and infallibility. But all of this is mythmaking--a power maneuver in its own right. My primary interest is ripping away the façade people like to present and showing you the inner workings of power, rats and all. And it is often easier to practice this analysis on dead people.
In our first meeting, however, I quickly saw that Fifty was different. He was in the midst of a power struggle with a rival rapper and he talked quite openly about the strategies he was employing, including mistakes he had made along the way. He analyzed his own actions with detachment, as if he were talking about another person. Over the last few years he had witnessed a lot of nasty maneuvering within the music business, and he seemed to want to discuss this with somebody from the outside. He was not interested in myths but reality. Contrary to his public persona, he had a Zen-like calmness that impressed me.
After the meeting and doing some research on him I came to the following conclusion: Fifty is a master practitioner of the The 48 Laws; he exemplifies a type that has always fascinated me--what Machiavelli calls the New Prince. Most princes or traditional leaders in this world occupy their position of power because of their background, connections and a bit of luck. They have a good education and perhaps some skill, but their power is limited because it depends on external factors--things that have been given to them from the outside, including knowledge. If fortune shifts, they are not able to adapt very easily. They remain tied to the past, ideas from books, and all kinds of conventions they have absorbed over the years. These shifts in fortune finally reveal them to be incompetent or mediocre.
New Princes generally emerge in times of great turmoil and chaos. They start at the bottom--with no privileges, connections, or money. What they have in abundance is ambition and hunger for power. If they make mistakes, they quickly analyze what they did wrong and learn the lesson. Considering the odds against them, they must stay focused, alert and patient. If they begin to rise up the ladder, it is almost purely by their own actions. They do not depend on others. They can handle downturns in fortune because they are used to adversity and turning negatives into positives. Since their education comes from experience and observation, they can think in the moment and adapt to their environment. They re-write the rules that others then slavishly follow. A classic example of a New Prince would be Napoleon Bonaparte.
Considering the openness that I sensed in my initial meeting with Fifty, I believed that this book project could represent for me a unique opportunity to study a New Prince in action. In a modern twist, Fifty could serve as my Cesare Borgia, and I as his Machiavelli.
I had another thought at the time: America can be country of great social mobility, but in many ways we remain people who are locked in mental ghettos. Academics tend to live in their cloistered world and talk among themselves. Celebrities associate with their own kind, to an absurd extent. As most of us get older, we like to be around people who share our values, even though this might close us off from interesting encounters that would challenge our most cherished beliefs and preconceptions. Look at any progressive neighborhood, such as where I live within Los Angeles, and you will see a rather depressing homogeneity in people's style, tastes and values. To me, these ghettos are dull and deadening. I live for encounters with people from other cultures who think in different ways and make me reflect on my own limited perspective.
Although Fifty and I might have a similar way of looking at the power game, we come from diametrically opposed backgrounds. This book could be an experiment in which we would bring our two worlds together, on the plane of ideas, and see where this would lead.
With these considerations in mind I agreed to do the project. Together we came up with a method. I would follow him around and witness him in action on many fronts. I would go to Southside Queens and interview people who knew him from his drug-dealing days. As much as possible I would try to pierce the world of the urban hustler and learn its secrets. Most important, Fifty and I would have lengthy discussions about the power game and what it means to advance in this harsh, competitive world. From all this research and our talks, the exact subject and structure of this book would come to us.
Several weeks into the process, after witnessing many strange events (some of which eventually found their way into the book), I had a revelation of sorts about hustling, the New Prince and Fifty himself. We humans are generally frightened and timid creatures; we carry within us so many deeply embedded fears--of change, criticism, being alone, death itself. People who feel less fear in life have a distinct advantage. They are more adaptable and their careers are longer. Fearlessness is in fact the quality that distinguishes a New Prince, and one that Fifty has in abundance. In his days as a hustler, he had to deal with endless confrontations, violence and betrayal. He learned that to feel fear on the streets could be fatal; he had to project a bold front. He saw the value in taking risks, experimenting and even failing--a hustler is always trying new things. And he has brought this fearless mindset into the world of corporate America, which is generally governed by cautious and conservative Princes, intellectually tied to the past. What they perceive as chaos, he sees as the normal state of things. Change, turmoil and adversity do not faze him in the least; in fact, they bring out the best in him. This is his strategic advantage.
At the base of all fears is that of death itself--a dread that influences our daily actions in so many ways. Fifty had that fear bleed out of him the day he survived the assassination attempt on him in 2000. This, I believe, accounts for his uncanny calmness.
Without really understanding it fully, I could sense that this quality was the source of his remarkable rise from the bottom to the top. There is another aspect to it: although we may seem to be rational, civilized creatures, we remain animals and as such we tend to read signals from people in a preverbal manner. In an encounter with someone new, we register their levels of fear and timidity--from their tone of voice, mannerisms, the look in their eye. If we sense that their fear level is higher than our own, we unconsciously look down on them, treat them with a touch of disdain and respect them less. If their fear level is lower than ours, we are either intimidated and get out of their way, or we are seduced by their self-assurance and follow them.
Confidence can be contagious, just as the awkwardness and timidity of others can infect us as well. Fifty's fearlessness has this seductive power over those around him. In the few short weeks I had spent trailing him, I could feel its inspiring effect on myself.
The task before me was to get at the heart of this quality, break it down, make it understandable so that anyone could move closer to the ideal of fearlessness and experience the power it could bring. This, I decided, had to be the subject of the book and in discussing it with Fifty he agreed.
Together we mapped out ten common types of fears and the reverse power that you can obtain by overcoming them. We found stories from his own life that would illustrate these ideas, many of them culled from his days as a hustler and even highlighting mistakes along the way that taught him valuable lessons. Later, from my own research, I would bring in examples from other historical figures who exemplified this trait. Many of them would be African Americans--Frederick Douglass, James Baldwin, Miles Davis, Malcolm X, Hurricane Carter, et al--whose fearless quality was forged by their harsh struggles against racism. Others would come from all periods and cultures--the Stoics, Joan of Arc, JFK, Leonardo da Vinci, Mao tse-tung, and so on.
With all of this research in hand, I began to write the book in 2008. But as I thought about the material and analyzed our discussions, I came to the conclusion that there was something much larger going on here. This was not merely about some inspiring personal quality that can bring power. Without a fearless attitude, you have no balance, no hold on reality. You overreact to events and your strategies misfire. You could understand all of the laws of power but if you remain infected by fears, you will apply them in the wrong way and any success you have will be fleeting. The truth is that a fearless approach is the necessary starting point of almost any successful or creative action in this world. The 50th is in fact the ultimate law of power, the key to the castle.
Coming next:
Part Two--a glimpse into the Law itself, its mechanisms, and how freedom from fear translates into freedom in general.
Part Three--The Republicans, Barack Obama and the 50th Law.
Part Four--The Economic Meltdown, the Fear Culture and the 50th Law.
Source: Power, Seduction & War
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