Image: Shaun Uthum

As any London or New York company will attest, South Africans make grand recruits. Resourceful, diligent, and willing to fix almost any problem with duct tape, South Africans are renowned for their rarefied business skills.

Nowhere has this been more apparent than in our ability to extract cash from the more trusting members of our society through an ingenuous schlenter. (“Trusting”, of course, is the more polite nomenclature for more direct phrases, such as “credulous” or “startlingly idiotic”).

Here, we’re not talking about the mammoth, yet tedious, financial frauds such as Steinhoff, VBS Mutual Bank, and Leisurenet, which would have taken an accounting professor many litres of single malt to decipher.

Far juicier are the forehead-smackingly obvious cons that, despite being as clearly fishy as an Atul Gupta wedding invitation, succeeded in swindling people whom you’d otherwise consider the smart money.

It’s a skill that dates back many decades.

NOTHING BUT EVIL

Take the story of Joseph “JB” Robinson — one of the original randlords and one of South Africa’s richest men at the turn of the 20th century.

Moustachioed, fond of wearing his pith helmet in public, and utterly Machiavellian, Robinson was “renowned for his meanness”, according to the Sunday Times of the day.

“Before he would enter a bar, it was said, he would peep inside to find if there was anyone there who might expect him to pay for a drink,” it said.

Not that he couldn’t afford it: he was the original owner of the Langlaagte and Randfontein farms, after all. While JB was second in wealth to Cecil John Rhodes in SA then, the book The Gold Crusades reports that, nonetheless, Robinson “had no rival for the title of most distrusted and reviled Randlord”.

When he died, The Star newspaper entitled its obituary “Nothing But Evil’, describing the stock-exchange building he designed in 1886 as “perhaps the most hideous building that the perverted fancy of man ever imagined”.

Joseph “JB” Robinson.
Joseph “JB” Robinson.
Image: Supplied

Given that typecasting, there’s no little schadenfreude in how Robinson was duped into handing over £30,000 to buy a British peerage he never got to have.

In 1920, a man named Maundy Gregory — dubbed “the prince of conmen” — set his sights on Robinson. Gregory had set himself up as a “purveyor of honours”, and wrote to Robinson, offering him peerage and a place in the House of Lords for a mere £50,000.

Robinson, characteristically, haggled over the price. He must have been tickled pink when he bargained the price down to £30,000.

The result: the 1922 Birthday Honours list records that Robinson was to be given peerage. Only it sparked a rip-roaring scandal in the UK, so much so that prime minister Lloyd George sent Robinson an “angry letter”, after which he “declined the honour”.

Furious at what had happened, the British government made it a criminal act to sell honours within three years of the scandal. Gregory, appropriately, ended up in the infamous London prison Wormwood Scrubs, serving a sentence for “an offence against the honours act”.

Still, Robinson, who was prone to famously fire-infused flushes of fury even before he was ripped off, never got over the fact he’d paid £30,000 for a title he never got.

VROTMELK

Fast forward to the traumatising khaki-yellow era of PW Botha’s 1980s, and a forgettable dorp known as Garies in the Namaqualand.

It was here that Adriaan Nieuwoudt dreamt up the “vrotmelk” scam that many consider a defining scam of the 1980s globally — a scheme built, impossibly, on rotting milk.

Niewoudt’s pitch was this: all you had to do was buy a dried plant named “Kubus” from him, as well as an “activator”, made of a “secret compound”, for R500.

The idea was that, when mixed together, it would produce about 10 jars of a milk culture per week. The “Kubus farmers” would then scoop out the culture, dry it out and post it back to Nieuwoudt, who’d buy it back for R10 per envelope.

In theory, you’d break even within five weeks — and thereafter, it’d just be gravy. Or sour milk, as the case may be. Then again, in theory, socialism works.

As he told it, Nieuwoudt was gathering this culture to on-sell as a miracle beauty cure. In practice, it was a classic Ponzi scheme, recycling the R500 paid by “new investors” to repay the “older investors”.

The sheer cynicism was mind-bending. Inside a secret laboratory, Nieuwoudt had hired people to take the envelopes sent back to him and grind them up (including the paper), which would then be repackaged and sent out as new “activator kits”.

At the time it was a sensation. Just before the Kubus bubble burst in 1984, the town was a hot mess: the Garies post office was wall-to-wall Kubus envelopes and almost everyone in town sported a Kubus-branded T-shirt.

It left an awful smell, both figuratively and literally. Speaking of the smell from thousands of jars of “vrotmelk” fouling up the town, one grower, Wilma du Toit, bragged to the Sunday Times: “You don’t smell it after a while. The smell of the money is what matters.”

Inevitably, some people saw through it. But any criticism was seen as “an attack on downtrodden Afrikaners and an attempt to jeopardise their golden opportunity”.

One freelance photographer, Bill Fry, described how he’d arrived in Garies and casually suggested a bit more scepticism was warranted. “I was almost lynched,” he told the newspapers. “These people say that if the business collapses, it will be due only to the negative publicity.”

Does one want to lose R19.2-million? No one does. But it’s in the past. I made a decision — it happened to be the wrong one. I’m over it
Sean Summers

In the least surprising twist of events since Jacob Zuma fell ill on the eve of his court hearing, the vrotmelk scam collapsed in November 1984, leaving 70,000 people owed R140-million high and dry.

It turned out that Nieuwoudt had been skimming money off the top, and had clocked up an almost-unheard-of fortune at the time: R80-milion.

But it all disappeared. In the end, the sheriff of the court attached all his furniture, his children’s bicycles, and even, embarrassingly, his sheep.

Nieuwoudt whined: “If people had left me alone, I would have made a success of the business. Now, I am forced to live from day-to-day, and do not always know where my next meal will come from.”

His estate was sequestrated, his six farms were repossessed and, while he later went to jail, it was for illicit diamond buying — not duping gullible investors.

There is, however, an intriguing postscript. In a ringing endorsement of South African enterprise, some budding conmen exported the con to the British Isles and to the US.

In Wales, a Zimbabwean (well, Rhodesian at the time) named Courtney Ferguson began selling milk cultures to Welsh farmers for R24 a pop, which they would “activate” with milk and grated cheese. Ferguson would then buy the product back for R144.

Supposedly, Ferguson told them he’d use it as “an ingredient for special biscuits, which he planned to export to Ethiopia to help solve the famine”.

To this day, Kubus remains a high point of South African swindling.

GREED AND EVOLUTION

The 1980s were, of course, an era of unrepentant capitalism. It was the decade in which Michael Douglas, swaddled in the personality of Gordon Gekko in the movie Wall Street, spoke crisply of the guiding philosophy of the time.

“Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms: greed for life, for money, for love, knowledge, has marked the upward surge of mankind,” he said.

For some, this was a clarion call. Ronnie Skjoldhammer was a slick conman who, in 1983, duped some of SA’s top businessmen who ran a company called De Bond Corporation into handing him R5.5-million’s worth of diamonds.

De Bond was run by a number of eminent South Africans — including Sanlam chairman Fred du Plessis, Progressive Federal Party MP Harry Schwarz, and Mercabank MD Charles Ferreira.

Skjoldhammer had introduced himself to them as a “wealthy international diamond buyer and racehorse owner”. He told them he’d keep the diamonds in a safe deposit box in Geneva, Switzerland. But after he disappeared, they opened that safe deposit box, and discovered just a motley collection of marbles.

Speaking afterwards, Ferreira told the Sunday Times: “I know Skjoldhammer very well now… if he greets you, you count your fingers afterwards.” Unusually in today’s terms, there was actually a reckoning: Skjoldhammer ended up in prison in London.

The 1980s also saw the arrival of “The Amazing Mr Vermaas” — known as the “missing millions lawyer” because of, well, exactly that.

In that case, Albert Vermaas managed to dupe a number of “investors”, including National Party cabinet ministers, out of R50-million within two years. He did it by offering to pay them interest of between 40% and 60% per year.

With all that loot, Vermaas lived what journalists described as a “caviar lifestyle”. He bought a diamond mine, an airline business (Chieftan Airlines), the Ciskei-based Eurobank, and a fleet of cars, including Ferraris.

Before ripping them off, he’d treat VIP guests to game auctions, where they enjoyed French champagne and dined on caviar and nibbles prepared by a French chef.

As one insider put it: ”He’s generous with his largesse. Everyone who’s anyone in government, the SA Defence Force and the SA police circles is on his guest list.”

That old thug Magnus Malan, minister of defence in PW Botha’s government, was one person who enjoyed Vermaas’ favour.

But again, it was a Ponzi scheme. The money put into Vermaas’ scheme by “new investors” was used to repay the older investors.

Later, judge Louis Harms would marvel at how so many smart people had never asked the obvious question: why wouldn’t Vermaas simply have borrowed money from the banks at a 15% interest rate, and invest himself to make the 40% return?

“Avarice remains highly contagious and incurable,” said Harms.

GETTING THE SKATES ON FOR RUNAWAY BAY

All of this was before the granddaddy of shifty schemes.

In 2009, it emerged that Barry Tannenbaum, the scion of the founders of Tiger Oats, had swindled R12.5- billion from thousands of “investors” with a scarcely-credible story about how they could invest in the components of HIV/Aids drugs and earn returns of up to 219% per year.

Tannenbaum’s “investors” were top drawer: besides a swathe of lawyers from gilded law firms, others duped included the former CEO of Pick n Pay, Sean Summers, the former chair of the JSE, Norman Lowenthal, and former OK Bazaars boss Mervyn Serebro.

Image: Supplied

Speaking about it later, Summers appeared sanguine: “Does one want to lose R19.2-million? No one does. But it’s in the past. I made a decision. It happened to be the wrong one. I’m over it.”

Intriguingly, Tannenbaum’s scheme was operating at the same time as Bernie Madoff was running his own, remarkably similar, Ponzi scheme in the US.

The glaring difference is that Madoff was swiftly arrested, tried, and jailed. Tannenbaum, however, hid out in Australia and the Keystone Cops who make up SA’s police haven’t even got it together to write an extradition application.

Still, he did it with style: when the scandal broke, Tannenbaum fled to Runaway Bay, on Australia’s Gold Coast. He was last spotted driving an Uber, claiming he’d run out of cash. Blame his gambling addiction.

It’s hard to know what goes on in the heads of these con artists and scamsters. Perhaps it’s nothing more complex than the reasoning that if the financial markets have already been gamed, they’re just getting in on the joke.

Near the end of Wall Street, Charlie Sheen’s character, Bud, asks Douglas’ Gekko just how much would be enough money to make.

Gekko responds: “It’s not a question of enough, pal. It’s a zero-sum game — somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred — from one perception to another. Like magic.”

 From the March issue of Wanted 2020.

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