Sydney tycoon is ‘another Madoff’

By Moira Schneider Cape Town and Dan Goldberg Sydney, June 18, 2009
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A Jewish businessman has been accused of masterminding South Africa’s largest ever corporate fraud, scamming 400 investors out of some £730 million in a giant pyramid scheme.

Barry Tannenbaum, 43, allegedly promised investors returns of up to 200 per cent from his company, Frankel Chemicals. He told them he was importing raw materials for the manufacture of HIV drugs by some of South Africa’s pharmaceutical giants, including Adcock Ingram, founded by his grandfather, Hymie. Forged documents were reportedly used to persuade investors that their money was secure.

Investors included some of South Africa’s best-known businessmen and up to 250 Jews.

The allegations have rattled both the South African and Australian Jewish communities. Tannenbaum has lived in Australia for the past four years.

“People are in shock,” said a South African Jew living in Sydney, who knows the Tannenbaum family. “They are in the most terrible state of disgust. Shame on us, it’s an embarrassment. He’s our local Bernie Madoff.”

Another South African expat who knows people who have lost money in the alleged Ponzi scheme said: “People are angry and embarrassed and disappointed that a Jewish person is alleged to have taken other people, including Jews, for a ride. People here feel quite strongly that if Barry committed fraud he should face the music. But whether he has or hasn’t is still anyone’s guess.”

Warren Drue, 46, a senior partner at Johannesburg law firm Routledge Modise, told the JC he had invested “a very small amount of money”.
He had known Tannenbaum since their university days and the two families had holidayed together in Singapore in December.

“I had Barry at my offices in October and he basically told me that I’m missing out on the best opportunity of my life — how can I not be putting money behind him, don’t I have faith? I discussed it with my wife and we decided we’d put a little bit of money behind him — we thought perhaps it was the right thing to do for a friend and I thought I was hopefully making a wise investment.” Drue was particularly impressed by the “really high-powered individuals” in the business community who had already invested. These included Mervyn Serebro, former head of the OK Bazaars national chain, Norman Lowenthal, former chairman of the Johannesburg Stock Exchange and Sean Summers, former chief executive officer of the nationwide supermarket chain, Pick ‘n Pay.

Drue said of Tannenbaum: “He is really the most charming, wonderful person you’ve ever met; kind, an incredibly good father and it just saddens me that he got himself caught in this mess. I don’t think it started out intentionally as such — it’s very, very upsetting.”
He added that Tannenbaum had been “quite active” in the community before he emigrated. “I know that he donated a Torah to Chabad’s Umhlanga synagogue — probably with our money.”

Tannenbaum comes from a well-respected Jewish family, and was apparently a platinum member of the Chevra Kadisha — in South Africa, the umbrella body providing welfare services for the needy — signifying that he had donated a large amount of money to the organisation on an annual basis.

Speculation this week mounted that Mr Tannenbaum had withdrawn his children from their Jewish school and left his Australian house. The curtains were drawn although a security guard was still there. However, Mr Tannenbaum did issue a statement denying the allegations against him.
“I have read with amazement that I have been guilty of a multi-billion-rand scam and that I am compared to Bernie Madoff in the USA. As has happened with other companies that have from time to time found themselves in a financial predicament, particularly in the present climate, I have found myself in such a situation.”

Mr Tannebaum’s lawyer in Sydney, Derek Ziman, told the JC he was confident his client was not the brains behind the alleged scam.
“I think Barry’s the victim. He’s been an unwitting party to it.”
Criminal charges have yet to be laid against Tannenbaum but his personal estate in South Africa has been placed in provisional sequestration. Lawyers are also going after his Australian assets.

    Last updated: 4:24pm, November 15 2010