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Johannesburg - Former Pick n Pay CEO Sean Summers on Wednesday confirmed he was a victim of an elaborate, home-grown Ponzi (pyramid) scheme which investigative magazine Noseweek speculated could have grifted upwards of R2bn from a selection of South Africa's mega rich.
Speaking on the World at Six, Talk Radio 702's business show, Summers said people made mistakes in life and this was one of his. He stopped short, however, of confirming additional speculation by Noseweek that he'd lost an initial sum of R50m.
A Ponzi or pyramid scheme, in which investments from one client are used to pay returns to another, was named after the early twentieth century fraudster Charles Ponzi.
More recently, New York money manager, Bernard Madoff, found himself the subject of global attention when it emerged he had been running a Ponzi scheme for decades with as much as $50bn invested.
According to Noseweek, the perpetrator is, sensationally, the son of Adcock Ingram founder, Harold Tannenbaum, one Barry Tannenbaum. This detail emerged, Noseweek said, in Johannesburg High Court documents in which another scheme victim, Christopher Leppan, brought an application against Barry Tannenbaum to have him declared bankrupt.
Speaking to Talk Radio 702, however, Summers urged caution, saying there had been a lot of media speculation recently and that a detailed article would appear in the Financial Mail, a weekly financial magazine.
Leppan told the court, Noseweek said, that he'd been persuaded to invest in a scheme devised by Tannenbaum to finance the importation of raw material required for the local manufacture of pharmaceuticals.
It was so profitable, Tannenbaum is reported to have said, that Leppan could expect a 20% return on his money every 12 weeks.
Leppan is said to have invested R25m while Mervyn Serebro, the former CEO of OK Bazaars, invested over R25m and is owed R50m in terms of the scheme.
"An estimated... 400 investors are believed to have lost R2bn or more. All of it has disappeared, most via a Hong Kong bank account," Noseweek reported.
- Fin24.com