$1.5 Billion Scam

THE man accused of one of the biggest frauds in history - the suspected fleecing of up to $1.5 billion from wealthy South African investors - stood in the doorway of his humble St Ives office suite and denied the allegations last night.

Asked if he had perpetrated the scam, Barry Tannenbaum pointed to the two men in rumpled casual clothes in his office and said: "That's just what we are busy discussing at the moment."

Asked if he had set up a Ponzi scheme - a pyramid investment rort like that used by Bernard Madoff in his $US65 billion ($80 billion) scam - Mr Tannenbaum said, "absolutely not".
--------------------------------------------------------------------------------------------------------
Do you know more? Text 0424 SMS SMH (+61 424 767 764), email us with information and pictures or direct message us on Twitter @smh_news
--------------------------------------------------------------------------------------------------------

Mr Tannenbaum, who lives in a cul de sac not far from the suburban strip of shops where the Herald found him, is accused of offering 200 per cent annual returns to investors in his pharmaceutical ingredient importation businesses, Frankel International and Frankel Chemical Corp, and forging orders from big drug companies to back his claims.

The allegations have rocked the South African establishment. Mr Tannenbaum is the grandson of the founder of the pharmaceutical giant Adcock-Ingram. His father, Harold, is not only known for power and wealth but for piety. The estimated 400 investors so far thought to be caught in the scheme are drawn from the ranks of the business elite in South Africa, Germany, the United States and Australia.

The Herald yesterday traced the former managing director of Frankel, Kevin Kramer, to a Dover Heights business called Maxitrade, which Mr Kramer founded on his arrival in Australia last year.

Maxitrade appears to be in the same business as Frankel International in South Africa.

Mr Kramer denied any knowledge of the alleged scam.

"I'm so shocked, I can't tell you. This has hurt so many people. I can tell you honestly that no money could have gone through that business, I would have been the first person to see it."

Mr Kramer said Mr Tannenbaum was well-liked and had a "sterling" reputation in Johannesburg's elite business circles. "In five years I never saw anyone have a fight with him."

Mr Kramer said he remembered Mr Tannenbaum was sometimes ostentatious with money. "I'm sorry, I can't say any more," a clearly distressed Mr Kramer said. "I need to get some advice."

A Sydney man who had some business dealings with Mr Tannenbaum said he was unassuming and friendly. "He was not in with that eastern suburbs flashy crowd."

Mr Tannenbaum has registered a string of businesses in Australia, including Oxygen Pharmaceuticals and Frankel International, which appears to be headquartered in the St Ives building.

It was reported by the South African investigative magazine Noseweek that a Johannesburg businessman, Christopher Leppan, applied to the High Court in Johannesburg to have Mr Tannenbaum declared bankrupt after demanding the return of his capital and interest only to discover that Mr Tannenbaum had closed his accounts and moved to Australia.

Investors include well-known South African business figures such as Sean Summers, who invested more than 50 million rand ($7.7 million) and says he is now owed more than 100 million rand, and Mervyn Serebro, who invested 25 million rand and believes he is now owed more than 50 million rand, Noseweek said.

It is not yet known how much money is supposed to have disappeared.

A private investigation firm has posted online documents it claims are fraudulent orders for AIDS drugs that were used in the alleged scam.