Investec goes after its cash

2013-02-03 10:00

Ponzi scheme kingpin Barry Tannenbaum’s right-hand man and lawyer, Dean Rees, has been slapped with a R34 million lawsuit by specialist banking and asset management company, Investec.

Investec claims Rees and a trustee in his Aljebami Trust, Edward Jowitt, owe them the balance and interest on 14 loans taken by entities linked to Rees.

Jowitt, also Rees’ former business partner and investor in the R12 billion Ponzi scheme, is being sued for two of the loans.

Rees says Jowitt has no knowledge of the other 12 claims.

Some of the loans are believed to have been used in the Ponzi scheme, South Africa’s biggest.

The scheme involved buying raw materials from Tannenbaum’s company, Frankel Chemicals, for the manufacture of pharmaceutical products sold to generic drug manufacturers to make antiretrovirals.

Investors received some of the repayments of their money through Rees’ trust account held by Investec, his former business partner Christopher Harris revealed in a separate court case in 2010.

Investec’s application to have Rees’ wife, Dominique, also a trustee of the Aljebami Trust, join as a respondent in the lawsuit succeeded in December, according to court papers seen by City Press.

In court papers Rees filed from Geneva, Switzerland, he says he couldn’t pay because Investec “unlawfully froze his accounts” in June 2009, soon after news of the Ponzi scheme broke, for “reasons that are not clear”.

“The freezing of these accounts came to my knowledge when I transferred monies from one of my bank accounts not held with the applicant (Investec) into my bank account held with the applicant,” Rees says.

He says Investec’s action was unlawful and in breach of the relationship between customer and banker.

But the bank accuses Rees of making “gratuitously defamatory allegations” in his response to the lawsuit.

The freezing of the accounts also had an impact on other Investec accounts, in which Rees had direct and indirect interests, according to court papers.

“Not being able to access my financial information placed me in the difficult position of attempting to minimise the financial exposure of myself and the principal debtors insofar as I could,” Rees says.

Rees reportedly assisted Tannenbaum in swindling hundreds of investors, including former Pick n Pay chief executive Sean Summers.

Rees, who lives in Switzerland, and Tannenbaum, who lives in Australia, are yet to be extradited to South Africa face trial.

Rees claims Investec officials derive knowledge of the case solely from documents in the bank’s possession and “cannot swear positively to the facts”.

Investec says this claim is incorrect.

“Rees has chosen not to place the material facts before the court which, if proved at the trial, would constitute a defence of Investec’s claim,” says the bank.

In his answering affidavit, Rees pleads with the South Gauteng High Court to dismiss Investec’s case with costs.

“The court does not have jurisdiction to grant judgment against me,” he says, pointing out he is no longer a South African resident.

By January 2009, Rees was already living in Switzerland.

Rees also accuses Investec of unlawful conduct, saying some of its employees bought properties put up as sureties for the loans.

To sell the properties, Investec used Auction Alliance, which Rees says is the subject of inquiry owing to dubious auction practices.

“The intertwined relationship between the secured creditor, liquidator and auctioneer ... warrants inquiry,” he says.

However, the bank says Rees is using bold and unsubstantiated allegations of collusion, unwarranted speculation and innuendo to suggest he is the victim of Investec’s fraudulent conduct.

Investec’s lawyer Nastascha Jansen van Vuuren declined to comment, saying City Press’ queries pertained to a matter that was sub judice.

Judge Sharise Weiner is scheduled to hear the matter later this month.

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