An extraordinary entrepreneur

Leon Kok is an independent writer on public policy and investment markets. (Picture: Supplied)
Leon Kok is an independent writer on public policy and investment markets. (Picture: Supplied)

I’m absolutely delighted that the Liberty Group has just celebrated its 60th anniversary. 

And so I should be. Not only have I interacted with it for much of my career, but literally married into it as well. 

My late wife, Diana, was former chief executive Roy Andersen’s PA for several years, and that gave me considerable insight into what was an extraordinary organisation.

When Andersen took the helm, Liberty was the darling of the insurance sector, credited as the country’s highest-rated assurer, and it allowed investors to cash in on great results.

The Liberty Life Association was incorporated on 10 September 1957. Of course, credit for building it into the colossus that it became goes to Donald Gordon. 

As one of Kessel Feinstein’s auditors in the 1950s, he was responsible for the audit of Standard General Insurance Co, was struck by the insurance industry’s inefficiencies, and saw major opportunities to take the gap.
Born in Johannesburg in 1930, Gordon matriculated at King Edward VII (KES) in Johannesburg in 1947, studied accounting at Wits University, completed his articles and qualified as a chartered accountant.

He told the Financial Mail 20 years later that his most purposeful co-founders were Louis Shill and Sydney Lipworth.
“Gordon surrounded himself with men of like background, who gave great attention to detail while keeping sight of broader perspectives,” said his biographer, Ken Romain. 

“They were not in it for quick fortunes and worked as a team in the long follow-through on early planning.”

Years later, at the opening of the Gordon Institute of Business Science (Gibs) in 2000, Gordon was to say: “Remember that overnight success usually takes about 15 years.”

Liberty listed on the JSE in 1967, the first life company in South Africa to do so. The firm immediately specialised in the business and professional market and soon benefitted enormously from changed legislation that allowed for tax-deductive retirement annuities (RAs). 

The top marginal rate of income tax then was 72%. 

Moreover, unlike other main life assurers who operated exclusively through tied agents, Liberty distributed its products through independent brokers and was known to pay the best commission in the market. 

Gordon also ensured that his sales team was the best educated and best trained in the country.

In the early 1960s changes were made to the unit trust legislation in SA, and Gordon and Shill decided to take advantage of these. 

Following a study visit to the US, they started SA’s first unit trust, the SA Growth Equities Fund. This was done in partnership with Nedbank and London & Dominion.

These were linked to Liberty’s insurance products and were winners from the start.

The fathers of the modern South African unit trust industry, incidentally, were two finance ministry officials, Rudolph de Villiers and Wynand Louw. 

The country’s first Unit Trust Control Act had been passed in 1947 and only permitted closed-end funds.

De Villiers and Louw reckoned that changes were necessary to modernise the industry and allow modern-concept “open-ended” funds that had become popular in the UK and US, and had the legislation amended in 1962 and 1963.
Soon after, Shill was keen to promote the growth of unit trusts as a stand-alone product and so broke away from Liberty to establish what became Sage Holdings. 

Liberty re-entered the unit trust market in 1970 with the establishment of Guardbank, a joint venture between its controlling shareholder, Guardian, and Barclays Bank.

Guardbank was driven by Roy McAlpine and was one of the finest unit trust offices in the country for many years. Today, it’s incorporated in Stanlib.

Early in his career Gordon identified property as the finest long-term investment and that became another major arm of the group. 

Liberty initially built up its shareholding in JSE-listed Real Estate Corp of SA (REC), and took control of it in 1972.

Gordon furthermore became a director of Liberty’s landlord, Rapp & Maister; it built Sandton City with Liberty funding in 1972 and was taken over by Liberty in 1975. 

The founder’s son, Michael Rapp, became Gordon’s closest confidant and business partner. Later Gordon built a property empire in Liberty International, a FTSE 40-listed property company.

At its peak Liberty was one of the four big companies that dominated the South African business environment, owning among others 45% of Standard Bank and having joint control of SA Breweries. In 1999 Standard Bank acquired it.

Gordon also gave an enormous amount back to society. For example, the Donald Gordon Foundation funded Gibs and donated R110m to Wits to purchase the Kenridge Hospital in Parktown, upgrading and redeveloping it to meet rigorous academic and research goals. 

Today it is known as the Wits Donald Gordon Medical Centre.

Said Gordon’s daughter Wendy Appelbaum in 2005: “To have succeeded in taking Liberty Life to the heights that my dad did was a feat that few can rival. 

His credibility and integrity were never disputed. He became a visionary leader, an example and model to be emulated. His legacy is that his companies managed to transcend their dependence on him as a founder.”

This article is from the September 2017 edition of FundFocus, which appeared in the 21 September edition of finweek. Buy and download the magazine here.

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 1300 votes
It depends on how the funds are used.
73% - 8624 votes
No. We should have gotten the loan elsewhere.
16% - 1898 votes