My good friend David Shapiro tells the story best. In the early 1990s, shortly after the stockbroking firm of which he was managing director(Max Pollak & Freemantle) merged with Frankel, Kruger, Vinderine, Shapiro discovered his newly inherited star brokerage generator was doing so illegally. Greg Blank was the sharp end of a front-running syndicate that included a couple of Old Mutual portfolio managers. The syndicate bought shares Old Mutual had earmarked for purchase, and sold them on to the institution at inflated prices. The stockbroking firm made juicy brokerage and syndicate members pocketed the difference. Once he discovered it, Shapiro reported what was going on and all hell broke lose. One of the Old Mutual managers committed suicide, the other fled to Italy and Blank, who alone stayed to face the music, ended up serving time in jail. A couple decades later, Blank is totally rehabilitated. Having semi-grated to Cape Town, he now applies his ever sharp faculties to investing in shares for himself and friends – and making money out of his passion for horse racing. One of the world’s leading racing writers, Michael Clower, went to see him at his Sea Point offices to interview this rarity. He produced a fascinating profile of Greg Blank in his 50s which is republished with permission from Parade Magazine. – Alec Hogg
First surprise: The financier is dressed, not in a suit, but in T-shirt and shorts. Nor is he sitting at a desk but on the sofa watching the Bloomberg financial channel on a large wall-mounted TV, framed photographs of racing victories filling the rest of the wall.
Second surprise: He looks a good ten years younger than his 56, remarkable considering what he has been through.
He moves to an interview room. It’s glass-walled and glass-doored, like the rest of the fourth floor office, and starts talking about what got him interested in racing.
“My Dad was an owner so it was a natural progression, although looking at what happened to him I should never have got involved – he didn’t have a winner for ten years.
“I started owning horses in 1984 with Larry Nestadt and Jeff Shill, both lifelong friends. We also started breeding and we formed the Tawny Syndicate. Bernard Kantor later came in and in total I’ve had over 850 winners including 38 Group 1s.”
But what about making money out of it? Blank, light brown hair cut short, doesn’t hesitate. He is an amazing talker with a lightning-quick mind. Every question is answered without even a pause for a thought. There is not an ‘um’ or an ‘er’ throughout the next 40 minutes.
Greg Blank – one time king of Diagonal Street who fell to the bottom, now happily rehabilitated and living in Cape Town
“Our whole play is that we get in and get out. If a horse has value we try and realise it. It’s nice to have racing as a hobby if you’ve got unlimited cash, but we treat it as a business and if the horse doesn’t perform he goes. We also keep costs low and try to get the maximum return.”
He reels off a list of those who have been profitable, horses like Rakeen, North By Northwest, Dancing Danzig, Palace Line and Pointing North. He owned the dam of the 2008 Cape Guineas winner who won over R1 million before Blank sold him for US$700 000, the dam for R4m and her yearling for a further R2.4m. His partners each paid R25 000 for a share and received R1.5m.
But seemingly it’s much more difficult these days. “When I started a maiden win paid for a year’s costs. Now it’s four months.”
Part of the profitability secret is keeping a tight rein at the sales. “We seldom spend more than R400 000 because we need to get a return. Add in training and other costs at around R10 000 a month and the horse has to earn R800 000 just to get your money back.
“What you want is a horse that can (a) pay its way and (b) maybe make it as a Group horse, and if we take in partners they have to understand that the horse goes if the price is right.”
Pointing North had eight partners but three or four is the norm – “People who own 5% can cause as much aggravation as those who own 50%.”
There are a string of trainers: Sean Tarry, Dominic Zaki, Lucky Houdalakis, Gavin van Zyl, Dennis Drier, Duncan Howells, Dean Kannemeyer, Justin Snaith and Mike Robinson but Blank holds no truck with respectful pussy-footing. “Racing is just about the only game in the world where people move around an asset as if they can’t touch it because the trainer might get upset.
“The bottom line is that if you have an underperforming asset you get rid of it. Unfortunately people think with their hearts rather than their heads when it comes to horses, but with us it goes if it hasn’t performed after three runs.”
Rise and fall
The Greg Blank story has been well-documented and there is even a book about it (Rex Gibson’s Prisoner Of Power). The son of a Johannesburg businessman, he had a conventional middle class upbringing and went to the famous King Edward VII School before going to Wits University where he did a B.Comm in accountancy. But six months as an articled clerk was enough to persuade him to defer his two years’ national service no longer.
He then joined Standard Merchant Bank, found that too restrictive and joined the stock exchange. His rapid-reaction brain rocketed him up the ladder, earned him a rising-star reputation and landed him in hot water. He was arrested for fraud and found guilty of a variant of insider trading. Six months later his particular offence was deemed no longer illegal but, even though he and others expected only community service, he was sentenced to eight years.
David Shapiro – blew the whistle after discovering Greg Blank’s front-running scheme
South African prisons are horrific, frightening places – even more so for a white – and in his first week at Krugersdorp Blank saw two people stabbed. Some of the worst times came at night when the cell door was locked. “It had a double lock and turning the key made a noise like a gun going off. Picture yourself locked in a cage. You want to get out, say to go to the toilet, but you can’t. I’d geared myself up for prison, just as I had done for the army. But it was tough, and it affected my whole mindset.”
Listening to Blank as he relives the hell, you can’t help but wonder if this is the reason for the see-though office walls and doors, even if only a sub-conscious one.
Back at Krugersdorp he resolved to do something about his new life and in the process he did more for humanity that most people do in a lifetime. “Jail is the same as everything else in life – you have to make the best you can of the situation,” he says, explaining his then new-found philosophy, “and in a way it is a microcosm of the outside world. But there is no rehabilitation so the guys keep coming back and what I did was to introduce ventures to make them feel good about themselves.”
He got a fortunately reformist-minded prison commander on his side and introduced activities as varied as football to hairdressing, as computers to a library, plus pool tables and video games. “It was also self-serving,” he admits. “It kept me busy instead of being locked up 18 hours a day, and in the process I was able to do my own form of rehabilitation.”
Award and reward
He was given a Red Cross merit award for his efforts and after 22 months he was released. He then had to overcome prejudice as he fought to regain his place in financial society. “People can be cruel but I was unbelievably lucky because almost everybody stood by me and doors were opened. Sometimes they might say ‘Greg, we will do business with you but would you mind staying in the background?’
“But it helped that I had my integrity and my credibility. I didn’t owe anything to anybody – I’d repaid the money. I’d also held up my hands and pleaded guilty, and I’d paid my debt to society.”
Within a year his reputation was restored to the extent that he was able to float a public company. These days it’s private equity that dominates. “I look at businesses and under-valued situations,” he glances through the glass wall but only as if picturing something in the far distance. “Say a gold mine, for example, and I build up stakes in them. I act for other people if I get the mandate but otherwise I use only my own money. I would rather lose that than anyone else’s.”
He has a considerable reputation as a gambler but seemingly that is over-stated. “I’m in the markets every day and so betting on horses is a natural progression but I’m not a big gambler and I don’t bet more than R5 000.
“I make money on the exotics like the PA and the Pick 6. I’m a big fan of the Tote because I’m looking for a big return from small money and that’s where you get the results. But if I was to add up over the years and see whether I’m ahead I doubt if I could say yes whereas I am on owning horses because we have bought and sold. Indeed that is what has kept me in the game.”
Last year he and wife Dawn (who runs the Gift ov life egg donor programme for women who can’t otherwise get pregnant) moved with their two young children from Johannesburg to Cape Town. Seemingly staying put involved one gamble too many. “Between us, we’d experienced four hijackings.” He smiles as he adds: “We felt that a fifth one could be our last!”
* This article is republished with the permission of Parade Magazine, which is available to view on www.goldcircle.co.za under media centre / publications.