Liebesman is a chartered accountant, a profession that has fallen − by the practices of some among its vast world-wide number

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By David Gleason

Growing like Topsy
Liebesman is a chartered accountant by profession. He was the focus of events at Corpcapital, repeating as though by a mantra the course of the unhappiness at a company he superintended over the 1980s and early 1990s called W&A.
Liebesman, who was born in the modest, lower middle-class Johannesburg suburb of Orange Grove, began his working life after attending the University of the Witwatersrand, as a trainee accountant with the South African firm Kessel Feinstein, now part of the international firm Grant Thornton. It was there that he met Eric Ellerine, and became close friends.
Kessel is an intriguing accounting company. Though small, it managed to attract and subsequently turn out chartered accountants who later became luminaries of business. Among its alumni are men such as Donald Gordon, founder of Liberty Life, the assurance company that became a giant in the industry (and spawned Liberty plc, the UK-based company that is now among the world’s largest shopping centre owners); and Derek Keys, who later restored ailing mining house Gencor to health and went on to become, more famously, the country’s minister of finance over the delicate period of transition to democracy from the apartheid era.
After becoming a chartered accountant and partner in the firm, Liebesman graduated to managing his own accounts and audits. Among those he cared for was Form-Scaff Industries, FSI as it was known. It was concentrated in the business of providing scaffolding for high rise buildings, apartment blocks, and skyscraper offices. This was how Liebesman was introduced to the construction sector.
In 1981, Form-Scaff Industries was simply a solid little business.1 Its annual turnover was R12m and it turned a profit of R500 000. It was owned by three individuals – Bernie Kaminer, an engineer and its chairman, Nisch Bress and Barney Edwards (who later emigrated to Israel where he died).
Kaminer and his colleagues were sufficiently impressed by Liebesman’s acumen to invite him to join them. He was offered shares in the company which he bought with money borrowed from his wife, Merle’s father, Kassie Israelite – and perhaps others who saw an opportunity. It was this initial breakthrough into commerce that gave Liebesman a toe-hold in a company concentrated solely in the building and construction sector.
Three years later, Form-Scaff was listed on the Johannesburg Stock Exchange. Kaminer told the investing public “that a major objective was to make acquisitions. It has done so with a vengeance: and if goals are realised, it will become a formidable, if inconspicuous, multinational.”2 By late 1987, the company had acquired Lentex Investments (property), National Bolts (industrial fasteners), had put together what it called FS Team (electronics, electrical wholesaling and battery supplies), and had grown the original formwork, scaffolding, manufacturing, engineering and overseas companies.
In advancing his commercial interests in the manufacture of fasteners, Liebesman also acquired (in 1992) Transvaal Pressed Nut, otherwise called TPN. Much later, TPN was to play a major role in the life and, ultimately, the demise of Corpcapital.
In September 1987, following promptings by a senior FSI executive,3 Terry Rolfe, Liebesman was persuaded that it would be clever to take control of E W Tarry, a retail hardware business whose network of branches spread nationwide and extended even into Zimbabwe and Zambia. Tarry was listed on the London Stock Exchange but all its assets were situated in southern Africa.
And it was controlled by Waicor Holdings which was also listed on the Johannesburg Stock Exchange and which held the W&A Group. Its controlling shareholder was another gung-ho South African entrepreneur, Mannie Simchowitz, who had emigrated to Britain in 1986.
In seeking to buy E W Tarry, Liebesman became engaged with Brian Joffe, now famous as the founder and controlling shareholder of the Bidvest group of companies, among South Africa’s most prestigious companies in the services industry. At the time, Joffe was W&A’s managing director – and he had already made his mark as a no-nonsense businessman: “Particularly important among the W&A executives is the highly-rated Joffe – an entrepreneur who had himself become a millionaire at age 33 before joining W&A.”4
But what few involved in the negotiations to buy E W Tarry realised at the time was that a substantial portion of W&A’s 1987 profits came from pure trading operations involving the buying and selling of stocks listed on the Stock Exchange.
In any event, Liebesman was there to buy a hardware company, albeit listed on the London bourse. As the news magazines told it after the event: “Two of the key players, Liebesman and Joffe, met last Tuesday evening (Sept 8, 1987) at Liebesman’s house at 19h00, while the third, Mannie Simchowitz, sat in London at the end of a telephone. By 02h00 the following morning, the deal was struck.”
But the deal wasn’t merely about E W Tarry and, though the newsmagazine had done its best, it didn’t encapsulate the extraordinary drama of the event. As the negotiations progressed more and more people dropped in. By the time midnight arrived, Liebesman and Joffe had been joined by leading corporate law attorney, Michael Katz, his brother-in-law and leading stockbroker, Sydney Frankel (of the firm Frankel Kruger) and Richard Laubscher, the high-flying banker who would one day take the helm of Nedcor, the holding company of one of the country’s largest commercial banks.
W&A was an industrial group whose activities were widespread and ranged across pantyhose manufacture, coal mining (small) and household delivery, tyre manufacture, motor car distribution and sales, furniture, hardware, textiles, leisure goods, and natural rubber applications in the mining industry (for conveyor belting and lining of tanks). It is unlikely that Liebesman had any idea of the full extent of the W&A group’s activities.
Yet by 02h00 the following morning Liebesman had bought not just E W Tarry but the entire W&A group. His FSI group certainly didn’t have the money for such a takeover, so how had this been arranged? The truth is probably that the gregarious Laubscher, with whom Liebesman had forged an intensely close banking relationship, was given to chucking money at both problems and opportunities.
On Sunday, September 13 a terse announcement appeared in a Sunday newspaper. “Frankel Kruger,” it said, “is authorised to announce that, in a series of inter-related transactions on The Johannesburg Stock Exchange, FSI has acquired 3 000 000 shares in Waicor, constituting approximately 47% of the issued share capital of Waicor, at R35 per share. As a result, effective control of Waicor has passed to FSI.”
“A similar offer will be made to all Waicor shareholders.”5
So what had happened here? It must be distinctly possible that Simchowitz,6 seeking an opportunity to realise some of his South African assets, then locked in by the country’s formidable exchange control barriers, saw an opportunity to sucker Liebesman into what would be, for him at least, an incredible deal. The scenario involves Simchowitz, Joffe and all those who recognised a deal-in-the-making and wanted in on the ground floor.
And they were helped, of course, by an aspect of Liebesman’s character that both drove him and would pursue him down the years – an overweening sense of ego-identity, “that sense of identity as gained from self-perception and others’ perception of him,” and ego-ideal.”7 As some observers commented, Liebesman was a man who, over the course of his career and as he became increasingly wealthy, became intoxicated with his own ego, drunk with a sense of his own importance.
It is entirely reasonable to suppose that Liebesman was easily persuaded of the impact such a deal – a minnow swallowing a whale – would have had on the market. And imagine what it would do for him, Liebesman. It would make him the darling of the analysts, a new wunderkind.
What had taken place was that Liebesman, acting for FSI, had bought Simchowitz’s 47% stake in Waicor, W&A’s holding company, for R105m (though Simchowitz later stressed that the vendors included other shareholders). The purchase price was R35 a share – a whacking premium of 54% over the ruling price for the counter the day before of R22,75.
“Could it be,” asked newsmagazine Finance Week8 “that Mannie Simchowitz has managed perfectly legitimately to end up outside SA with [US] $21m on this deal? It all rests on the assumption that, in February, Simchowitz himself was behind a bookover of 2m Waicor shares. The bookover price was R5 against a market price of R7. The buyer was understood to be non-resident and the purchase was paid for in financial rand [long since removed, similar to China’s current renminbi, a currency designed to attract international investors at substantial discounts] then trading at around $0,23. The purchase…would have cost $2,3m.
“ Now, if those 2m shares have been sold at R35 apiece with the financial rand trading at closer $0,30, that $2,3m investment turns into an exit price abroad of $21m.”
All this also meant that, aside from enabling Simchowitz and others to realise substantial cash gains, in terms of the rules of the Stock Exchange, Liebesman was obliged to put down a stand-by offer (at the R35 price) to Waicor’s minority shareholders. In the event that all the minorities were to accept, the total cost of the transaction would amount to a hefty R224m.
A train of sizzling results and events then followed.
For the full financial year to December 1987, both FSI and W&A returned extraordinary results. W&A, under the stewardship of CE Brian Joffe, returned an earnings increase of better than double. Further up the ladder, FSI delivered interim earnings that were treble those in the previous year.
But all this was overshadowed by what happened on October 19, 1987. Many will have forgotten the heady days of 1987. That was when stock exchanges everywhere were feeding happily off the phantasmagoria of what seemed an endless boom.
In fact, the New York Stock Exchange peaked on August 25 of that year. Curiously, the fact that the Dow Jones industrial index had reached an all-time high seemed unimportant – it prompted barely a stir. The only mention of it in the Wall Street Journal was buried in the “What’s News” column where the paper quoted a trader as saying “In a market like this, every story is a positive one. Any news is good news. It’s pretty much taken for granted now that the market is going to go up.” 9
That was the day the market showed its first sign of hesitancy. Stock prices started to come off their highs; even so, there were few worries and an analyst was quoted as observing that “the bears finally climbed to the top of the ladder and fell off.” He was right – for a while. Over the next two weeks, the market worked its way ever higher.
Then, on October 6, it took a sharp turn south. The Dow Jones lost 3,5%, a new record decline in a single day. Over the next week, the market continued to fall steadily. Until Friday, October 16. The market opened 10 points higher and immediately started to drop. When it closed, it had fallen 4,6%, another record.
In the United Kingdom the southern counties were struck by a violent hurricane. Parts of London’s famous Hyde Park were flattened. In the Kent village of Sevenoaks, a mink-and-manure dormitory town for London, three of the ancient oak trees were uprooted, much to the dismay of the residents. It was almost as though, in true Shakespearean tradition, the elements had provided a suitable overture for what was to follow.
Monday, October 19, soon to be named Black Monday, was the day the market finally crashed. In New York, the Dow Jones Index fell a colossal 22,6% and, by the time trading ended, the Exchange’s combined value was more than a third less than it had been just two months earlier.
This was the new environment in which Liebesman suddenly found himself. It meant troubles of such dimension that they would – eventually – bring him down. He had persuaded some shareholders not to take up the stand-by offer he had been obliged to make to minorities when FSI took control of W&A. Instead, they held put options. For the time being, given the way in which W&A was performing, its share price along with its flying results, they were happy enough to sit back and relax.
But the colossal collapse of the American stock market, likened by many at the time to the beginning of the Great Depression nearly 60 years before, meant that billions were being written off the share prices of companies around the world.

And then came the second sign of trouble. Joffe, a prime anchor man in W&A’s executive structure, figured he could do a lot better on his own. He resigned on the premise that he would be able to buy W&A’s property subsidiary Aurochs which he wanted to turn into a major trading company specialising in food and related products.

Joffe’s departure was “undoubtedly a pity. Joffe took W&A subsidiary E W Tarry’s turnover from R5,5m in 1984 to 204,7m [in 1987]. But it was probably inevitable that two young men, both dynamic and ambitious, would have some problems. Joffe had a completely free hand, but Liebesman, CE of FSI, after having to borrow more than R200m to buy the group, would naturally want to make his mark on it. It seems a reasonable assumption that there were some differences of opinion and management styles.” 10
As it turned out, FSI’s shareholders, led by Simchowitz from his London perch, rejected the deal. Joffe left anyway – as it transpired, to untold riches.
Meanwhile, in the same month Joffe decided to plough his own furrow, Liebesman unveiled a massive restructuring of both the FSI and W&A groups. Though he had been forced to borrow massively to fund the total payout of those minorities that chose to walk, Liebesman had, nevertheless, persuaded institutions to cough up another R121m through a rights issue. Investors were behaving as though the problems that followed the global melt-down just seven months earlier were of little or no consequence.
“The company,” said one financial journalist, “will be rock solid financially. Liebesman, 35, an auditing clerk only eight years ago, will have personal control of an international group with assets of R1,4bn.
“He [Liebesman] is an informal young man of few pretensions. Surveying the fountain outside his picture window on the sixth floor, the acres of carpet and the artwork, he adds: ‘It looks like an ivory tower, but we’ll do everything we can to prevent it from becoming one. I intend to stay close to the operational action.” 11
It all sounded as though Liebesman had surmounted what might otherwise have been an unclimeable Everest. But even though he had, according to one newspaper headline at the time, joined the ranks of South Africa’s top 20 industrial companies, all was not as it seemed.
Liebesman kept on raising money through rights issues – between five companies in the group, a total of R294m in November 1988. A year later, FSI was named the top company in the Sunday Times’ Top 100 company survey and in March 1990 W&A was able to brag its annual turnover had topped R2bn.
Later that year, leading financial journalist Jim Jones reported on the first obvious cracks in the FSI armour. “For every one of its champions,” he wrote, “FSI can apparently count on a detractor – perhaps not surprisingly, given the confusion that seems to surround the group.
“’Liebesman is running nothing more than a paper empire,’ complains one broker. ‘He’s still deep in the mire with the debt the top company had to take on when the October 1987 market Crash landed him with 97% of Waicor,’ chimes in another. In stark contrast, yet another believes emphatically there is nothing ‘sinister’ about the planned restructuring.
“The brokers’ indecision underscores incomprehension among the investment community of the group, which really got into gear when Liebesman bought control of W&A from Mannie Simchowitz in 1987. That incomprehension has, in several cases, led to concern about the state of the group and the reasons for restructuring.”12
This process of endless restructuring, all of which amounted to nothing less than a highly complex and cleverly designed method of throwing sand in investors’ eyes, could not continue indefinitely. By the time the results for calendar 1991 (the same as the group’s financial year) became available, the numbers were beginning to tell tales of their own.
The debt-to-equity ratio had jumped over three years from 0:47 to 0:87 [meaning debt stood at 87% of shareholders funds], the pre-interest margin had fallen from 12,4% to 10,3% and the market capitalisation of the company was down at R449m. The share price over 1991 hit a high of 575c in October. By the time the company (Waicor) released its annual report for comment it had fallen 30%. In addition, asset sales totalling R590m during that year had been applied in reducing the debt burden but the dividend had been raised from 20c in 1989 to 43,3c.
And there was certainly one asset sale that raised eyebrows. It concerned Arwa, the hosiery company which had been bought out of the Cape-based conglomerate Tollgate by that group’s former chairman, Johan Claasen.
He had been prompted to make the purchase in June 1990 (for R43m) by Tollgate’s banker, Trust Bank, a subsidiary at the time of Bankorp [itself controlled by the giant Afrikaner life assurer Sanlam]. R39m was advanced to Claasen to enable him to make the purchase.
But Trust was so substantially exposed to Tollgate that, in the event that group went down the proverbial liquidation tubes, it would itself be in serious trouble – and that, in turn, would imperil Bankorp itself with dire consequences for South Africa’s financial system.13
And Tollgate was in trouble. When UK businessman Julian Askin, in his earlier years a South African resident, arrived on the scene fresh from a notable triumph in Britain, Tollgate was in play – but Askin refused to have anything to do with it unless its debt burden was reduced and part of the key to that was in removing Arwa. This explains Trust Bank’s desperation to oblige Claasen to buy it out of the group. 14
Once Arwa was out of the way, Trust Bank’s credit department then decided it needed to get its money back somehow – or at least some of it – and get Arwa and Claasen off its books. A senior executive of the department, Hennie van der Merwe, gave an instruction: “Issue Summons,” he instructed the bank’s legal department, “now on the R39m guarantee before the 31.12.90 [the date on which Tollgate’s underpinning guarantee would expire] because there cannot be a problem.” 15
“Desperate to achieve a solution before the Tollgate guarantee expired, the bank called the loan. On Christmas Eve 1990, at six in the afternoon, Claasen was notified that he had to repay the R39m at 10 a.m. on 27 December – a difficult task given that both Christmas Day and Boxing Day [Dec 26] were Bank Holidays. Effectively that gave the unfortunate Claasen ninety minutes of a working day. He was therefore obliged to surrender his assets, including his holding in Arwa.” 16
But worse was to follow. Indeed, the chain of events was so extraordinary as to be almost unbelievable.
The FSI (W&A) Group owned Burhose, a substantial maker of hosiery, pantyhose ware included. That made Arwa one of its prime competitors. If it succeeded in getting control of Arwa it would pretty well have tied up the South African market. In fact, W&A had made an offer earlier for Arwa with a price tag of R33m, an attempt that was stifled by the competition authorities.
This time, Trust Bank offered Arwa to W&A and didn’t demur when it was offered a paltry R9,3m.
What was intriguing about all this was that Liebesman was a nonexecutive director of Senbank – and Senbank was Trust Bank’s affiliate in Bankorp. Nor should it pass notice that, at that time, W&A had been allowed to run up a debt with Senbank of R1bn. Though those involved will deny that any information regarding Arwa and Claasen was passed from one bank to the other, it is impossible to conclude otherwise.
Worse followed. If you can believe it, the same Van der Merwe who was responsible for the Arwa account in Trust Bank, who had entered into the original agreement with Claasen, had given the instruction that led to the demand on Claasen for immediate repayment and had then negotiated the sale of Arwa to FSI, left Trust Bank and joined W&A as its deputy chairman. He was handed a “joining bonus” of R5m.
A few months later, W&A sold off its entire hosiery business to the American Kiwi Brands Corporation for a massive R200m, of which R65m was accounted for in the value accorded to Arwa.
This is an extraordinary “tale-within-a tale” and what it most illustrates is the complete absence of ordinary morals, ethics and principles. Neither Liebesman nor Van der Merwe, the latter very clearly a man out for himself, showed the slightest compunction in helping themselves to the assets of a man obviously in trouble. In fact, they engineered the “trouble” and then delivered a brutal knockout blow when he was down.
This is not the end of Van der Merwe’s role in the W&A saga. He re-appears later, once again in the most surprising of circumstances.
Meanwhile, the group lurched along. In what was described as an “expert opinion,” David King of Laird-Andrews, a business providing value-planning services intended to enhance shareholder wealth, the conclusion he reached was that “In terms of Market Value Added, W&A features poorly, having destroyed shareholder value by R322m.” 17

1 Financial Mail, Sept 18, 1987

2 Ibid

3 Rolfe was another charted accountant. After acquiring an MBA at Colorado, he returned to South Africa where he took control of Universal Clips, later sold into National Bolts, still later brought by Liebesman for FSI. Financial Mail, Sept 18

4 Finance Week Sept 19, 1987

5 Sunday Times Sept 13, 1987

6 Manfred Simchowitz, a mercurial, larger-than-life, occasionally ebullient businessman, launched his real business career when he bought the firm W&A, then ailing, from its owners, Messrs. Weil & Ascheim in 1971 for R560 000. He built it into a diversified conglomerate with turnover in excess of R1,5bn and with assets of around R1bn. He emigrated, first to the United Kingdom in 1986, and later to the USA where he lives for some of the year in Los Angeles

7 Oxford English Dictionary, 1993

8 FW, Sept 17, 1987

9 Wall Street Journal, Aug 26, 1987

10 FM, May 13, 1988

11 Sunday Times, June 26 1998

12 FM, Aug. 24, 1990

13 Dangerous Deceits” by Frank Welsh, published by HarperCollins 1999

14 Ibid

15 Ibid, p185

16 Ibid

17 FW, June 11, 1992

Humpty-Dumpty had a great fall
Early the following year, the market woke up to the news that W&A was proceeding with yet another rights issue, this time for R500m. Liebesman’s problems, notably the never-ending debt mountain, had proved too much.
“In what can only be described as a coup of breathtaking proportions, W&A’s Jeff Liebesman has secured an injection of R350m in fresh capital from JSE-listed star performer Trencor.
“Trencor’s investment will give it join control of the recapitalised W&A group. In terms of the agreement, Trencor will invest R350m by underwriting the rights offers and by taking up rights renounced in its favour by companies in the W&A group.
“Seen from W&A’s viewpoint, the arrangement is nothing short of manna from heaven. Hard pressed in terms of its gearing ratios, burdened with a huge load of interest commitments, and viewed with scepticism in the investment community, Liebesman has succeeded, in one astonishing blow, in restoring his asset-rich group to a modicum of financial respectability.
“’I would never have dreamt that Liebesman would persuade Trencor to invest in W&A,’ said one bemused analyst who confessed he found it difficult to understand what synergistic benefits could be in it for Trencor.
“It is how this marriage will turn out which will have the financial community agog over the months ahead.” 
Barely ten days after that article appeared, the Financial Mail returned to the W&A and Trencor story with a lengthy and detailed leading commentary.
“Why would a highly focused company like Trencor − developed, mature, enormously successful, confident and cash rich − see any merit in the acquisition of a group plagued by unsatisfactory gearing ratios, burdened with heavy interest payments and viewed with suspicion by institutional investors? This is a litany with which Trencor chairman Neil Jowell surely wouldn’t normally be associated.” 
As Jowell would have it, the reason was that Trencor was restrained from investing any further overseas by exchange control regulations. It had been seeking expansion opportunities and W&A, asset rich and cash-shy, looked ripe.
“Good marriages, it is alleged, are made in heaven. Flamboyant Liebesman (40) and reserved Jowell (59) make an unlikely pair at first sight. Liebesman is very conscious of his new partner’s expertise and knowledge; more than that, he’s acutely aware of the power he’s been obliged to hand to Jowell.
“[All this]…raises questions about Liebesman’s relationship with Jowell and Trencor. The rapport between them appears genuine. But joint chairmanship and joint control agreements rarely seem to last long in practice.”
And the newsmagazine concluded that “Liebesman and Jowell both deserve to be successful in this venture and in their new-found partnership. But corporate life operates on its own imperatives: it might be worthwhile for Liebesman to ponder the really difficult part of making relationships work after the wedding feast.” 
By the time W&A’s financial statements for calendar 1992 were released the damage that had for so long been hidden from view was there for everyone to see.
“The final dividend has been passed and there is blood all over W&A’s accounts. Not that this should have come as a surprise. The FM warned the day of reckoning was at hand after interviewing chairman Jeff Liebesman and white knight Neil Jowell...No investor can read these accounts without concluding that major changes to the style and conservatism of the underlying accounting policies have been applied. But it was logical that new partner Trencor would insist on this and it is probably wise to take the punishment on the chin in one blow.
“This leads, of course, to the forthcoming rights issue. It is interesting to note that this has grown to R650m − previously it was supposed to raise R500m.” 
Then, after another disaster, this time involving AAF, the W&A group’s London Stock Exchange-listed subsidiary in which about R100m was lost, it became clear that Trencor had lost patience with both Liebesman and his leading associates.
“It was hot in Cape Town last week: bright days and azure skies,” wrote a Financial Mail financial correspondent. “But it was hotter in the boardroom of Trencor. This blue-chip company now looks dishevelled after its affair with W&A, the conglomerate which Trencor rescued from bankers last year.
“Hasson returns to Johannesburg with an uncompromising, unequivocal brief: he must tell W&A joint chairman Jeff Liebesman, a whiz-kid and self-made tycoon, that the parting of the ways has come. Barely a year since the marriage, Trencor is filing for an instant divorce.
“I don’t know what Hasson said to Liebesman. He won’t tell me; neither will Liebesman (who refuses to speak at all). But it must have been a savage conversation. Liebesman signs a latter of resignation and leaves W&A’s elegant offices in Doornfontein.
“Next, Hasson turns to financial director Neville Cohen. Whatever he knew, whatever his role may have been, he is not wanted. Cohen tenders his resignation.
“…The conclusion that has to be drawn from his [Liebesman’s] rapid departure and the market’s positive response to the news, is that there is more to this than Liebesman’s youthful exuberance conflicting with Jowell’s celebrated conservatism.
“Shareholders will have to be told in greater detail and with more candour about the sources of these irreconcilable differences. Neither the Jowells nor Liebesman will gain in credibility by remaining coy.” 

Jim Jones, by now editor of South Africa’s daily business newspaper, Business Day, delivered a pungent eulogy: “The final message was written on the wall earlier this month when Trencor announced plans to raise R800m in a last-ditch rescue attempt of debt-burdened subsidiary W&A. The rights issue underscored the full extent of the mistake well-run Trencor had made in acquiring control of Jeff Liebesman’s W&A.

“Drastic measures were needed. And, when it became clear that the institutions would not back the rights offer while Liebesman remained with the group, he had to go.
“Liebesman’s slide to disaster began in October 1987 when his brash FSI company bid for Waicor, the controlling company of Mannie Simchowitz’s W&A. The R35-a-share bid for Waicor represented an effective 880c a share for W&A. Liebesman calculated that the JSE’s bull run was unstoppable and did not even consider the possibility that he might have to stump up cash. Two days later the JSE collapsed and the share prices of FSI and W&A dropped by about half. Simchowitz, who was packing for Los Angeles, indicated he would be taking the cash option.
“Liebesman put a brave face on things. He was and still is one of the most creative corporate accountants in town. And he reckoned that the fact that FSI had to borrow heavily for its W&A acquisition and pay cash to Waicor minorities who sensibly followed Simchowitz’s cash election was manageable.
“….The situation deteriorated behind a veil of creative accounting. Even conservatively run Trencor was confident that problems could be managed…Whether Trencor was fully informed of the true state of affairs is debatable. Clearly it was not informed about the problems developing in London-listed AAF Industries. In the past Liebesman had hidden details of his group’s foreign interests, claiming disclosure would prejudice foreign operations.
“AAF had to sell assets and Liebesman refused to divulge any more details than had appeared in the official announcement. That was one of the final straws for Trencor, which had been looking inept.
“By November 1993 when Campbell Belman produced their last Company Confidence Predictor, FSI was ranked bottom in all respects….The Campbell Belman list was damning.” 
Liebesman’s departure was made simultaneously with that of Neville Cohen, the chartered accountant who had, once upon a time, been his boss at Kessel Feinstein. That left Ray Hasson as the sole executive chairman of W&A.
It is easy enough now − with the unfailing vision that hindsight bestows − to see that, when Liebesman was finally obliged to seek a financial underpin for his failing businesses, he did so believing he had covered his tracks. But he reckoned without Ray Hasson, an engineer by discipline and training, and a man who never flinched in his pursuit of the truth.
To their shock and horror, Trencor’s directors discovered that things at W&A weren’t at all what they seemed. Snakes started emerging from the woodwork as Hasson calmly worked his way through the mountains of information.
He was looking for something, anything, that would unlock the door to Liebesman’s secrets. He found it finally in the case of the errant Rolls Royce. Some years earlier, Liebesman had bought a Rolls Royce, an extravagant and ostentatious vehicle in a country in which millions of its citizens live in poverty.
Whose is the Rolls? asked Hasson. Without flinching, Liebesman responded that it was his. But Hasson wasn’t satisfied. He wandered off to the back office where he casually asked the bookkeepers whether there had been any payments on the car. And there they were.
That was why, two years after making the investment, Trencor instituted a legal action against Liebesman and W&A’s auditors, Kessel Feinstein. The circle had been squared.
The matter was lodged in 1995 and settled eventually in 1997. A confidentiality agreement prevented any details of the settlement leaking out. Hasson refused to comment on any of the negotiations though the media carried startling stories over a long period. Liebesman, of course, wouldn’t talk to anyone.
But in 2003, court papers containing the settlement were made available to the media. These revealed that Trencor and companies in the broader W&A group had sued for repayment of about R86m. They also revealed rather a lot more.
Among a litany of accusations, Trencor alleged that Liebesman had arranged for alterations to his personal home, costing almost R2m, to be paid for by a group company. He had also used company funds to redeem the various debts of his brother, Brian Liebesman, amounting to R1m.
In another matter, Liebesman arranged for W&A to pay off R5,65m of debt incurred by a company involving his cousin, Ernest Leibowitz. And he even succeeded in getting the group to pay for his son’s expensive barmitzvah party (R37 000), held at the Sandton Sun hotel.
Finally, Trencor turned its attention to a company called Confor Investments One, owned solely by the Liebesman family and close associates. “During the period 1989 to 1993 Liebesman and Cohen caused numerous other payments to be made from the funds of [W&A group companies] to or for the benefit of Confor and themselves. In causing the said payments to be made, Liebesman and Cohen were not acting bona fide in the best interests of [W&A group companies], but with a view to benefiting Confor and themselves.
“…the amounts represent monies paid wrongfully and in consequence of a breach of fiduciary duty committed by Liebesman and Cohen…Furthermore, to the knowledge of Liebesman and Cohen, a number of the payments were, in contravention of s38 of the Companies Act, made to assist Confor and other entities controlled by Liebesman and Cohen to acquire shares in group companies.” The amount claimed was R41m.
What came out of the court files was a cryptic fax from Cape attorneys Sonnenberg Hoffmann Galombik dated March 1997 in which the settlement was recorded.
Hasson uncovered mountains of evidence that led to only one conclusion - that Liebesman had deliberately defrauded his own companies (and, therefore, his fellow shareholders) of substantial sums. Hasson was satisfied he could prove to a court that nearly R100m had been subsumed into the maw of the Liebesman family, among many other serious irregularities.
In point of fact, he had plenty of additional evidence that pointed to much more. His problem was that he would not be able to prove it beyond a reasonable doubt. Adding these “doubtful” thefts to those he knew were based on solid, irrefutable, evidence would only weaken the overall case. Hasson, chose, therefore, to omit any claims he could not prove absolutely.
So, Liebesman had finally met his match. But he could still muster up a defence, even though his situation looked hopeless. First, he lodged claims against his former companies that amounted to very nearly the sum Trencor and Hasson were claiming. Then, Liebesman surrounded himself with high class legal brains. He wanted to be quite certain he wasn’t about to sink without a formidable fight.
But this wasn’t all. He turned to the Jewish community, famous everywhere for its willingness and readiness to come to the aid of those of its folk in trouble. Liebesman had been rich, well sort of. He had made free with money. Not always his own money, true, but he donated readily and no one was about to ask questions that might cook the goose. Besides, in those days, no one had any inkling of the limited extent of Liebesman’s personal cheque book.
And some influential people responded readily enough to Liebesman’s SOS. The rescue charge was led by Eric Ellerine himself, personally fabulously wealthy from his colossal furniture empire. He denied this.
As the date finally set down for the court case to be heard came closer, so Liebesman’s friends put out feelers to Trencor and Hasson that might lead to a negotiated settlement. As everyone knows, and as the famous British statesman and warrior, Winston Churchill, once observed, jaw-jaw is better than war-war. In any event, the outcome of court actions is never certain and some experienced observers suggest the odds either way are flirtatious and unfathomable in the extreme.
But Hasson proved uncompromising. He was absolutely satisfied that Liebesman deserved to be locked up and he was determined that was where he was going - behind bars.
But, before the matter reached the High Court, Hasson died, killed in a motor accident while travelling by car to Johannesburg’s International Airport. Seen from the viewpoint of Trencor, Hasson’s death was both untimely and premature. It was, in fact, nothing short of disastrous for Jowell who was left without a long- time friend and ally and a man whose personal integrity was impeccable.
But it provided Liebesman with a respite - and, let it be said, an opportunity he was quick to capitalise on.
On the basis that if you don’t talk, you’ll never know, and given that Trencor had just lost the one man whose finger was on this pulse, the company went along with the talking.
The story of the Jowell family fortune is worth looking at, however briefly. Its origins lay in the tiny dorp of Springbok in the remote northern reaches of the Cape Province. The Jowells provided a comprehensive transport service to the wider farming community, made up mostly of Afrikaner farming families. This was very much in the tradition of Jewish traders, smouses as they were known, who followed the travels of Afrikaner communities during the nineteenth century in their quest to escape British suzerainty and supplied them with gunpowder bullets, pots and pans, cloth and essential food items such as salt.
Over the twentieth century, the Jowell family flourished because it recognised early the need to get cosy with those such as civil servants and their political overlords in the Department of Transport. In those days, road hauliers required special permits to operate across designated routes. The permit system was, in effect, a licence to print money − and the Jowells had Springbok and its surrounding region tightly wrapped up.
Under the next generation, the Jowell family took a quantum leap. It expanded until it was almost unrecognisable. It moved into the multi-use, international container industry, a sector that reached its apogee in the early to mid 1990s. The move made the Jowell business, Trencor, a darling of the investment community.
And it was at that time that Liebesman arrived on Trencor’s front door, offering joint control of a conglomerate with an international reach which was filled with sparkling assets but which was burdened by a crippling debt load.
Trencor had already discerned the limits to the growth opportunities in the container business. The brothers Neil and Cecil, the two men who had propelled the company to new heights, were casting around for suitable avenues into which to channel the company’s cash resources. Exchange control barriers precluded them from expanding abroad and South Africa seemed pretty well tied-up.
On the face of it, then, the W&A group must have appeared as a heaven-sent opportunity.
But they could not have anticipated the lengths to which Liebesman and Cohen were prepared to go to dissemble. Though Trencor’s auditors, at the time Arthur Andersen conducted what they claimed was a detailed due diligence (which Hasson was later forced to concede wasn’t thorough enough), the big question was why had so much gone wrong since then? The AAF disaster in London was simply at the end of a long farrago which, as it unravelled, exposed a breathtaking readiness to pervert every business ethic and a willingness to take unacceptable risks with other people’s money, even to the extent of committing fraud.
Once Hasson had pieced together what he could of Liebesman’s activities − along with those of Cohen and auditors Kessel Feinstein − Trencor was resolved to bite back, understandable in the circumstances. Jowell might have been tempted to sweep it under the carpet and get on with restoring W&A to health (there has never been any suggestion he would) but, in any event, his own shareholders would have demanded action.
So, when Trencor launched its action, even Liebesman must have finally realised he was between a rock and a hard place. Trencor’s detailed and complicated summons demanded repayment of about R90m, money it believed it could demonstrate to the satisfaction of any court had been extracted by illegal means. With the kind of devil-may-care insouciance that the investment community had come to expect of Liebesman, he and Cohen launched counter-claims of about R100m. All they could have hoped to gain from that tactic was to delay matters.
The one time senior partner of auditing firm Kessel Feinstein, Kas Herman (he was cited by Trencor as one of the correspondents in the summons issued against Liebesman, Cohen et al) has since revealed to Frangos the details of the secret meeting that took place between Trencor and a number of individuals after Ray Hasson’s death. It was that meeting that delivered the miracle that saved Liebesman’s bacon.
The investment community was frankly taken aback to learn that the argument between Trencor and Liebesman had been resolved though one analyst commented much later that, in the circumstances of Hasson’s death, Trencor probably didn’t have the stomach for an extended, knock-down fight.
So what had taken place? As it now emerges, a secret meeting convened in February 1997 in the offices of Gustav Benjamin Liebmann who was Liebesman’s attorney. Present at that meeting were the furniture king, Eric Ellerine (he denied ever having played any role in this), banker and co-founder of Investec Bank, Errol Grolman, Julius Feinstein (founder of Kessel Feinstein), Neil Lazarus, a prominent senior counsel specialising in corporate law, Michael Hart, now chairman and senior partner of the prestigious corporate law firm, Deneys Reitz, Liebmann and, of course, Liebesman himself.
Representing W&A and, therefore, Trencor indirectly, was the man who, a few years earlier had denuded Johan Claasen of his ownership of Arwa, handed it on a plate to Liebesman, who had then joined W&A, had become its deputy chairman − and had survived unscathed, Hennie van der Merwe.
There can be only one reason for Ellerine’s presence at the meeting − Liebesman had presented him with repeated opportunities to enrich himself through FSI and W&A and, if he could help extract Liebesman from the hole he was now in, there was a promise of much more to come down the line. Reviewing what later happened at Corpcapital, and the extent of Ellerine’s inexplicable support for Liebesman in the face of contrary evidence, it is not possible to arrive at any other explanation.
Grolman’s sudden appearance is less understandable. Yet, as with Ellerine, his subsequent deep involvement with Corpcapital, of which he became a senior executive director, sheds light on his actions in 1997. The information now available suggests that Grolman was motivated primarily by the opportunity that Liebesman’s difficulties presented to enable him, Grolman, to externalise some of his assets.
Finally, and perhaps most important, by the time of the secret meeting, Ellerine had already prevailed on Frangos for his active support as a co-founder (and chairman) of Corpgro. This was the small (at the time), unlisted company that was the vehicle for Liebesman’s rehabilitation. The last thing any of those involved with Liebesman wanted was for Trencor’s case against him to arrive on public display in the High Court. The damage that would cause would be irreparable.
The purpose of the meeting was to finalise what had obviously been a long gestation during which there had been much to-ing and fro-ing between emissaries seeking resolution. At its conclusion, Grolman handed over a cheque for R30m. It was accepted on behalf of W&A and Trencor by Van der Merwe.
This was not a partial payment. It was a final settlement. Liebesman and his associates appear to have made off with R90m over a period of some years and were now off the hook with a repayment of R30m. On the basis solely of simple arithmetic, this demonstrates that crime does indeed pay.
From among the welter of information later amassed by Frangos, emerges details that suggest Grolman’s West Indies company, Frampton, was the recipient of moneys accessed off-shore by Liebesman and his attorney, Liebmann, from Peter Moss, an émigré South African. Moss played a major, if hapless, role in kick-starting Corpgro, later Corpcapital.
What appears to have taken place is that Grolman − perhaps with others − made available the money need to settle Liebesman’s obligations to Trencor. He recovered these outside the country, thereby short-circuiting South African exchange control regulations.
Grolman is an intriguing character. Short in height, of limited physical presence, nevertheless there is little doubt that he is unusually clever. In the estimation of many, he is probably among the smartest businessmen of his generation. But some observers have also commented that his obsession with money and wealth may well have been the cause of his abrupt removal from Investec Bank, which he helped to establish and which is now the country’s fifth largest.
Frangos says of Grolman that his own involvement with him was coloured by his approach to company ownership and the entitlements of executives. Grolman made it abundantly clear to Frangos − not once but often − that, in his view, managers are the most significant element in any company. Their recompense is paramount; shareholders come a poor second. And Grolman bluntly told Frangos, then chairman of Corpcapital’s board of directors’ remuneration sub-committee, that he, Grolman, would play a significant role in determining who got what share.
Nor was he, recalls Frangos, beyond shifting the goal posts. “I can recall one occasion during which I remonstrated that a particular demand was out of bounds. It was not what the nonexecutive and executive directors had earlier agreed. That was then, responded Grolman. This is now. And the rules have changed.” 

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