October 29, 2009 / 12:50 PM / 10 years ago

S.Africa seeks global freeze of Tannenbaum assets

* Businessman accused of $1.6 bln fraud

* South African assets already frozen

By Serena Chaudhry

JOHANNESBURG, Oct 29 (Reuters) - South African authorities are seeking a global freeze of the assets of a businessman accused of orchestrating a 12.5 billion rand ($1.63 billion) fraud, a government spokesman said on Thursday.

Lawyers and investigators working for investors have accused Barry Tannenbaum of operating a Ponzi-style scheme that has been compared with the one used by convicted U.S. swindler Bernard Madoff, albeit on a much smaller scale.

Tannenbaum promised annual returns as high as 200 percent which he said were linked to pharmaceutical imports.

Adrian Lackay, a spokesman for a government task team established to investigate the scheme, said the country’s prosecuting authority was seeking a global preservation order over assets in Tannenbaum’s name.

“I don’t know if it has been filed yet, but it is something that will be done,” Lackay told Reuters.

“We want to move on to a preserving worldwide order and I think our position from June, when the task team was appointed, to now, we are much better informed ... but we are still uncovering information, almost on a weekly basis.”

He said the National Prosecuting Authority (NPA) also wanted to freeze assets belonging to Dean Rees, a South African lawyer linked to Tannenbaum.

The NPA was not immediately available for comment.

A South African court has already frozen Tannenbaum’s assets in the country. The businessman now lives in Australia.

South Africa’s Finance Minister Pravin Gordhan said on Tuesday arrest warrants had been issued for Tannenbaum and Rees.

Neither Tannenbaum nor Rees immediately responded to emails from Reuters seeking comment on Thursday. Lackay said he could not confirm whether a unit of South Africa’s police force had directed the arrest warrants to Interpol to make a worldwide application.

“That was the idea when it was announced, I don’t know if it has been done yet,” he said.

Qatar’s Barwa Real Estate BRES.QA said on Wednesday it had been successful in a bid to provisionally isolate the estate of Rees after it obtained a freeze order for his assets on Sept. 1. Rees has until Feb. 9, 2010 to give reasons as to why the sequestration order should not be made final.

Barwa said in June it was seeking repayments from a company operated by Tannenbaum and had stopped a $40 million revolving credit facility it had been providing.

Tannenbaum denied any wrongdoing in June. [ID:nLC527260]

In July, a source close to the matter said Tannenbaum had admitted to forging documents to deceive Qatar’s Barwa Real Estate BRES.QA, citing an affidavit used by Barwa in a UK court application to freeze Rees’s assets. [ID:nL2902297]

Tannenbaum operated through the Frankel International and Frankel Chemical Corp companies.

Reporting by Serena Chaudhry; Editing by John Stonestreet and Erica Billingham $1=7.678 Rand

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