Raiders of The Tomb (Part I)

Read Raiders of the Tomb Part II and Part III

If the dead could speak, this tale would have them screaming. In an on-going investigation using custom-designed software, this team of journalists and data processors have tracked a multi-million dollar scheme by some former and current FirstRand Ltd executives who used their positions to stuff their accounts with proceeds from deceased estates. What seemed like a perfect economic crime to its perpetrators was successfully concealed for almost a quarter of a century. But the steely jaws of justice are done with nibbling, and are ready to bite.

It’s long been alleged that among banking executives there are those with longer arms than the law – and deceased estates are among their favourite sites for plunder. Especially where the late client’s affairs are distributed across a plethora of accounts and holdings, sometimes reflecting their own not always honest-to-the-letter strategies for accumulating massive wealth. 

Our report indicates the need for a much wider investigation into how executives of FirstRand Ltd and various of its subsidiaries, have secured the billions that let them own wine and game farms, multiple huge homes, luxury yachts, private planes and helicopters; influential stakes in nearly every sector of the economy – from mining, telecommunication to media.

Our story begins in 2005, with a fairly simple income tax inquiry from the US Inland Revenue Service (IRS) to a South African citizen living in the States, Analize van Tonder. The request, channeled through accounting and audit firm PriceWaterhouseCooper, acting as her financial advisers and tax consultants, was about her off-shore (i.e. South African) earnings. Analize forwarded the inquiry to FirstRand Limited’s subsidiary, First National Bank Trust Services, which had been administering her late father’s estate and a testamentary trust the late Frans Johannes van Tonder had had set up.

Analize got no response. FNB Trust Services simply would not respond – probably hoping the IRS demand would go away. After almost a year of waiting, and about to end up in the (in)famous IRS’s bad books, Anlize Van Tonder jetted into the country. A Stellenbosch University graduate who also holds a post-graduate degree from an American journalism school, she had decided to handle the matter herself.

Quickly terminating the services of FNB Trust Services, Analize began her own enquiries and soon enough discovered holes in the books of her late father’s estate. A number of strange payments had been made on behalf of the estate and the trust that the bankers could not explain. In fact she felt that FNB Trust Services were deliberately blocking her enquiries. No one with any authority would co-operate. With that her curiosity exploded.

Subsequent parallel investigations by Analize and the team of journalists have produced tens of thousands of records and documents. Normally the patterns would have taken years to comprehend, but new technology has vastly sped up the detection of what looks like an intricate mechanism of asset-stripping, tax-fraud, racketeering, money laundering and deliberate contraventions of various laws, including the Administration of Estate Act No. 66 of 1965, the Company Act No. 61 of 1973 (old Act), Income Tax Act No. 58 of 1962, Bank Act No. 94 of 1990, Trust Property Control Act No.57 of 1988.

In February 1989, Analize had just begun her third year studies at Stellenbosch University when her father was diagnosed with pancreatic cancer. Doctors gave him three months to live and he shopped around for the best deal in the management of his estate. Very soon the financial vultures, as journalist Greg Palast would call them, were hovering about. Everyone wanted a piece of the action. For starters, FirstRand executives dissuaded him from engaging lawyers, offering to handle everything. They wanted exclusive control of his huge investments.

This was a crucial historical moment. The apartheid regime had been pushed to the brink of collapse and was negotiating with the ANC. The release of Nelson Mandela was imminent. Many white South Africans were uncertain of their future in the country. This situation would come to play its part in what subsequently unfolded.

Van Tonder died on 5 November 1989. He had lived six months beyond the three his doctors had predicted. His daughter, Analize, had just turned 21. Believing his daughter would not be mature enough to handle the massive assets he was leaving behind in his estate, he had agreed with the bankers to the creation of a testamentary trust that would handle her affairs until she was to turn 35. Van Tonder also succeeded in negotiating a 50% discount on the administration and management fees with the bankers.

According to his personal phone logs, this ailing man was on the phone with FirstRand executives until just a few weeks before his death. He must have been constantly updating his lists of assets and liabilities. Some of the executives he talked to during those final days were later to feature in the subsequent asset stripping. A page of such logs can be found here.

Van Tonder was no Joe Soap. Judging by what our team of journalists and data processors have pieced together, he was one of the richest people in South Africa, with his wealth distributed in multiple personal and business accounts and portfolios across the country. For example this investigation discovered a security deposit box quietly held at the George branch of Standard Bank.

That he was a Gold Credit Card account holder was but a tiny sign – his wealth were way beyond the minimum required to be in the club of golden accounts (the club was reserved for the truly wealthy). He invested heavily in tracks of land in nearly every part of the country. He held multi-million rands’ worth of stocks in listed companies and commandeered at least six companies of which he was the sole director and shareholder.

Through one of these, Pegma Minerale (Pty) Ltd., Van Tonder held mineral rights, which connected him to various mining houses, including De Beers. Through another company, Wema Konstruksie (Pty) Ltd., he had multi-million rand construction contracts, including, again, some with De Beers.

Three weeks before his death, Van Tonder sent for his daughter in Stellenbosch. “I was in the middle of my exams and had to drop my studies to fly to Pretoria to see him,” Annalize reports. On arrival at her father’s Pretoria sickbed, she found a FirstRand banker with him.

Her father introduced her to the branch manager and told her that she wouldn’t have to worry about anything after his death. “He told me that he only had one over-draft of R700,000, but that would be covered by one of his many life insurance policies. He had made legally sound arrangements for my financial affairs to be managed by the only people he could trust – the bankers at FirstRand.”

Those arrangements were made with FNB Trust Services that specialize in managing deceased estates, and, it would appear, with helping those who want to hide their assets by the creation of ‘shadowy trusts’.

Says Analize: “During the three weeks that I was with him in Pretoria before his death, he repeated that he would not trust lawyers to do the right thing by me. And that since he had been with the bank for decades, I didn’t have to worry.”

Two days after returning to Stellenbosch University, she got a call from her aunt with the news of her father passing away.

The arrangements with the bankers appeared sound and simple. FNB Trust Services were the executors of his last will and testament at half of the legislated maximum executor’s fees. The same will that provided for the creation of a testamentary trust (the FJ van Tonder/Analize Trust).

FirstRand Limited’s subsidiary was also to appoint the estate officers and trustees to handle the affairs of the estate and trust respectively – everything was kept in-house. Seemed sound enough.

The maximum professional fees chargeable by executors of the deceased estates are legislated and are often a percentage of the value of the estate. Yet, within days of his burial, the executors apparently decided to short-change their dead client by approaching the then-still-in-mourning young woman to get her to sign a letter altering the negotiated fees. They wanted more. These were the trusted individuals who had been instructed by their client that his daughter should not make any financial decisions until she turned 35 – but what the late Van Tonder didn’t know wouldn’t hurt him.

Our investigations started by attempting to trace the missing or undeclared assets. The software application being used has divided the assets into three; bank accounts, shares and immovable properties. The findings are mind-boggling – and show that it wasn’t just the estate of the Late Van Tonder that was robbed by the bankers, but that several other families have been seriously affected, and some have been rendered poorer than church mice.

With the evidence so far amassed, it’s not a matter of whether these bankers robbed the dead, but of how they did it and with whom. Unfortunately for those involved – bankers, accountants, lawyers, property agents and other individuals who benefited from the assets of the dead – the information is already out and no amount of intimidation will stop its flow.

That mid-level Provincial Department of Labour employee who suddenly bought a new R750,000 Jeep to trail people involved in the investigation would need to explain to the Receiver of Revenue how he could afford to buy such a vehicle with cash. Those private investigators who have been making strange midnight calls intended to intimidate – your fees were paid for nothing. The dissemination of information on this sorry enrichment scheme will flow on like the mighty Orange River.

As for how those involved believed they would not be caught out, we have to revisit the historical events of that period. These events must be looked at in relation with the racial classification of most of their victims and once again our computer application has been vital in helping develop a plausible view.

With the imminent liberation, which was expected to usher black leadership into power, some white South Africans, especially those with means, opted to migrate from South Africa. Most sold up what they had, to run, with no intention of ever returning to face what they believed would be a vengeful black leadership.

They however did not know that the anti-apartheid leadership (which of course included all races) well understood the principle enunciated by Mahatma Gandhi, that “An eye for an eye will only make the whole world blind.”

With Analize having departed for Europe and thereafter USA shortly before the first multi-racial election of 1994, the bankers must have lumped her with those hurriedly leaving the country for fear of the unknown, and surely didn’t expected her to come back asking questions. They were wrong. She told this team that the thought of permanently emigrating from SA never crossed her mind. This was the land of family, “My father’s buried in Gauteng – why should I abandon that?”

Once in the States, she found love and got married – but she kept her South African citizenship and remains proudly South African.

We would therefore start by dealing with various contraventions that occurred within a few months of the death of the late Frans Johannes van Tonder. We already know they took advantage of a young woman still mourning the death of her father to renegotiate higher executors’ fees that had taken her father at least nine months to negotiate. Part 2 of this series makes those renegotiations seems like child play. 

As for what our team has faced during the months of investigation – the levels of intimidation have been high. They include phone-hacking, house surveillance and car-tailing. It’s been like that real horror movie you would rather not watch a second time. When a laptop not connected to any networks suddenly wakes up and the in-built camera and microphone come alive, only to discover that it’s been transmitting whatever via Bluetooth your surely hadn’t set! When your email ends up in an inbox you’ve never used in ages! When your Blackberry phone suddenly wipes its entire contents as you watch it on a desk! We have had to abandon two relatively new laptops. We have had to sometimes drive around in rented, borrowed or swapped cars. These raiders have a lot to lose.