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Fri 3 Jul 2009 10:05 AM

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Qatar's Barwa defrauded by a South African - source

South African businessman admits to forging documents to deceive Qatar's Barwa.

A South African businessman accused of orchestrating a 15 billion rand ($1.93bn) fraud has admitted to forging documents to deceive Qatar's Barwa Real Estate, a source close to the matter said on Thursday.

The source, who asked not to be named, said Barry Tannenbaum had made the admission in a signed affidavit used by Barwa in a UK court application to freeze the assets of Dean Rees, a South African lawyer who the source said was linked to Tannenbaum.

The source was confirming an article in South Africa's Financial Mail weekly, which printed part of the affidavit on Thursday and said Tannenbaum had signed it.

"It is a legitimate document that has been signed by Barry," the source said when asked about the affidavit. "It was part of the application in the London High Court."

Reuters was not immediately able to obtain a copy of the document. Tannenbaum did not reply directly to emailed questions about whether he admitted to forging documents.

"No-one has accused me of having committed a specific crime," he wrote. Tannenbaum has denied wrongdoing in previous emails to Reuters. He did not answer a further email on Thursday asking for clarification.

Barwa said last month it was seeking repayments from a company operated by Tannenbaum and had stopped a $40m revolving credit facility it had been providing. The company declined to comment on Thursday.

According to the affidavit printed in the Financial Mail, Tannenbaum promised to "make full restitution" to Barwa in relation to financing of about $32 million to his company Frankel Enterprises Limited (FEL).

"I accept and acknowledge that with my knowledge and consent and participation and that of FEL, a number of documents including invoices, bills of lading and emails were altered or fabricated by me and by FEL (and other connected companies) with the intention of diverting or retaining funds owed to BARWA under applicable agreements," the affidavit reads.

Lawyers and investigators working for investors have accused Tannenbaum of orchestrating a Ponzi-style fraud that has been compared to the one used by New York money manager Bernard Madoff, albeit on a smaller scale.

A South African court has frozen his assets in the country. Tannenbaum now lives in Australia.

In the affidavit, Tannenbaum says his actions were taken "with the active encouragement and full knowledge of Dean Rees who acted on behalf of FEL and connected companies".

Rees did not answer repeated calls to his mobile phone on Thursday. Warren Goldblatt, a private investigator hired by investors to look into the scheme told Reuters that Rees acted as Tannenbaum's agent in South Africa.

Goldblatt said he had seen a faxed copy of Tannenbaum's affidavit and believed it was legitimate.

A spokeswoman for South Africa's National Prosecuting Authority said a task team made up of financial and law-enforcing authorities were still investigating the matter. (Reuters)

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