ALEC HOGG: David Alexander is with us in the studio. He's a fraud export. David, you're a fraud expert because you went to jail for fraud. I was just wondering, going back a little - did you ever think about taking the Aussie route before you went to jail? Was there an option in your mind, because it appears as though anybody who has done anything wrong in South Africa hops off to Australia and they cannot actually be extradited.

DAVID ALEXANDER: No, Alec, I never considered any route at all - the reason being I wasn't expecting to be caught. So it's only if you are expecting to be caught that you look for a bolt-hole. But that certainly appears to be true.

ALEC HOGG: So Mr Tannenbaum, who's been in Australia since 2007, the Mr Ponzi scheme we call it - R2bn that he's taken from investors. He must have expected that at some point in time the thing would have collapsed.

DAVID ALEXANDER: I would imagine so. This guy's back to in Australia. The high court said that they are reluctant to extradite people to South Africa because they regard it as being tantamount to a death sentence. I am sure at some stage that is going to be challenged, but Australia seems to be the bolt-hole of choice at the moment.

ALEC HOGG: How long did you spend in jail?

DAVID ALEXANDER: Five-and-a-half years.

ALEC HOGG: You came out and you're completely rehabilitated yourself, and that's why we love talking to you on this programme. Is it really as serious as that, or did somebody maybe con a few Australian judges?

DAVID ALEXANDER: Alec, it's certainly not a pleasant place, but then again it's not supposed to be a pleasant place. You are supposed to be punished, no matter how. Rehabilitation is part of it. But you are in there for punishment, you are there for retribution. It's not supposed to be pleasant. And yes, there is a high prevalence of Aids, but I think that to say it's tantamount to a death sentence - that's not correct.

DAVID ALEXANDER: Let's get back to Mr Tannenbaum. R2bn is a lot of money, but when you think about the type of people who were caught by this Ponzi scheme - Sean Summers, former chief executive of Pick n Pay, we've heard of other big names as well, highly respected business people - how did they manage to get sucked into this?

DAVID ALEXANDER: Alec, I think if you look at most of these high-profile things, it starts off, it works on a  chain of trust. So you have the guy at the top who either has great personal credibility, or has some sort of inherited credibility, he is a man that is trusted by people. And then typically he has people underneath him who again in their turn have their own credibility, their own aura of trust and respectability and sometimes infallibility. They are regarded as being savvy investors, very good people, they know what's going on in the market, and the tendency is to say if X had invested with this guy, and he trusts him, who am I to say that I don't trust him? And then what happens is I trust Mr B, and Mr B trusts Mr A, and I call into question Mr B's judgement, then it becomes an issue between us. And if I have a trusted arrangement with Mr B, and Mr B trusts Mr A, I tend by this chain of trust also to trust Mr A.

ALEC HOGG: That seems to be the modus operandi of many skelms.

DAVID ALEXANDER: It all works the same way. If you go to Mr Madoff, is was the same. Ex-chairman of Nasdaq, advised the SCC on compliance issues. Who would ever have thought that a man like that is committing fraud? Look who was referring the investments - big banks, very savvy investment advisers, trusted by hundreds of people. Who would ever have thought that a guy like that would be caught by a Ponzi scheme? So it is very much this chain of trust. I trust him, he trusts him. I also then presume that the person I am trusting has done the due diligence and checked it out, because after all the person I am trusting is a clever guy. He is not going to invest in something stupid. If he's put his money there, I'm safe to put my money there.

ALEC HOGG: So, if you're a crook, the best way to do it, I guess, is to target certain personalities whom other people trust, and then to win them over to believe that you are a credible person. And, by doing that, you are now setting the chain in motion, all kinds of chains in motion.

DAVID ALEXANDER: The other issue that also comes into it is people love either a deal that no-one else has access to, so they feel like a special investor, or some sort of secret deal that nobody else knows about.

ALEC HOGG: Which this was.

DAVID ALEXANDER: Which this was. So they feel like they are getting the inside track, and that also serves another purpose in saying: "Don't talk about it, because then everybody wants a piece of the action."

ALEC HOGG: Or don't talk about it because in this case it looks like - I'm pretty sure this thing was illegal. Exchange control contraventions, etc.

DAVID ALEXANDER: I appears that they are targeting a lot more people, and that is also inevitable. If you go back to Mr Madoff, I read today that they are now targeting ten other individuals apart from the auditor that they've arrested. So in time this will seep down to whoever is involved.

ALEC HOGG: Fascinating story. David, just to close off quickly - the new FICA for cellphones, do you think it's going to have any impact, it's going to help against crime?

DAVID ALEXANDER: Alec, yes, from two issues. You know that I am involved with an initiative to try and educate people about scams and fraud. I'm talking about the general public at the ScamStop initiative. Now, two things. first of all, a lot more people in South Africa have access to cellphones than they do to the Internet. So what is happening is cellphones are targeted by advanced IT fraudsters that send you SMSes now with a local cellphone number and say: "You have won the jackpot." And the intention then is to make contact with you, to suck you in, to get you involved in their scheme. Now, the more that you can make it difficult for people to do things like that, the better it is. I have heard all these bleats saying it's a policed state, and it's this and that. The only reason that you would possibly have any objection to registering yourself is if you are a crook. Otherwise, why are you worried about it? The problem is that obviously these people will then target things like false identification documents. So I see a further challenge for the cell companies, not just in terms of accessing the people that they have to register. They are going to have to educate their staff in recognition of false identification...

ALEC HOGG: But anything that makes it more difficult for the crook to operate is a good thing. David Alexander, our export on fraud, always lovely talking with you.

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