ALEC HOGG: Well, Magnus, seems if you are a crook in South Africa, get on a  plane, a Qantas, off to Australia, and you are safe.

MAGNUS HEYSTEK: Nothing has changed in about 400 years. You go to Australia.

ALEC HOGG: Ja, you said it! Any of your clients get involved in this? Or any of your clients asked your advice on whether or not to put their money into...

MAGNUS HEYSTEK: Not at all. But I did hear about the scheme, and I kind of listened with half an ear to these kind of returns, and I thought it cannot be true.

ALEC HOGG: What were they promising?

MAGNUS HEYSTEK: Well, they were promising 20% every six weeks, or every 12 weeks. It works out to a compounded rate of 168% a year. That's what amazes you, if you're in the investment world. Forever we've been saying on radio stations and columns and as financial advisers if it's too good to be true it's not true.

ALEC HOGG: Warren Buffett is the world's best investor, and he makes 20% a year. Sean Summers used to be the CEO of a big company called Pick n Pay, and he fell into this. How can someone like Sean...?

MAGNUS HEYSTEK: It's like herd mentality, it's like a group madness - and that's normally where it starts. If you look at the Madoff scheme, one friend introduces the next, and there's this network and it spreads out from the middle, and everybody is comforted by the fact that his best friend, his neighbour or his banker is involved, and everybody assumes - and this is the most incredible thing - everybody kind of assumes somebody else has checked it out, that somebody else has been smart enough to go and do the due diligence. And especially in a case like this, like with the Madoff case, you've got very, very prominent people - the previous chairman of the Johannesburg Stock Exchange - and that's a selling point if you want to perpetrate a fraud. You say: "Well, the president of the Johannesburg Stock Exchange is involved in the scheme and the ex-president of the Bond Exchange is involved." So you kind of cloak it with respectability, and it's sound, and you are part of an inner circle.

ALEC HOGG: I guess also it is illegal, or presumably getting money out of the country is illegal, so nudge, nudge, wink, wink, don't tell anybody and we'll make great returns.

MAGNUS HEYSTEK: Well, the fact that this task team has been put together at such speed indicates that it's much bigger than we thought initially. I mean, the Krion thing took months and months to get anything off the ground, but here, in three or four days we've got everybody involved. We've got SARB involved, SARS involved, the NPA involved, FICA involved - and I've heard that they are going to be moving this week already. You'll have certain announcements and moves against either people or companies involved in the scheme. Now, you might remember, going back many years, in the eighties when we had the finrand, and people used to move money with over-invoicing and undersupply. Someone suggested that we might have a case of - there's been this invoicing, money flowing around, but absolutely nothing coming into the country. You know, if you look at the responses of the medical companies or the pharmaceutical companies, they say: "We haven't dealt with this guy." Now there are invoices that back up this financial scheme of arrangement, and it'll be quite easy to go an check how much stuff actually came into the country to be resold to the pharmaceutical companies. Where is the stock? Now, the purported buyers of the stock are saying: "We didn't buy it."  So then you immediately ask yourself, well, if they didn't buy it, did nothing come into the country - and where did the money go? And that's why the Reserve Bank is involved.

ALEC HOGG: So it might only be the start of problems of people like Sean Summers, who invested in the scheme?

MAGNUS HEYSTEK: One doesn't wish anybody bad things, but this could be serious stuff for three to four hundred people. Apparently at that Routledge Modise meeting they had 300 guys in the auditorium wanting to hear what happened to their money. Now, we are talking about very, very influential people, respected people, business people, and we are talking of very large sums of money. Two questions are going to be asked: if stock was imported to be resold, which was the basis of the scheme, where is the stock? That would be easy to prove or disprove. And secondly, if we are talking about billions, where's the money? If the money's gone and no stock came in, you have a very, very elaborate scheme to get money out of the country.

ALEC HOGG: And it they broke laws, these guys could go to jail.

MAGNUS HEYSTEK: Well, now you've got SARS. Even if it was a legitimate scheme, if you participated and made money, you've got to declare that and you've got to pay your taxes on the interest that you earned.

ALEC HOGG: So the upshot of all of this is: don't get involved in anything shady, because it can come back and bite you.

MAGNUS HEYSTEK: This is definitely another proof - just stay away from all these funny deals. Stick to the regulated stuff, which is traded and checked out, and at least you are not going to lose your money. But this could cause serious damage to reputations and careers and it's going to cost a  lot of people a lot of money.

ALEC HOGG: Well, you see what happens to you. If you go the more difficult way it takes you longer perhaps to build wealth, but you sleep at night.

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