011213 Barry Spitz is suing FirstRand in North Gauteng Court.Photo by Simphiwe Mbokazi.photo by Simphiwe Mbokazi 4

The most important lesson for winning (in sport) is breathing: the guy who gets tired loses; the minute you get tired you have lost your match; the big thing is not to get tired, says Barry Spitz, the man who for the past 12-odd years has grappled with FirstRand over consultancy fees he believes he is owed.

He does claim to have coined the words on winning, but at 80, anyone is a sage. Especially when they have worked as an advisor to 17 governments, a number of high profile institutions and can count a king or two, some sheiks and several presidents as close friends.

Spitz, a lawyer and tax expert, is the founder of the International Law and Tax Institute, which is how he came to be engaged by the FirstRand Group in March 2000 to provide advisory services to a division the bank wanted to see become profitable.

The fight with FirstRand, which he says started over “one little sentence about a commission”, has had its material body blows.

“Of course they have destroyed my money position, but not my life… certainly not my life; I still play an hour of tennis in the morning and a half hour in the evening, I go to gym everyday… sport is the answer to everything.”

On Thursday this week, he had another day in court with a new defence team.

“If I had had a very good team of lawyers from the beginning, this would have long been over. I did not have that and now that I have,” he said to no one in particular outside the courtroom foyer.

The strategy for advocate Nazzer Cassin, who admitted to having taken on the matter a mere 36 hours previously, was to outline the numerous transactions Spitz worked on and was not paid for, which hopefully would substatntiate his client’s financial claim.

The institute claims in court papers that its contract entitled it to 7.5 percent of the gross revenue earned by Ansbacher and certain other FirstRand divisions.

The institute has argued that, for it to establish what sum constitutes this percentage, FirstRand must disclose such gross revenue.

As the revenue disclosed by FirstRand is in dispute, it is believed to be inevitable that the clients concerned and even their records will be subpoenaed.

It got sticky when the irrepressible Spitz qualified some of these transactions as criminal or fraudulent, resulting in the defence, led by advocate Nic Maritz, objecting to the descriptions on the grounds that it tarnished the good names of some of these high profile clients.

The session hit the skids and had to be adjourned for Cassin to make a more moderate approach, especially as Judge Eberhard Bertelsmann agreed with the principle raised by Maritz. “The matter we are discussing is mainly on fees, would your client be entitled to payment if the transactions were criminal,” the court wondered.

It was clear after the adjournment that the wind in Spitz’s lungs had been deflated somewhat. He had been pumped up for a full contact engagement with the bank that would hopefully get to the end of the matter.

“I will take this fight to the very end… I dont have a right to stop… if I were fighting for myself I could stop but I cannot, this is for somebody else and (I) can’t stop” he said.

The somebody else, Spitz says, are the various charities including a cancer foundation for children, HIV/Aids charities for children, Hospice at Home and “jewish, muslim, hindu, black, chinese and other children in need”, whom he hopes the multimillion-rand settlement will ultimately benefit.

Still, he will not even whisper a ballpark figure of the settlement he hopes to make with the bank, understandably so, as the matter is sub judice.

Research by Business Report has unearthed figures of between R2.3 million, R73m and R79m, while other publications from around 2003 when the case started hint at ”hundreds of millions”.

Spitz has presented a reputational and integrity problem for FirstRand.

The problem flows from abandoned offshore tax structures that FirstRand’s then private banking arm, Ansbacher Trust, offered to a group of rich clients – including directors of Discovery, most notably chief executive Adrian Gore. Such structures were offered by many financial institutions in the wake of the 1998 decision by the government to allow South Africans to invest up to R500 000 offshore, but some of them were more aggressive than others, raising questions about their legality.

Two related schemes developed around 1999 by Ansbacher (since sold) have come under scrutiny now because of the protracted legal dispute Spitz has brought to FirstRand’s door.

Former FirstRand heavyweight Laurie Dippenaar admitted Ansbacher had botched the administration of the schemes, but insisted the bank believed the underlying scheme was legal. Spitz was brought in to Ansbacher Trust Services in South Africa in 2001 to advise on such schemes, designed to minimise the tax paid by local high earners. Part of his remuneration was to be based on improved income achieved by the local Ansbacher unit.

Spitz, who is viewed by the FirstRand Goliath as more of a greedy troll than a plucky David, soon fell out with his client and his services were terminated. In November 2001, Spitz launched court action against FirstRand.

In essence Spitz argued two things: first, that FirstRand had been incorrect to claim he had not met his targets; and second, that he had struggled to do so because Ansbacher had demanded he provide services that were not legally compliant. He demanded that Ansbacher disclose details of the relevant transactions, both so that he could challenge its calculation of fee income and to test his case over the legality of the firm’s conduct.

Spitz cast his net wide and FirstRand fought to limit his access to its internal documentation. Ansbacher was forced to disclose internal documentation relevant to its dealings with Spitz and Noseweek latched on to two sets of transactions – those involving Gore and an offshore structure, Duisberg Holdings. Because there is a grey area between legal tax avoidance and illegal tax evasion, it is difficult to pin down whether the transactions were legal or not.

But the documents obtained by Spitz raise serious questions about both the morality and the competence of the services provided by Ansbacher.

In 1999, investigations by Irish authorities into alleged illegal practices by the bank found about 200 of some of that country’s elite, including high-ranking politicians, were using the services of Ansbacher (Cayman) to evade tax and worse.

In their 10 000-page report, the Irish inspectors drew a disturbing picture of money laundering, tax evasion, the holding of unlawful payments to politicians in offshore accounts of Ansbacher, laundering stolen and embezzled government funds, and laundering money for drug dealers.

I did not get to ask Spitz what he thought of the label “litigation terrorist” inferred by Dippenaar at the group’s 2003 annual general meeting, but then I doubt it would have stirred the wind beneath the plucky 80 year old’s wings.

I did ask, though, if he found the fight bruising.

“Nothing, not to me. They seem to have found it bruising; for me this is a playground fight… I live a good life,” he said.

The bruises Spitz is convinced he has inflicted on FirstRand relate to his nearly forcing the bank to disclose details of the offshore accounts of 500 clients, which would, for the first time, have lifted the lid on payments related to the controversial R30 billion arms deal.

The International Tax & Law Institute asked the High Court in Pretorial to force FirstRand to disclose the transactions of 500 of some of the bank’s wealthiest clients.

The one word Spitz scribbled on my notebook about his demeanour throughout all the years of battle was “cool”. – Additional Reporting by M&G Online, Business Day/All Africa Global Media via COMTEX