Barwa demands return of $40 mln credit line

[Salin Arub]

Barwa demands return of $40 mln credit line
Jun 18, 2009

Qatar's Barwa Real Estate is seeking repayments from a company operated by Barry Tannenbaum, a South African businessman accused of defrauding investors of up to $1.9 billion.

Barwa, a unit of the property arm of the country's sovereign wealth fund, said in a statement to the Doha bourse it had stopped a $40 million revolving credit facility it had been providing to Frankel International.

"Immediately upon learning the risks facing the company's investments related to this convention, Barwa terminated the facility ... and is vigorously pursuing the repayment of the amounts provided for these transactions by all legal and judicial ways," the company said.

Barwa cannot disclose the actual amount it is owed for legal reasons, said Tamer Khedr, the company's president of financial services, but he said that of the $40 million facility, Frankel "didn't use it all".

A South African judge has appointed three trustees to manage assets seized from Tannenbaum and to investigate allegations he defrauded investors of up to 15 billion rand ($1.86 billion).

First National Bank, a unit of FirstRand, confirmed on Thursday it had frozen Tannenbaum's assets to comply with a court order.

Tannenbaum has denied wrongdoing, and said his company's difficulties are due to the economic crisis.

He did not immediately reply to an email sent by news agency Reuters on Thursday seeking a comment on the Barwa facility.

One of the South African trustees appointed to manage Tannenbaum's assets said it did not appear as though any other companies had lost money in the scheme, which appears to have mostly targeted individuals, though it was too early to be sure.

Shares in Barwa fell 3 percent on Thursday after dropping 8.2 percent on Wednesday.

Lawyers and private investigators say Tannenbaum lured hundreds of investors in what appears to be a Ponzi scheme similar to the one used by New York money manager Bernard Madoff. He promised annual returns as high as 200 percent which he said were linked to pharmaceutical imports.

Tannenbaum operated through his Frankel International and Frankel Chemical Corp companies, and is a relative of a founder of South Africa's No. 2 pharmaceuticals firm, Adthingy Ingram.