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POSTSCRIPT: Hannes Strydom died in a car accident on Sunday 19 November. He was 58 years old.
1995 World Cup winning Springbok Hannes Strydom was portrayed as a drug-dealing psychopath by an alleged criminal syndicate to cover up their theft of at least R50m from his pharmacy business. After discovering the loss, Strydom called in forensic investigator Paul O’Sullivan who has uncovered a crude fraud masterminded by the GM of Strydom’s 350-staff-strong enterprise. Detailed documentation and witness statements reveal that the crooks stole prescription-only scheduled medicine to be on-sold by drug dealers at huge premiums. O’Sullivan’s investigations revealed that theft in a single codeine product line cost Strydom’s business R50m. When the former rugby star first confronted the alleged criminals, they reacted by selling their version of the story to television show Carte Blanche, painting the 6-foot-6 entrepreneur as the villain. In this interview, O’Sullivan shares how his investigations uncovered the conspiracy which he says not only clears Strydom but raises massive problems for the other parties. – Alec Hogg
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Relevant timestamps from the interview
- 00:07 – Introductions
- 02:28 – Hannes Strydom on his story regarding the scam
- 05:02 – It can happen to anyone
- 07:03 – On how big his business is
- 07:53 – Paul O’ Sullivan on a criminal syndicate at work
- 16:28 – The Impact on Hannes
- 18:07 – Is this a South African equivalent of the OxyContin saga in the United States.
- 19:44 – Paul O’ Sullivan on the chief suspects
- 26:23 – Hannes on Carte Blanche and if people stood by him
- 28:13 – World Cup final thoughts
- 29:51 – Conclusions
Edited transcript of the Interview between Alec Hogg, Hannes Strydom and Paul O’ Sullivan
Alec Hogg: In this episode of Undictated, we’re going to be talking with Paul O’ Sullivan, no stranger to the business community, and Hannes Strydom, who wore the number five jersey right through the game when South Africa won the World Cup in 1995. So it’s quite appropriate that he’s wearing a jersey, not that jersey, you can see, as it’s from ’99. But Hannes has been under the kosh. He is a businessman, he’s a pharmacist. And we’ll go into that story, which is one that so many of us can learn from. Undictated, it’s all about getting context so you can know more. Going through all the details of this saga, which we’ll unpack for you in the next 20 minutes or so, reminded me very much of the experience my wife and I had. At one point in time, we owned a health shop. She actually owned it. We got a guy who came and worked for us. The only advantage that this health shop had, it was in the Rosebank Mall in Johannesburg, was from a company called Solgar.
They only sold their products through health stores, not through the skimp or Clicks pharmacies, which are far, far cheaper. As a consequence, we were very reliant on them as a supplier. We hired a guy who seemed to be far more knowledgeable than we were. He engaged very well with the customers. Unfortunately, what we discovered was that Solgar was supplying us with products that were coming into the shop and being signed for by him, and then going straight out of the shop. When I got hold of Solgar and asked them what was going on, somebody there said to me, “Well, there is a store at Melrose Arch where the owner has a very bad credit record. We do not supply them, and yet they have Solgar on their shelves.” On further investigation, we saw there was a relationship between these two. Unfortunately for us, we couldn’t prove anything. We had to pay the guy to leave, and that was the story. Now, Hannes, that to me, reading through the details of what you’ve gone through was that on a tiny basis, given that you’re a far, far bigger operation and there are tens of millions of rands involved here. It sounds similar to what you’ve just been through.
Hannes Strydom: I think, Alec, similar actions, different modus operandi as well because, I mean, you might get caught up in one way, but definitely, it did happen that stuff was received, not even a GRV (Goods Received Voucher). In other words, it’s good to see Valsa (Value Added List) was being written out for. So it wasn’t put onto the stock system of the pharmaceutical wholesaler and then went directly into bakkies (pick-up trucks) being delivered to warehouses where they were waiting for it. The payments used to be cash only, and some of them used to be through invoices. Invoices would go out legally through the pharmacy or through the wholesaler, and then the wholesaler itself, after it’s gone out as a COD (Cash On Delivery) or an account, the credit would have been passed through, and then the credit would then show that there’s no sale and no balance outstanding. A stock adjustment would be done to cancel out the shortage of stock. So when you do our monthly or bi-monthly or four-yearly big cycle counts, no stock discrepancies were shown in that cycle count. It looked as if the stock is fine, but the stock has been coming in and out or not even reaching the store. It’s similar to what you guys experienced, and it takes a while to pick it up. Your bookkeepers and all those people should have picked it up as well. Your vet should have been not biased. Even doing your credit balances on your statements according to your invoices and your proof of deliveries. Also, the GRV, which was received into your own system itself. Some systems have picked it up, but I think you can draw it usually as a camaraderie of people working together, a fine line of people working together. It’s not just one person that can do it on its own.
You have people working together, and your staff also probably sees what happened. You know, I mean, they probably saw the stock coming in and going out, and they didn’t speak. And that’s what’s alarming for me, that the staff members who see something wrong is going on, the manager is doing it. They don’t make alarm. And how long has it been carrying on? It’s been carrying on for a long time. Exactly. We’re being fired by the manager. The manager fired him because he’s involved with this. He’s actually responsible for them and can hire and fire them the way they want to do it.
Alec Hogg: But this is such an interesting story because if it happened to us with our little store, it’s happened on a grand scale with you. I’d like to unpack that in a moment. It’s got to be happening all over the country, and anybody who’s watching this, who’s in the retail game, beware.
Hannes Strydom: I think I’ve done my MBA four times, but I feel like I’ve earned my MBA degree through all these dealings and thefts from me. I’ve essentially completed my own very expensive MBA course. Coincidentally, the pharmacist who did this defrauding had his MBA done. So he was a master at working out sums, finding alternative routes for dispersing the stock, invoices, and proof of deliveries, and all those types of things. It was a combination of a very clever, well-coordinated, and orchestrated scheme. Don’t forget, it involved everyone from your goods receiving person to your security team, your bookkeeper, and your pharmacist. What I found interesting, Alec, is that in a bookkeeping or sales system, or any shop system for that matter, not one person should be allowed to both debit an account and have the ability to credit the same account. They should be separate entities, but he gave himself the right to put things on a fake account and then issue a credit after the goods had been sent out to the legal routes through the security guard and other means. So it went out legally because it was invoiced, but the invoice was canceled afterward. In your case, I think the invoice never even made it into your system. Many times it happened to me as well, and you would have noticed it if you reconciled your statements.
Alec Hogg: How big of a business is this, Hannes? I’ve read through the court papers, but if you lose 50 million Rand plus, and that’s just one product that Paul has investigated. But before we bring Paul in, how big of a business is it?
Hannes Strydom: I think it’s quite a big business. The black market for anything in the world, especially for medicine, is significant. For example, if you take a Viagra tablet, there are always Viagras available on the black market. And all these factors really cause quite a few problems. That’s why I brought Paul O’ Sullivan in because he’s fantastic at digging deeper and getting to the root of things. And that’s precisely why I got Paul on board – because of his expertise, his approach to uncovering the truth, and his determination to keep digging until he finds the answers. A stop sign isn’t really a stop sign; it’s a disguise for what they’ve been doing.
Alec Hogg: Paul, when you were brought in by Hannes, how do you start investigating something like this? It appears to be a criminal syndicate at work within the organisation.
Paul O’Sullivan: Yes, there’s no doubt we were able to discover that there was a criminal syndicate at work. When we got involved, we had a number of staff working on this project, including our financial accountant, who’s also a forensic auditor. We started with a paper trail and requested various documents. We looked at the amount of sales going through and chose one particular product from a supplier, though we won’t name the supplier because they weren’t involved in the scam. We chose a particular product, a codeine-based cough syrup in 100ml bottles.
Unfortunately, in South Africa, some people misuse it for a quick fix due to its codeine content, a morphine-based drug. There are certain controls in place, and you can’t simply buy a large quantity of it without proper identification. Even for a single bottle, you need to provide your name or be in their system already. The syndicate was being led by the general manager, and red flags were raised when some staff resigned on the same day after we requested certain documents. They submitted written resignations, blaming Hannes for targeting staff and being aggressive. But it turned out they were part of the problem, as was the accountant. The general manager was ordering and buying stock, manipulating the company’s books, and selling the stock on the black market. He used the cash from black market sales to pay for the stock as if he was a legitimate customer. Instead of internal payments, external parties were paying for the products. We discovered that it was his contacts who were paying for the product.
We interviewed the remaining staff, all of whom were interviewed under caution due to the nature of the investigation. They admitted that they did as they were told by the general manager, and he controlled their actions regarding invoices. Some invoices were instructed to be left, then later approved, and some were even reversed. He attempted to keep his fingerprints off the documents, but he made mistakes. For example, he used the company’s delivery drivers to transport stolen stock, and we found evidence linking him to these actions. The syndicate extended to external parties who conspired to commit the crime. One staff member issued invoices for the general manager’s side business during company hours and then gave the cash proceeds to the general manager, who had stolen the products from Hannes’s pharmacy. When we approached her for a statement, she initially agreed, then changed her mind, likely due to pressure from the main suspect. We’ve requested the police to take her statement, as there is evidence of her involvement.
To further complicate matters, the criminals preemptively accused Hannes of a similar scheme to cover their tracks. Carte Blanche became involved in this false narrative, using witnesses tied to the criminal syndicate in their documentary. This implicates Carte Blanche in conspiring with the criminals to accuse the victim of a crime they committed themselves. If Hannes had committed the crime, why is he the one who’s out of pocket by about 50 million rand, while the crime syndicate has walked away with all that money?
Alec Hogg: What a story, Hannes. What about the impact of it on you?
Hannes Strydom: Interestingly, Alex, the person behind this elaborate scheme is a pharmacist who served as the responsible pharmacist in charge of every medication sold in the business. He held the qualifications and an MBA, making it well orchestrated to paint me as the culprit. With 250 staff members, it’s impossible to oversee every one of them. We had rules in place as a wholesaler, and one of them was ensuring that any large quantity sales were registered with the pharmacy council organisation and had a certificate on hand. I couldn’t find any fault in that. The only issue was my dwindling cash flow, as large transactions were going through, and he would sell the medicine and keep all the profit for himself. I was left with an outstanding bill to the pharmaceutical supplier, losing all the sales and still needing to pay for the goods I had received. It was a double loss, and the quantities involved are around 55 to 60, even up to 70 million rand.
Alec Hogg: I’m just wondering if this is a South African equivalent of the OxyContin saga in the United States.
Hannes Strydom: It’s different. It’s codeine-based, not morphine-based. Codeine-based products are mood lifters and euphoric drugs, which seem to be in high demand. It’s worth noting that Paul Sullivan’s group has only investigated one company, with the value already reaching 22 to 30 million. They are still working on reports for three more companies. We had to pursue legal action because I was being portrayed as the guilty party. Paul and his team rushed to get the final report for this first company sealed and ready, with a top forensic expert now working on the case. It’s a thorough and well-documented investigation, and it’s clear that the authorities want to see a full forensic report before taking further action. This is why I chose Paul O’Sullivan, as I believe he’s the best person for the job, ensuring a solid case and not just dealing with it myself to make a stronger case.
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Alec Hogg: Paul, why do you think the chief suspect and the criminals went to Carte Blanche? What were they hoping to achieve, considering that the scheme would eventually be exposed?
Paul O’Sullivan: I believe they realised they would eventually be exposed. When I arrived at the scene with my team, I didn’t receive applause from the staff. Instead, it was like the rats jumping off a sinking ship. People at the company knew something was happening. We’ve conducted forensic investigations at various companies and corporations, and we’ve experienced scenarios where the staff panics when they realise we’re starting an investigation. The word spreads around the building, and by lunchtime, everyone knows something is going on. In Hannes’s case, people we wanted to speak to suddenly resigned, and original documents, such as GRVs with signatures, were missing. We had to reconstruct information from what the supplier could reissue and from the records in Hannes’s company’s system. This indicates an inside job. The narrative they tried to paint publicly was meant to make Hannes look like the bad guy. Where else could they go but to Carte Blanche? Carte Blanche has a history of being gullible and falling for sensational stories.
For example, they once accused me of kidnapping someone on air, and it later turned out to be entirely false. The person they claimed was kidnapped was actually the mistress of the person producing the Carte Blanche segment. This fake claim was made three years after the alleged incident, and it was thrown out of court. Carte Blanche later removed the segment from their website when they realised they had been misled. Hannes’s lawyer wrote to Carte Blanche asking for details of their revenue model, but they refused to respond. Carte Blanche relies on independent producers who invoice them for creating shows. During the show’s runtime, there are often 18 minutes of advertising. The most expensive advertising slot is the 7 pm to 8 pm on Sunday nights. Carte Blanche aims to get more viewers and runs teasers and snippets on social media to create anticipation. They took advantage of the Rugby World Cup’s popularity to run this sensational story, providing a platform for the crime syndicate that defrauded Hannes of nearly 50 million rand.
Alec Hogg: Paul, in this case, it seems quite likely that Carte Blanche will apologise for their coverage. Hannes, What’s your perspective on how to proceed, and how has this situation affected your reputation and relationships?
Hannes Strydom: People who know me well know I’ve never engaged in corrupt activities, so it’s difficult to stay calm and composed when a camera crew and a reporter are trying to get a reaction. But I’m grateful for Paul O’Sullivan and his team for their assistance in this matter. They helped ensure the truth came out and that my reputation was not tarnished. If I had been taken down, a business with a 50-60 million rand loss would not have survived. As the sole owner and director, I had to bear the brunt of the situation. Having reputable individuals like Paul Sullivan and his associates helped me present the real facts to regulatory bodies like SAPRA, the pharmacy council, and the medical control council. I’m confident we can turn this situation around with their assistance and the publicity we’re receiving.
Alec Hogg: Building a business takes a lifetime, but its reputation can be damaged in an instant. I’m sure you’ll navigate through this.
Hannes Strydom: Absolutely. I believe we’ll turn this around, and with the help of Paul and the visibility we’re gaining through this, people will come to understand what truly happened.
Alec Hogg: Before we wrap up, considering the World Cup final is approaching, are you making a prediction?
Hannes Strydom: I’ll bet another million on the Springboks. As I mentioned earlier, they can send the Cup back to South Africa because it’s meant to be here. We’ll make space for it in the Trophy Cabinet in South Africa.
Alec Hogg: In the racing industry, they say, “from your lips to God’s ears.” Sorry, Paul, any final words from you?
Paul O’Sullivan: I’m currently in Manchester on business, and I’m pleased to say I’ve managed to get a ticket. So I’m flying from London to Paris on Saturday. I’ll start off in Paris at O’Sullivan’s Pub, one of the most famous Irish pubs in the city. After that, I’ll likely head to the stadium where I have a seat. Hopefully, we’ll see that final kick over the bar in the last minute or two of the game. If it’s anything like the England game or the last time New Zealand and South Africa played, they won it 30 seconds before the end of the game. So I think the same thing can happen.
Alec Hogg: Or even like the game Hannes was involved in 1995 in extra time. We’ll take it any way we can. Wonderful talking with you, Hannes Strydom, who shared his insights on the ordeal he’s been through, and it happens often in business. Just keep your eyes open. And thank you, Paul O’Sullivan, forensic investigator from Forensics for Justice. I’m Alec Hogg from BizNews.com.
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