The world is changing fast and to keep up you need local knowledge with global context.
Well known and respected in the industry, Magnus Heystek tells the story of how he grew up with boys who would become some of the wealthiest men in the country. A story of buying at the bottom, incredible luck, and diamonds. The fascinating journey of Johan de Villiers had many twists and turns, fortunes and failures. Along the way, it also gave Christo Wiese the boost he needed to buy Pep. As Heystek writes, both men have made and lost fortunes in their lifetimes. – Melani Nathan
The untold story on Wiese’s first big break
By Magnus Heystek*
… I can feel it coming in the air tonight, Oh lord
Well I’ve been waiting for this moment for all my life, (Oh lord)
I can feel it in the air tonight, oh lord, (Oh lord)
Well I’ve been waiting for this moment for all my life, Oh lord
In his smash hit “In the air tonight” Phil Collins sings about waiting “for this moment all his life”.
Well, last week, after being invited onto BizNews’ new radio show Power Hour, hosted by Alec Hogg, I had the same rush of blood when I heard legendary tycoon Christo Wiese was to be on the show as well, and that I was going to be given the opportunity to ask some questions.
But it was not going to be about the collapse of Steinhoff or Wiese’s losses of about R60bn in this debacle, as Alec originally thought.
No siree, I was going to ask Wiese for confirmation of a story that I have been hawking around dinner tables and golf courses for more than 40 years – how Wiese made his first fortune as a young businessman, and how this ONE particular deal put him onto a path that eventually led to him becoming, prior to the collapse and wipeout he suffered during the Steinhoff story, the richest man in SA.
This story starts a long time ago, almost 50 years and more.
I was at school and in the same class at Helpmekaar in Braamfontein, Johannesburg, as one Johan de Villiers. In fact, we were also posted to the same army camp after matric, the Heidelberg Gymnasium. De Villiers, was a tall, strapping young lad and not only played lock for Helpies but also for Transvaal Schools, as it was known in those days.
After the army, De Villiers studied accountancy at Wits and joined one of the large firms to do his articles. We kept in touch with the odd beer here and there. It was also during one of these beers that he told me the most incredible story. That was where life took him in a different direction.
As one of the unmarried article clerks at the firm, he drew the short straw of being sent away for two weeks to do the annual audit of a small but very profitable diamond mine called Ochta somewhere in the remotest area of Namibia, not far from the notorious Sperrgebiet. At the time it was owned by Otto Thaning who had two sons – one, a heart surgeon and the other, a world-class swimmer – but neither of them expressed any interest in taking over the running of the mine.
“Sell the bloody thing,” they often told their father. Or that’s what Johan told me later.
During his two-week sojourn into the desert to audit the mine – which most days ended up with a couple of drinks or three after work in the evenings with the crusty old diamond miner – a sort of friendship sprung up from these late-night evenings and – so I was told – Mr Thaning offered to sell him the mine at a very modest price. Having just done the books of the mine and knowing the real value, De Villiers headed back home and started looking for capital with this option in his hand. Not coming from money himself, he realised he needed a backer, and after having several doors slammed in his face, his path crossed with that of a young lawyer-turned-merchant-banker called Christo Wiese, who was busy making a name for himself in the money world of the City of Gold (and diamonds for that matter).
The option was to purchase the mine for R3m and Wiese immediately wrote out a cheque for 50% of the mine, the other half going to De Villiers. As Wiese said on Power Hour last week: “De Villiers went to bed a poor man one day and woke up a very wealthy man the next morning”. The option had been turned into a shareholding – which cost him nothing – as Wiese took all the risk.
This was circa 1976/77 or thereabouts.
This was also the bottom of the commodity and precious minerals cycle and very soon, as luck had it, the diamond price started rising in 1977 and doubled again and again in the following years. There was more luck, as the late David Carte, editor of Business Times wrote, sometime in 1978 when they struck a pocket of diamonds and made a massive profit.
It was at that stage that De Villiers offered to buy out Wiese, which he accepted, and if memory serves me, he turned his initial investment of R3m into R30m in a very short space of time.
THAT was the deal that financed Wiese’s entry into Pep Stores and the rest is history as they say.
Bigger things ahead
But that was not the end of the story as far as De Villiers was concerned. De Villiers was ready to conquer the diamond world and was barely past his 24th birthday.
In 1977 I was invited to the opening of a large diamond cutting works of Ochta in collaboration with some Taiwanese firm. I was working at the Beeld at the time and went off to meet up with Johan again, the first of the Class of ’70 to make it really big. At this function I bumped into several of our old school chums – many of them now working for De Villiers in his rapidly growing diamond empire.
He already had an office in Antwerp, Zurich and now also in Taiwan.
And from what I can remember from the speech that evening, it was just the start of something very big, said De Villiers.
Up to this point, my untold story was first hand. But the story is not complete without me filling in other parts from other sources, both close friends, who filled in parts of the jigsaw puzzle which was forming around the life of Johan de Villiers and the Ochta diamond mine. And the final part of the jigsaw puzzle was filled by none other than the late Anton Rupert himself.
The one piece was contributed by a fellow jogger at the time who was also a salesman at the largest Mercedes-Benz dealership in Johannesburg. One morning on a run, he told me about his incredible deal the previous day. “This huge man walked into the dealership, and after enquiring about the top-range of Mercs on offer, ordered no less than six for his salesmen as a bonus for each of them.” This giant was none other than De Villiers.
Not long after that, at a dinner party, one of the guests – an airline stewardess at SAA – told me about Johan who used to fly regularly to New York on business class, each time booking out the whole first-class section for himself and his family. This happened on several occasions… so there was no doubt that De Villiers had struck gold with his diamond mine.
The meeting with Oppenheimer
But that is not the end of the story. Sometime in 1980, at about the peak of the diamond boom, none other than the late Harry Oppenheimer, Chairman of De Beers, invited De Villiers for a cup of tea at 44 Main Street. It was obvious that Oppenheimer was following the meteoric rise of De Villiers very closely and thought it was time to take the matter further.
After some polite toing and froing, Oppenheimer came to the point: “Johan,” he reportedly said, “we would like to offer you R300m for your mine.”
Remember, this was to a young man, barely 27 years old, who a mere four years previously ‘went to bed a poor man’.
In today’s terms that would be several billions of rands…
Much to the astonishment of the old diamond baron – whose family had seen the ups and downs of the diamond business over many decades – De Villiers not only turned him down but threatened/warned that De Beers would soon be in the sight of the rapidly expanding Ochta Diamonds. And that’s where matters ended as far as the Oppenheimer patriarch was concerned.
That was also, almost to the day, the peak of the diamond cycle, which promptly went into a five-year swoon with prices crashing again and again as the tight money supply policies enacted by Paul Volcker, newly elected head of the US Federal Reserve, took hold.
Hopelessly over-geared and borrowed to the hilt, Ochta was bought in 1985 by Anton Rupert for R300m – with all of the money going to repaying Ochta’s overdraft at Nedbank.
How do I know this? Well, it doesn’t get more first-hand than Anton Rupert himself, who during a lunch at his home in Sandton some years later, regaled me with the whole story of the Oppenheimer offer as well as the subsequent bailout of Ochta by one of the companies in the Rembrandt empire. I still remember Rupert saying that he had never seen anyone make so much money in his life – and subsequently lose it all – than Johan de Villiers.
And De Villiers? He left SA in a hurry for New York, where he still lives today.
This was confirmed by Wiese during his interview last week when he said he has spoken to De Villiers a couple of times over the years… but didn’t know much more of what happened in his life.
So there you have the story I have been yearning to write for more than four decades. At long last confirmed by Christo Wiese himself.
- Magnus Heystek is an investment strategist at Brenthurst Wealth.
- Life after Jooste, Christo Wiese opens up
- Christo Wiese: From billionaire to millionaire, as Steinhoff shatters his wealth #2020 in review
- Life after Jooste, Christo Wiese opens up
Listen to the BizNews Power Hour:
Comment from Jan Engelbrecht:
I found the story by Magnus Heystek, of his memories of Johan de Villiers and Christo Wiese, very interesting and fascinating.
I do not want to dispute his facts at all of how Johan de Villiers got involved as an article clerk with Ochta Diamonds. His memories of that are spot on and 100% correct. I want to add my memories to his story.
I got involved at Ochta during the years 1976 up to 1978 also as an audit clerk at an auditing firm in Cape Town. The firm was then the auditors for the period after Johan and Christo bought Ochta from Dr Otto Thaning and I was the manager of the audit team auditing Ochta. We flew on a regular basis to Ochta mines situated on the banks of the Orange river. Once even, I had the privilege to fly with them in their Lear Jet and I recall it was quite scary to land on the gravel strip at Ochta.
As we were told back then, the real guy who hit the jackpot was Dr Thaning. The Orange river, many moon years ago, had a different track on its way to the sea at Alexander Bay/Oranjemund where deep-sea diamonds are still mined today. On its way to the sea it had passed through an area called Bloedrift and that was the area where Ochta mainly mined their diamonds after Johan and Christo bought it from Dr Otto Thaning, but on its way to the sea there was a waterfall and all the diamonds from inland fell over that waterfall in to a deep pothole at the bottom, over years, and those diamonds in that pothole were found by Dr Thaning and mined, making a fortune out of it. Only after that he made the offer to Johan to buy Ochta from him. I am sure Johan knew that, as he was the audit clerk at Ochta at the time. Be that as it may, he and Christo still mined a lot of diamonds after that time.
So to come back to the company Ochta Diamonds after it was bought by Johan and Christo, the head office was in Victoria Street, in Cape Town. Christo was still running his practice as an advocate as well, while Johan was the managing director looking after the marketing.
There were two other guys as well with smaller shareholdings. The one was Duncan Reecie who as director had to look after the legal matters of the company and the other guy’s name was Graham (I have forgotten his surname) who had to look after the accounting matters as financial director.
On a lighter note I was sold (almost given) four little diamonds by Johan to have it set as an engagement ring for me and my late wife. During that time, on many occasions, I had interactions with Johan in social or business matters. I was always wondering since that time what has happened to him and I am very sad to hear of his fall from grace.
My relationship with Christo is a bit more on the personal and social side. He was at the University of Stellenbosch studying law four years prior to me. I was studying accounting. I came from Vredendal in the Northwest of South Africa and at that time, Christo’s parents were also staying in Vredendal if I remember correctly. At the time I was so fortunate that my parents gave me a little red Ford Escort and Christo would travel with me once or twice from Vredendal on Sunday afternoons to Stellenbosch. In later years I would jokingly tell my friends that I am still driving with my little Escort while Christo is now flying his own Lear Jet. I always admired Christo from varsity days up till today for his skills as a student, his legal career, and now as a businessman. Also on a personal side, I always say, once Christo shakes your hand when he meets you, he will never forget your name, even years afterwards.
As Christo mentioned the other day, and I quote, “money comes and money goes”. After the Steinhoff debacle and I had no shareholding in it, but I followed Christo, his family, in investing in a small company called Stellar. The company is still trading today on the JSE. I invested heavily on my financial terms in the company when it was trading around R2.50 to R3.00. I must put here, following Christo was not by any means because he told me to do so. It was my decision totally. Today, the share is trading at 70 cents and I lost a fortune, as I said, on my financial terms. “Money comes and money goes.”
Thanks Alec and Stuart once again that I could share my memories with you, as all my friends and colleagues who could have shared my memories have passed on.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.