In December 2011, Rael Levitt brought the hammer down on Quoin Rock, Dave King's Stellenbosch wine estate. Within months, Auction Alliance, the business he had spent 20 years building, was gone. In studio with Alec Hogg, Levitt went back over the auction that undid him: the vendor bidder he placed in the crowd, the lie he told billionaire bidder Wendy Appelbaum, and the attempted fix after the event that he admitted made it worse. He described years of investigations, a Consumer Commission ruling that was later overturned, and legal advice to stay silent that he now believes was wrong. Then came the comeback: an MBA in Los Angeles, a run-down warehouse in Epping, and one investor whose backing changed how the banks saw him. Alec put the question his book, It Takes a Tsunami, invites: is it a confession, or a defence? Levitt gave his answer, and told his 40-year-old self what he wished he had known..Listen here.Edited transcript of the interview.[03:02] Alec Hogg Rael Levitt survived two tsunamis. One in Thailand killed his friends. The other, a ghost bidding scandal at Dave King's wine farm called Quoin Rock, killed his creation, Auction Alliance. He has rebuilt his life since then, now runs a R3 billion business, and he wrote a book about the tsunamis. They kind of end off with where he is today. But you've got to ask yourself: is this book confession, or is it a defence?Well, welcome to BizNews Edge. I'm Alec Hogg, business without the spin.Well, the first person you meet in this book was somebody I knew quite well, the late Gerald Jordaan. He was a colleague of mine. I had a brief period in banking, and he was running the Western Cape, and he actually gave you your big break.Rael LevittWell, I actually didn't know he had passed away, so that's news to me. And yes, I met Gerald when I was 21. I'd met other Absa officials prior to that, but I met Gerald and he actually gave me my lucky break. The book starts off with me at UCT, picking up the phone, phoning him and going to see him, and he gave me my lucky break. I always had a great respect for him, especially to do that. I was 21 at the time.[04:39] Alec Hogg He was a larger-than-life character, Gerald.Rael LevittYeah, he was. I mean, I was like a kid at university. I'm not even sure if he knew that. We were Capetonians, and to get this big, brawny guy, he looked like a rugby player, larger-than-life character, coming down and giving me work. I don't think I'd ever met anyone like that. He would swear, and he sat at a big desk at Absa head office. So, yeah.Alec HoggQuite a guy, Gerald. I enjoyed him a lot. In fact, I was at Absa for two and a half years, and he was definitely one of my favourite people there, someone that I worked with. But your story is really interesting, and the book describes it. It shows you're an entrepreneur from a very young age. When was your first money-making enterprise?Rael Levitt Yeah, I mean, when I was 17, in fact. I had just ended school, and I started knocking on doors on the Cape Flats in Cape Town. This was the era of the Group Areas Act. It was towards the end. I think Nelson Mandela had been freed, but the Group Areas Act was still around. And there was this strange anomaly that had been created: between the so-called coloured parts of town in Cape Town and the so-called white areas, there was a discrepancy in price. And the traditional estate agents of the time, the Goldings and the Seeffs, weren't really working those areas. So I literally got in a car without a driver's licence and started knocking on doors, and I made a few commissions. That's really my first venture into both real estate and into making money.Alec Hogg Entrepreneur right to your fingertips. But let's go to how you hit the headlines for all of South Africa. Dave King had a wine farm. Dave King got into big trouble with SARS. SARS grabbed his wine farm and then said to you, sell it for us. Now, there were a few things about that auction that you defend in your book that kind of confused me a little bit. I know a bit about auctions, I think not a fraction of what you do.[07:05] But I've bought a lot of racehorses and I've sold a lot of racehorses. Basically what happens with a horse auction is, as you bid, you get to a price, and if you haven't got high enough, the auctioneer always says, come and talk to us afterwards. Sorry. They never bring the hammer down unless it's a sale. And I guess your big enemy in all of this, Wendy Appelbaum, Donald Gordon's daughter, a person who's richer than Croesus, got the same feeling. She thought when you brought the hammer down at that auction, it was hers. And boy, did that cause trouble.Rael Levitt Correct. I mean, she thought that. And of course the media, I think they still feel that that was how it was supposed to be. It wasn't, because it was a sale which was subject to confirmation of the liquidators, a chap by the name of Cloete Murray. You may also know of Cloete Murray. He was the liquidator. And he had actually requested literally a day before the auction sale that we didn't sell it with a reserve, and it was subject to his confirmation.Alec Hogg OK. That's important, and that doesn't come through in the book. I know you said there was a R75 million reserve.Rael LevittCorrect.Alec Hogg So she put up to 55.Rael Levitt She bid up to 55. The media carried the story that Wendy was the successful bidder, but she wasn't a successful bidder. She was actually the unsuccessful bidder, but she was the highest bidder. But it was still 20 million off what SARS wanted, and what they sold it for, actually, three months later.Alec Hogg All right, let's just understand the difference between a horse auction and Auction Alliance selling Dave King's wine farm. First of all, Wendy did not like Dave King. So actually, this might have been a little bit of a win for her if she'd got it.Rael Levitt Well, that I also didn't know. But I do want to say, I wouldn't say Wendy is my enemy, in many ways.Alec Hogg She doesn't like you.Rael Levitt No, she doesn't like me at all. The irony is I've actually never met her. We've never actually had a one-on-one conversation. I saw her at the auction and had a brief telephone call afterwards, but I've actually never met Wendy.[09:29] Alec Hogg But she was really upset with you because you had somebody bidding against her?Rael Levitt Correct.Alec Hogg Just explain how that all happened.Rael Levitt So, if we go back to 2011 when this auction happened, 15 years ago, I was almost the king of auctions. We were 60% of all auctions in South Africa. And I was a specialist. In fact, I'd gone around the world to understand this ghost bidding, or what the real term is, vendor bidding: bidding on behalf of the seller. Similarly to a horse auction or art, there would be a reserve price, and the auctioneer has the right to bid up to that reserve, but not higher than the reserve. And that's common practice. It still happens today in South Africa. It happens all around the world. In some jurisdictions, and I studied this at the time, like in Australia, they would actually say, look, this is the reserve price, so that people would know. In South Africa, it wasn't in law nor in practice that that would happen.But we had put somebody in the crowd to bid up to get to the R75 million. And she didn't quite understand that. And then I was very unclear about it. And I lied to her. When she asked me who was bidding, it could have been settled in about two minutes, where I would have said, look, Wendy, it was the vendor bidder. The whole thing would have gone away. But my staff had told her they weren't sure who it was, and I let that story linger for a while. And that infuriated her. I think [that was one] of my missteps. Alec Hogg But then you also tried, and you do admit it...Rael Levitt Yes.Alec Hogg...you tried to kind of fix it up after the event.Rael Levitt I did, yes.Alec Hogg Bring in somebody.Rael Levitt Exactly.Alec Hogg That was a lie on top of a lie.Rael Levitt Correct. And that raised her ire. Added to that, the story only exploded actually two months later. This was over December. And then, prompted by the liquidators, I took quite a hostile legal approach to it. I rushed off to a firm of attorneys and sent a very aggressive letter. And if anybody knows Wendy, and as I said, I haven't met her, but I've studied her, Wendy is not taking that from anybody.[11:53] The combination of that really got her back up. And she said she wanted to teach me a lesson, and she did.Alec Hogg Wow.Rael Levitt So there was no holding back from her perspective.Alec Hogg But the whole vendetta, from her perspective, I can understand. OK, so you lied to her. You said to her there was somebody else bidding, but actually there wasn't. It was somebody that you'd appointed in there. And then after the event, you tried to organise it so that another friend of yours said, well, he was bidding on my behalf, when actually he wasn't. And that's a confession.Rael Levitt Yes.Alec Hogg But it's also a defence.Rael LevittYes.Alec Hogg Because you say, hang on, this happens all the time. Now, I just want to know the difference, because again, with horses, the hammer comes down, I own that horse.Rael Levitt Yes.Alec Hogg If I haven't got to the reserve price, the hammer won't come down.Rael Levitt Yes.Alec Hogg How can the hammer come down in your auctions?Rael LevittBecause when the hammer came down, and it was so well recorded because we had invited eTV and SABC News, and it was all recorded, as the hammer comes down, I said, ladies and gentlemen, it's sold, but subject to confirmation by the liquidators.Alec Hogg You did say that.Rael Levitt I said it, 100%. I said that it sold subject to confirmation of the liquidators.Alec Hogg And nobody kind of got that.Rael LevittWell, that happens, by the way. It still happens at auctions. The media at the time were writing about the story. The Argus wrote, Quoin Rock wine farm gets given away for a song, and they wrote... but it is always subject to confirmation. In fact, I actually corrected the, I think it was the Sunday Times at the time. I said, look, it's still subject to the liquidators' confirmation.Alec Hogg Geez, but Rael, you really took punishment as a consequence of that.Rael Levitt Correct. Because the story then mutated into a much bigger story. And when I say mutated, it was that Wendy then subsequently laid a criminal charge against me.Alec Hogg On what grounds?Rael Levitt For attempted fraud. It wasn't fraud, because she never got it, so there were no losses which she suffered. But she said,[14:10] look, you attempted to defraud me by pushing up the price at the auction sale. And that became a big investigation, and I had multiple authorities trying to investigate the story. And for all the reasons of, let's call it, African politics, the consumer commissioner, who was newly appointed at that time, was a woman by the name of Mamodupi Mohlala-Mulaudzi. And she wanted to make an example of me, of auctions.Alec Hogg Did she understand what she was doing?Rael LevittNo, she had no clue. In fact, she was subsequently actually dismissed in that role. She landed up at the Estate Agency Affairs Board, which is another one which came after me. And then she was subsequently dismissed there. So she didn't really... in fact, that's what the court said, because we went to court. It wasn't actually a legal sanction she gave me. It was the Consumer Commission saying that I transgressed the Consumer Protection Act. The story had got out that I had defrauded Wendy, which wasn't the case. And it was overturned. Her ruling was overturned. I went to the High Court. It was overturned. And they actually said she didn't understand her own Act, and had acted completely incorrectly. And that was the only sanction I ever had from the whole story. But the empire collapsed. The whole business, I shut it down two, three months after the story emerged.Alec Hogg And it was quite a business. What I found interesting was that many of the people you brought on board, you kind of spotted them in different places. They weren't necessarily people who'd put up their hands and say, I want to go into the auctioning business. They were salespeople, and sometimes pretty hardcore salespeople.Rael Levitt No, no, we were an aggressive sales machine.Alec Hogg You know, I'd call it a boiler room.Rael Levitt Yes, it was, very much. Certainly in periods it was like a boiler room. We had over 100... we had over 300 people working at Auction Alliance in multiple offices.Alec Hogg What's a boiler room?Rael Levitt So it was a very hectic sales environment, where we had to convince people to sell their assets using auction. Auction, as you know, is quite well known in art. It was well known in horse racing. [16:34] Andrew Miller, in fact, worked with me. He was at Auction Alliance.Alec Hogg David Miller's father.Rael Levitt David Miller's father, correct. He was at Auction Alliance. And today he's become quite a big property auctioneer. He learned that at Auction Alliance. He was in our Durban office. So my view was to change the industry. I needed people from outside the industry. We needed these auction evangelists, people who would convince sellers that auction was a preferred mechanism of sale. And that created an environment where it was like calling and convincing and pushing and probing and getting people to use auctions.Alec Hogg And getting people to maybe think differently about what they do with their assets. With hindsight, and I'm sure you have gone over this a million times in your mind, you were disrupting a whole industry. If Auction Alliance had continued, if you hadn't had this Dave King wine farm issue with Wendy Appelbaum, you'd imagine that today a lot of property transactions would be done via Auction Alliance, or be done on auction.Rael Levitt Boy, are you prodding a bear there. Auction Alliance was very disruptive. It did disrupt the auction industry and the property industry. A large percentage of commercial property transactions in South Africa went through auctions, and we had different divisions. Quoin Rock fell under our farming division. One of the ironies, or the many ironies, was that when Auction Alliance shut down, everybody left and they all started new businesses. So I'd say at least half of all auctioneers, people involved in the auction industry today, came out of Auction Alliance. But we were disruptive. And I'd adopted many of the techniques which I'd seen in Australia, because Australia is big auction country.Alec Hogg So what do you say to other disruptors, given that you were disruptive? You made a mistake. You've admitted it, and it's very well documented in the book. But disruptors have already got a lot of people... the status quo, the virus, or the antibodies kick back, and they kick back hard against disruptors. What would you say to others who are in businesses where they're trying to change things, and they haven't perhaps paid as much attention as they should to[19:00] what the antibodies are going to do?Rael Levitt Yeah, in the auction business, and to an extent in my new business, which is also a bit disruptive, you have pushback. You have pushback from convention, from people who've been around for a long time. And you really have to have a lot of tenacity, and roll with the punches, and have the ability to convince people that disruption is necessary. I think we live in a world today where disruption is actually a little bit more acceptable than it was when I started the auction business, because the big guys didn't like it. Alec Hogg Sure.Rael Levitt So you've got to have tenacity, and actually be quite self-confident, to know you're doing the right thing.Alec Hogg:And you didn't lack self-confidence, certainly up until the issue.Rael Levitt You know, it's a good question. Outwardly I didn't lack self-confidence. I would question it all the time. I wasn't blindly self-confident in believing what I was doing was right. But I could see how auctions were being dealt with in other countries. And I think that's one of the great things about being a South African entrepreneur: you can go and look at what happens elsewhere in the world, and you can adapt a South African version here, which I've done both at Auction Alliance and, truth be told, at Inospace. I saw it happening somewhere else in the world. So I just knew, if it could work in Australia and it could work in the UK and it could work in the States, it would work in South Africa. And that gave me the conviction to believe that what I was doing was right. It took time in the beginning. It wasn't easy.Alec HoggAnd you travelled a lot to see these things.Rael LevittYes. I went all over the world to look at auctions and to understand how they work. Every time I'd go overseas, from when I started... when I was 21, I started as an auctioneer. In fact, just before I started, I went to the UK and spent some time there looking at auctions. So I did. I looked around the world.Alec Hogg It's an interesting point. Getting back to the brief time I spent at Absa, my mentor, my boss, was Danie Cronjé, who was a wonderful chief executive and then became chairman of the company. And Danie always said that whenever he travelled abroad, it was like getting another university degree, and he had a doctorate[21:21] in economics, because, he said, you learn so much. Maybe that's something South African entrepreneurs have a bigger advantage in today, because today we can go anywhere in the world, thankfully, because we've had a change in our society. But back then, in the eighties, it wasn't that easy. Was it easy to get visas and so on?Rael Levitt A, it wasn't easy. B, you didn't have this world of information which is available to you. Today, I just ask AI what to do, and it will tell you, and it'll tell you where to go. So it wasn't easy. And actually, if you look back, there were many South Africans who did go overseas and see what was happening. We've got some big businesses in South Africa. If you look at private banking, the Investec guys went overseas, they saw private banking overseas, and they brought it back to South Africa. Even Raymond Ackerman tells the story: he went on a tour to the States and brought back big retailers. And you don't have to be as huge an entrepreneur as those. You can really look at what goes on in the world. It is much easier today. It's a very much bigger world than the little one that we have here.Alec Hogg But one of the people who comes out... and I thought about this as well. It felt to me a bit like Icarus. You'd flown high. Remember the story of Icarus?Rael Levitt Yes.Alec HoggWhere he had wings and the wax melted because he flew too close to the sun. There was somebody called Fiona Forde who comes through your book in quite a lot of detail. Do you think somebody put her up to going at you, i.e. Wendy? Or was she just an investigative journalist who, in your opinion, had just got it really wrong?Rael Levitt No, I mean, she was friendly with the Appelbaums. She was friendly with Hilton Appelbaum. I don't think that was a secret. And that's how she got to the story. So yes, I do believe that. Later on, she carried on investigating me for years, through multiple publications. She started off as an independent journalist... I suppose it is more common with journalists. When I was driving here, I was actually thinking, it's amazing how[23:39] traditional media has changed. This was a story in the newspapers. I think today, if there's a scandal in the newspapers, I don't think people would even see it. So she had written a book about Julius Malema. She was working independently. She wrote through multiple publications. To answer the question: later on, she actually wrote and said she was being paid by an organisation to clean up the auction industry. She wrote to my attorneys at one stage telling them that. So I'm not going to go so far as to say that she was paid to take me down, because I have no proof of that. But certainly she got a bee in her bonnet, and she held on to that story for a very long time.Alec Hogg Kgalema Motlanthe is not a fan of hers.Rael Levitt No, he's not. I do mention it in the book as well, because she had made claims about him having affairs with women as he was going up the political ladder.Alec HoggWell, he was actually then the acting president at that stage, wasn't he? Rael Levitt No, he was the president. And he wasn't a fan, and he took her on as well.Alec HoggAnd what's happened to her? Rael Levitt: Well, quite interestingly, she's no longer a journalist. Last I heard, she was living in Ireland. She's Irish. And she actually went to work for Absa for a little bit. She was looking at a lot of commercial crime and fraud, looking inside the bank. Alec Hogg: But no apologies from her? Rael Levitt: No, no, no. I write about the troika, so I don't think she liked me either. I only met her once as well, actually. Alec Hogg: So you had an investigative journalist who was gunning for you, and, as you say, someone was paying her. Someone had to be eating somehow. Then you had this consumer commissioner who seemed completely out of her depth, and, if one goes through what happened the way you describe it in the book, it's quite a lot of regulatory overreach. And then you have Wendy Appelbaum, who's probably the wealthiest person in South Africa, gazillions from her father, and she's been quite a good businessperson herself. That's a very powerful combo. [25:58] Rael Levitt: It was a powerful combo. The one was a regulatory authority. Although the Consumer Commission doesn't have the power of a court, she believed she did, which was the overreach. Had the story just ended there with a few articles, it would have been fine. But it continued for years, actually, for years and years. Because in South Africa, I believe the wheels of justice do turn. There's this perception that they don't, but they do. They just turn quite slowly. And so the authorities picked up the story, and when I say the authorities, it was a mixture of the Estate Agency Affairs Board and the Consumer Commission itself, and a few other bodies looked at it and investigated the story. It was an auction story. It wasn't a story of Jooste and Steinhoff. It really was a small story, but the authorities went after it, and the Hawks then ultimately got involved, and they investigated for years. In fact, the investigation was kept open for 10 years. It was only in 2022 that we finally got a letter to say that the investigation had ended. They had certain documents, which they gave back, and the story had ended. Alec Hogg: What were they trying to prove, then, if it took 10 years? Rael Levitt: There were two aspects they were interested in. The first aspect was the ghost bidding aspect: whether that was fraud. They believed it wasn't only happening with us; it was probably happening all over the show. They wanted to clean up. Alec Hogg: It happened in horse racing, where you have a breeder who says to his pal, please push up the price to my reserve level, otherwise you're not going to sell the horse, because you're not going to sell it at a cheap price just because somebody happens to be at the auction. Rael Levitt: Yes. Alec Hogg: So I kind of have a problem with "ghost bidder". What do you mean by ghost bidding? Rael Levitt: There is no term in law, "ghost bidding". It's a name which they came up with, and I got associated with the ghost bidding scandal. Alec Hogg: But what's their thinking? Let's just be sensible here. You have got this farm, which is worth [28:19] 75, well, probably 150 million. SARS wants to get rid of it, so 75 million. Is the assumption that, if there was only one person bidding, and they bid 35 million, which is where Wendy started, it should be given to her for 35 million? Rael Levitt: Correct. That's exactly what they thought. It's just a total misunderstanding of auctions. They believed that if somebody had bid 10 rand, they would have got Quoin Rock at 10 rand as well, as if that was the highest bid. But there was a second leg to the story, and in fact I read about it very recently. The second leg was that I was involved with the world of liquidators and insolvency practitioners and banks. If you remember, there was a big focus on banks. Banks were foreclosing. And the assumption was that this was like a cabal. Recently there was actually a report that came out about the insolvency world, and we were just a side adjunct to that. But I think that story of bankers, auctioneers and liquidators was something they wanted to really hone in on. Alec Hogg: Yeah, well, my former colleague, another late one, sadly, and my age, Barry Sergeant, told me for years when we were working together: the liquidations industry, boy, if you want to find problems, that's where there's a lot of dirt. And of course we've seen really hectic stuff happening there. Did you see much of that? Rael Levitt: Yes. First of all, liquidation was just a part of what we did. It was actually the background to auctions in South Africa, largely because of the economic and financial disruption of the eighties and nineties. And a lot of the lawyers were also party to it, because lawyers would give us work and they wanted referral commissions. That was an area. I saw it. I think it's also a bit overhyped. I think there have been specific instances, and I did follow Barry Sergeant's work, where it really was dirty stuff. But from our perspective, I saw how it worked. It was a sector and an industry. Alec Hogg: Referral commissions. Rael Levitt: Referral commissions. Alec Hogg: So that's the [30:39] most recent issue you had with Business Day, when they republished something and you didn't want them to republish it. Just unpack all of that. Rael Levitt: Yeah, well, that was a mistake on my part. But Fiona Forde, in the guise of Business Day... it was the same journalist. Alec Hogg: OK, it was the same journalist. Rael Levitt: It was Fiona Forde. What had happened was, at the time we had commissioned a report. It was a report which we'd done internally, and that report was our report. Alec Hogg: And this is Auction Alliance. Rael Levitt: Auction Alliance, correct. Our attorneys had actually done a report, and the person who had done the report was completely neutral. He had referred to these referral commissions, which he had picked up. We paid law firms, big accounting firms. If somebody would come along and say, here's an auction, we would pay them a referral. Alec Hogg: Just explain, how much is that? Rael Levitt: It would be up to 30, 40% of our commission earned. Alec Hogg: It's like a finder's fee. Rael Levitt: A finder's fee, correct. Now of course, that had connotations for them, because I'm not sure if they disclosed it to their clients. But it wasn't unlawful. It just had these connotations. And so when she got this report, she did publish it in Business Day. And I attempted to stop that publication on the basis that this was a privileged report. The courts do not like to muzzle the media, as you know, and quite correctly so, I suppose. And the story then went into Business Day. Alec Hogg: And you had to pay the costs. Rael Levitt: I had to pay the costs, and... Alec Hogg: You've made some mistakes, fighting with... Rael Levitt: And I brought an application against Fiona Forde, version one, with Independent Newspapers, right in the beginning, and also lost that case. So I think one of the great lessons is: don't bring applications. Alec Hogg: Johann Rupert used to say, don't fight with someone who buys ink by the barrel. I suppose now you could say someone who buys bandwidth by the terabit. It's got bigger bandwidth than anything. And you've kind of got that now: you don't fight with the media anymore. Rael Levitt: Well, I don't have any reason to. But the truth is also that when I fell out with the media, I disappeared. In fact, you made a comment on it at the time, because you were going to interview me, I don't know if you remember, [33:03] in the middle of all this. And then I said, I'm not coming on to the show. And that was a mistake as well, actually, because had I just calmly sat down and explained the story, it probably would have gone away. But I disappeared. I completely went undercover. And of course, that made me look like a criminal, like I was ducking and diving and hiding. Alec Hogg: It's funny how that happens. Usually there's the court of public opinion and the court of law. The lawyers are always going to say, don't say anything that's going to bugger up our case in the court of law. But they forget about, or don't care about, the court of public opinion, which is where you were being tried, with no defence. Rael Levitt: Correct. Because I said a few things in the beginning, and I remember a very senior counsel in Cape Town, a very respected counsel, called me in one day. By the way, I actually wasn't even defending anything; I was just getting advice. It wasn't as if we were acting in a case. He said to me, listen, I'm going to put you in quarantine now. You're not to say one word, because if this case ever goes any further, whatever you say is going to look bad. And by the way, that was the incorrect advice. It was the incorrect advice. It was one of the ironies: I'd never dealt with bad media. I'd only dealt with positive media. So I was totally shocked by the reaction. And then when the lawyers said keep stum, I kept stum for years, actually. I didn't say a word, for years and years. I only started talking to the media again in my recent business, in 2022, when we did a big transaction. And I will never forget, when somebody phoned me from Business Day, I got this anxiety, like angst. All they were really doing was reporting on the story, and I panicked just from somebody phoning me. But I think I've got over that now. Alec Hogg: Do you trust the media? Rael Levitt: You know, I am more wary today, obviously. I did trust the media then. In fact, when they came to talk to me the first time, at Independent Newspapers, and I'd always had this great relationship with Independent Newspapers. Alec Hogg: You gave them a lot of advertising. Rael Levitt: Yeah, we spent... In fact, one of the ironies: when I shut down Auction Alliance, they were my largest creditor by far. We owed them, in those days, a good R20 million, R30 million in advertising fees, which obviously we paid, 100 cents in the rand. Alec Hogg: So even though they nailed you and probably put [35:32] Auction Alliance in the graveyard, you still settled. Rael Levitt: Absolutely. Those are two different parts of the business. I couldn't turn around and say, well, you wrote those stories, therefore I won't pay. And I didn't want to liquidate the company. I didn't need to liquidate it, because I thought I'd come back and fight another day. So when Donald Trump talks about fake news, and it's become his refrain when he doesn't like what he sees in the news, I think a lot of people get that. A lot of people say, we understand we don't believe everything we read. I do think interactive environments change things, because journalists are now allowing people voices; when it's written, you can choose what you write. So I'm more wary, but I'm not that cynical. I'm not as far as Donald Trump, where I believe it's all fake news. Alec Hogg: Tell me a bit more about the regulatory overreach, because that's something we've been looking at at BizNews in quite a lot of detail recently. Brian is a good example. He spent almost a decade being accused of having manipulated the rand. It's not a good thing in anybody's terms, and his family took a hammering for it, but he worked at Standard Bank as a salesman. He had nothing to do with dealing. And there's been no apology from the regulator, no apology from those who pointed the finger at this man and named him. He won't talk to me, because he says he just wants to put it behind him and carry on into the future. But that's not fair. A good family, they've made a big contribution to South Africa over many years. And it's almost like when you're a regulator, or when you're working for the state, you can do what you damn well like. There seems to be very little retribution if you get it badly wrong and you hurt someone. And I'm just thinking of where you're sitting, because it's all in the book: this consumer commissioner, the way she went at you. Wow. Rael Levitt: Well, look, the overreach in my instance was actually not only her. It was the Consumer Commission. It was also the Estate Agency Affairs Board, [37:55] which is today the PPRA. Both organisations have actually had huge issues with their own credibility. The Estate Agency Affairs Board was actually put into receivership at one stage. Alec Hogg: I remember the time. Rael Levitt: But the damage is done. The damage was done. And the consumer commissioner, in one of the interviews, because she was having a field day, accused me of fraud. She said, Levitt tried to defraud Appelbaum. And of course that became a headline. There were articles floating around to say I was guilty of fraud, which was pure regulatory overreach. She had no jurisdiction. In fact, she gave me criminal sanctions. She said Levitt must pay a fine of a million rand or 12 months in jail, which, at the time, had legal counsel sort of rolling on the floor laughing, because she had no ability to have that sort of power. Alec Hogg: But at least you could afford legal counsel. Rael Levitt: I did. It was extremely expensive. I won multiple cases against the Consumer Commission, and only once or twice with costs. And when you win with costs, it doesn't come close to the cost. But the real damage was the perception. And even worse than that, when you fight it with a regulatory body, they have endless pockets. It's like a private individual going up against the state, which has got a huge budget. Alec Hogg: Exactly. Rael Levitt: In fact, I won a court order against them, and they hadn't paid me, and I think we were busy attaching the furniture of the Consumer Commission in Centurion. But you're extremely powerless when a body like that gets involved. The power of the state is an enormous power, which is extremely damaging. Alec Hogg: Your story after the auction and the attack on you: basically public enemy number one, for reasons that... the troika, as you call them, wanted to bury you. You took a different approach. You decided to use that time to go and learn more. I found that interesting. Rael Levitt: You know, when I started the auction business, I was at UCT. I was a student. I [40:15] was walking around the law faculty at UCT. I was doing law, but I never completed it. I did my first year of LLB, and I left university to start my first auction business at age 21. In fact, I started it while I was at university. So I'd always wanted to go back to study. And as life would have it, I got into this wild, exciting rollercoaster, which I did love, in the auction business, and I did that for literally 20 years. And in the 20th year, the story which we know, the whole empire collapsed. And it was a little empire; I don't want to make out that it was a big empire. Then for about a year or two, I just felt sorry for myself. I'd spend my days going over all the things that had happened, and how it was unfair. And then I decided, look, I actually want to go back and study. So I had a look at what I could do, and I came up with going to the States. My sister and brother both live in America. So I went to UCLA to do an executive MBA. And while I was doing the executive MBA, I did a further master's degree in Singapore. It was highly, highly recommended. People always ask me about MBAs. For me, I look back, it was the most amazing period in my life: suddenly, at the age of 40, to go back and be a student. I loved that period. And that's when I came up with a new business concept, while I was studying. Alec Hogg: Tell us about it. Rael Levitt: While I was studying, it was weird. I'd been a CEO all my life, from the age of 20, and all of a sudden I was a student with a backpack in Los Angeles, thinking, what am I going to do with my life? And luckily, while I was there, it was quite interesting, there was another court case, with a guy by the name of Ichikowitz. You've seen the interview. Ivor had actually gone against another auctioneer with a very similar allegation. Alec Hogg: Similar allegation to Wendy's. Rael Levitt: To Wendy's, correct. He chose a civil route, and it landed up in the SCA. And the SCA said that... there isn't such a thing as ghost bidding. It is the job of the auctioneer to [42:23] take the auction. So although the case continued for another five years, it really had been proven in the SCA that what I'd done wasn't illegal. I went to study not quite sure which route I was going to go. Should I go back into the auction business and try to do a return, or should I try something else? And when I was there in the States, there was a crowd from Westfield, the Australian shopping centre owners, and they came to talk to our class about how real estate was being disrupted by technology, which I found absolutely fascinating. The thesis was that retail wouldn't be disrupted, but retail real estate would be. In other words, you could still go buy your television from Takealot or Amazon, but you didn't necessarily have to go into a shopping centre or a big store to buy it. And I thought that was interesting. I do like disruption. I think we live in a world of disruption. And then they spoke about offices, and I was quite fascinated. That was three years before Covid. And I thought, well, offices are definitely going to be disrupted, because people don't need to go into offices. And it just so happened that somebody had contacted me and said, I've got an old industrial building, would you like to buy it? And I thought, this is very interesting, because industrial real estate, which today is also called logistics real estate, is quite interesting: every good has to pass through a warehouse at some point in its journey to the consumer. If you look at my jersey, it's probably been through 10 warehouses: where the dye was made, where the cotton was produced, where it was stitched together, and distributed from wherever it went. So warehousing was really interesting. So I bought an old warehouse in Cape Town, in Epping Industria, and I looked at it with completely different eyes. Warehousing was always the poor cousin of real estate. I followed a whole lot of people who write about real estate, and to own an office block with your name emblazoned at the top was the pinnacle, and of course shopping centres. But ugly old warehouses under grey roofs were not exciting. I just thought it was probably the most exciting part of real estate. [44:41] And so I started the new business. While I was studying, I literally wrote a business plan, and it was both a business plan and a personal plan. I sat through those two, two and a half years of education planning a comeback, saying, look, I have fallen, and I don't want that story to always define me. I'm even cautious that the book will define me forever, that I'm the auctioneer who... But to plan a comeback and to start a new business, which I did in 2017. Alec Hogg: Of course, the big question for most people is: why come back to South Africa? Rael Levitt: That's a great question, and it went through my mind a thousand times. I was very interested in the States at the time. But I just felt I had unfinished business in South Africa. Alec Hogg: What unfinished business? Rael Levitt: I was still regarded as the crooked, ghost-bidding, scandalised auctioneer. The Americans are quite different. When I was in Los Angeles, I contacted an auctioneer in the States on LinkedIn, and he said, come see me. And he said, your story is so cool. I don't think it was so cool, but he thought it was. This was sort of Donald Trump's first term. But I just thought I would carry that stigma. We live in a world where somebody just Googles me and it looks terrible. I wanted to come back, because I was never found guilty of anything; it was more in the court of public opinion, as you said. I wanted to come back and close the loop on that before I went overseas, because I didn't want to look like I was running away from the problem. And the truth is, I actually like South Africa. I think South Africa is an amazing place. And despite the bad end, I had many great contacts, people who really went out of their way to help me. That's why I came back. I remember sitting in the States thinking, well, I could become an auctioneer here. I was actually offered a job in the States by one of the big auctioneers in California. Alec Hogg: And you'd got an MBA. You were qualified now. Rael Levitt: Correct. I definitely could have done it. [46:49] And I remember when that property in Epping came up, I picked up the phone and phoned, and I'll mention their name because they were really good to me, Investec Bank. And they were like, yeah, sure, let's do this. I thought, how long would it take me to get to that situation? Alec Hogg: But they did distance themselves from you in the beginning, because of the auctions. Rael Levitt: They did, in a nice way. They said, listen, as far as we're concerned, he's done nothing wrong, but if he ever has, we won't work with him. They could have said that, and I completely understood that. But they actually backed me and were very nice about it. Alec Hogg: Was that a function of time? Rael Levitt: It was a function of time. And it was also because I wasn't found guilty of anything. And there were a lot of supporters in the banks; I knew all the banks because I was doing work for all of them. But Investec were the ones that said: many of our clients have had things written about them, and we ourselves have had things written about us. If you remember, the publication Noseweek would go for Investec constantly. So, you basically haven't been found guilty of anything, and we will back you. Normal credit terms; they weren't doing me any financial favours, but they backed me. In fact, I bought the first building with Investec. So I did the first one. We called it Inospace. We did a whole lot of innovative things. And then the second story, the Business Day story, came out, and Investec did then back off. They said, listen, this thing's a bit hard to handle. And I bumped into a very large investor who likes to keep very much under the radar. I'll mention his name: a guy called Jonathan Beare, a big investor. Alec Hogg: He's in the book. Rael Levitt: He's in the book, and I did get his approval to mention his name. He had in fact been involved in Auction Alliance in 2000. He had bought a small stake in the business, and I bought it back from him. I bumped into him coincidentally on a flight, and he said to me, look, I've been reading all these stories, and I just think it's really unfair what's been written about you. I've actually been in business with you, so if you ever need anything, give me a shout. So when that story came out and Investec pulled back, I gave him a shout. And two, three days later the bank came creeping back in and said, well, now you're involved with Beare, it's a whole different story. And from there, we went from one [49:14] building to 20. I moved the company from R30 million, R40 million to R1 billion worth of assets, which we bought in a two-year period. Alec Hogg: So Jonathan is still your partner? Rael Levitt: Yes. He was our partner, and when I say was, he still is. In 2022 they sold a large amount of their shares to Fortress, which is Fortress REIT, Fortress Property. So they got cashed out, and they are still our partners. And I have huge gratitude to them. Jonathan has got a team of really smart people. They're the most low-profile, under-the-radar crew, but they are behind many, many successful businesses in South Africa. It's been a great partnership, and I'm forever indebted and grateful to them. Alec Hogg: I've got to tell you a story. In 1999, I had a little company called Moneyweb. Jonathan Beare made three investments: Moneyweb was one of them, Aspen was another, and Peregrine was another. So you can see I was very much the poor cousin when you compare those three. But I found him to be a man of great honour. There was an opportunity at one stage where, as happens in business, you go this way or that way, and he went the honourable way when he didn't have to. So I've only got good things to say about Jonathan Beare, and the fact that he backed you must say a lot about the rehabilitation, if you like, of your reputation amongst people who can't. But are you seeing this in the engagement you're having with people? Rael Levitt: Yeah. For me, falling is one thing, but coming back again is a very difficult chess game. And for me, it was being with Jonathan that gave me a reputational boost. He's a smart businessman. He didn't do it just because he likes the colour of my eyes, and he'd tell you they've made a lot of money from Inospace. But people would say, look, if Beare backs you, are you such a big crook as everybody said? And he'd backed me before. In fact, it was [51:36] that period, and I actually remember that Moneyweb deal at the time, because Peregrine had bought 23% of Auction Alliance in '99. So it was in that era. I'd known him from '99, and then they reinvested in 2012, so there was a long relationship. That credibility was really, really important. So I'm not only grateful that he put a large amount of money into Inospace, R250 million, but reputationally, people said, hang on a second, if these are your partners, how bad can it be? And truth be told, I'm very proud that they've been our partners so long and continue to be our partners. Alec Hogg: And Wendy Appelbaum? Rael Levitt: Well, Wendy, as I said, I never met her. The story disappeared, and I've heard she's living in the UK. I said I've never seen her, but quite funnily, quite recently there was the Investec Art Fair in Cape Town. I must have rehearsed about 5,000 times what I would say to Wendy if I met her. And by the way, it wouldn't be what you'd think... Alec Hogg: Would you shout at her? Rael Levitt: No, no, no. One of the ironies of life is that what happened to me was not only a great lesson; it's actually put me in a completely different and much better place. So actually I owe her a debt of gratitude. I'm not sure if she wants to hear that, or whether she'd appreciate it. So recently, at the Investec Art Fair, I literally walked in as I saw her, and she walked right past; she didn't see me. And I thought, should I? And I thought, I'll just leave it. I was in a rush, going somewhere. So, I haven't heard from her in a very long time. Alec Hogg: How old are you now? Rael Levitt: 55. Alec Hogg: When you look back at the 40-year-old Rael Levitt, what would you like to tell him, if you could get in a time machine, the 40-year-old Rael Levitt before the auction? Rael Levitt: Well, I think the first thing I'd tell him is not to annoy a billionaire at an auction. But I don't know if that would help too many other 40-year-olds. In many instances, when you're successful at a young age, and I don't want to overplay the success, because it really was just an auction business, it wasn't an enormous company, [53:54] you get very caught up with hubris, which I was. And I think when you get successful, not to get too caught up in that hubris, and really to realise that at the end of the day, your life can change in an instant. Mine did. And that's really the theme of the book: it's a tsunami. It's a surprising, unknown event that you were just not expecting. One must not get too confident in anything you do. And I don't mean arrogant, I just mean confident, though it could be arrogant as well. Realise that life can change in an instant, and that means you look at the world in a completely different way. Have the humility to know: I've been successful in this or successful in that, but sometimes it's just a coalescing of different things, and things can change in a second. Listen, I've got 1,000 lessons that that 40-year-old learnt, but I would say that's probably the largest one. Alec Hogg: Have you also changed in your outlook on life, on God, on your direction and what we're doing here on earth? You've been through hell. You have been through the mill. There are not many people who've had the ride that you've had, and the opposition, and the public attacks that you've had to weather. Rael Levitt: Well, the first thing I've had to learn, and I think many people need to learn this lesson, it was a very important lesson for me, was not to be that concerned with what people think, because people also change what they think. I had a very different outlook. I was always very concerned about what people would think. And when it spun so out of control, I realised that what people think is not in my control, which I suppose is a bit obvious. An event like that has to change you. It changed me in many, many ways. I was very much go, go, go: it's all about the next deal, the next deal, the next deal. I still have that in me. I still have that entrepreneurial flair, which I like; I didn't want to extinguish that. At the same time, I certainly learned how to be much more empathetic with people. When I look back at Auction Alliance, the truth is many of the [56:19] auctions we did actually came out of very disastrous circumstances. I never saw it that way. I never saw the pain and the misery. We did all these big bankruptcies, and people were really affected. And for me, it was just making money out of it. So that empathy, I've really come to understand it. From a business perspective, one of the interesting things was that the auction business wasn't really mission-driven. It wasn't something where you could really make the world a better place. So when I wrote down my game plan, I said, I want to be in a business which can have an interesting impact on the world, even if it's a small impact. I think that's quite a nice thing to have, and it changed my view: it's not only about making those fees, which are great things to have, but having a vision where you can do something which is good for society, or good for business. Alec Hogg: It's really interesting when you look at your story as well, because now you are making the ultimate long-term investment: property. And yet many, many others might say, this country has given me such a tough time, I'd rather go somewhere else. But you are making that ultimate investment in South Africa. So presumably it's not just the Springboks that you like about this place. Rael Levitt: Yeah, well, our business particularly has focused on SMEs, which was also quite disruptive, because they're smaller businesses, start-up businesses. We've got over half a million square metres today. Over 2,000 of these small businesses are our clients. Well, I call them clients, but they are tenants. Even when I started, the banks and the investors didn't want to be in that business, because everybody wants one big tenant to pay one big cheque. But when I look at the entrepreneurial talent in this country, despite all the odds, despite government regulation and red tape and the rand and all the other areas, I just think South Africa has got this amazing entrepreneurialism. I think South Africans are such great entrepreneurs. [58:28] And I like this place. It's home. You asked that question earlier: it was a very conscious decision of mine to stay here, to live here. I believe in South Africa. I think that, despite all the odds, maybe because of all the odds, we're great entrepreneurs. And I think there's just a world of opportunities in South Africa. I really believe it. I've travelled extensively. When I studied, I was in both Asia and the States. And if you look at what's happened in the world in the last few years, it's quite nice to be at the bottom tip of Africa. And as I was driving into Hermanus a monolith, it was such a beautiful part of the world. Who would not want to be here? Alec Hogg: What about the people you beat now? How do they react? Rael Levitt: Well, first of all, in real estate parlance, we're actually tiny. We're not a big company. I suppose, for a private business, at about three-odd billion rand, it's quite big. But the auction business was highly competitive. This isn't highly competitive like that. I've actually found the other property groups very welcoming and friendly. I've never found very aggressive competition. Alec Hogg: But when you go to a dinner party and you're introduced, because yours is a name that many people know, how are people reacting to you now, compared with perhaps 10 years ago? Rael Levitt: You know, even 10 years ago I never actually got that one-on-one. It was always people who didn't know me who would write, and it was always the bots, what I call the bots. It could have been people writing on social media. I think the people who complained most about auctions had never been to an auction, and the people who said I was crooked had never dealt with me. So I didn't really find it direct, one-on-one. I used to scroll on Facebook at night and read all these nasty comments. Recently, we've gone into storage, and there was an article which popped up on News24, and at the bottom somebody wrote a sarcastic comment like, is this a real event, or is it a ghost event again? Alec Hogg: Is that water off a duck's back today? Rael Levitt: I would say it's water off a duck's back, but actually I don't like it. [01:00:49] But I don't let it paralyse me. In fact, I go the opposite way. The truth is that my story is probably like a rise, fall, rise again. And as much as people do like the fall story, I think for a lot of people, intrinsically, they like to see somebody who has fallen off the top of a building, landed on their back, dusted themselves off and said, OK, you know what, bad things happen, and bad things happened to me, and I can actually rise again. Many people find it absolutely inspirational, and I like to be inspired by that myself. We live in a world where there are so many examples. Everybody knows the Donald Trump story, because that's a big story, and in many ways people like that story: the man who has fallen down can rise again. We see it in South Africa, by the way. Even, you may or may not like him, but even Jacob Zuma: the man has fallen, and has got the ability to come back again. So I think people like that. And if they don't like it, I'm not sure I care. Alec Hogg: Before we go: next time I go to an auction, how should I be handling it to get the best possible value? Rael Levitt: Well, it's quite funny, because I've been buying on auctions lately. In fact, recently I bought on two auctions. The first thing is, you need to understand what that reserve price is. Auctions still don't really disclose it, but try to understand what it is. And really determine what your price is, and just bid up to your price, and don't get caught up in the excitement. For me, being on the other side of the gavel, I've realised it's probably why I became an auctioneer: I would be a very bad bidder. I get caught up in the excitement of the auction and the price rising. But really, just determine your price, know what you're going to pay, and stand by it. Alec Hogg: I know from the horse auctions: you make sure you stand at the back of the hall, the back of the arena, so no one can see who's bidding unless they turn their heads around, and you try not to let them know. That's one part of it. And the other part is exactly what you're saying now, because it is so easy to get caught up in the emotion. All you need is two people who want the same asset, and you end up overpaying. [01:03:01] Rael Levitt: It was quite funny, because we bought a very big building in Cape Town, the old telephone exchange in Cape Town. In fact, I bought it at an auction in Durban, and Andrew Miller was the auctioneer. I thought it was professional. The auction was well conducted, and I chose my price, and I wasn't going one rand more than that. And we got it. Alec Hogg: Well, I said in the beginning: was this book of yours a confession, or was it a defence? Rael Levitt: I think it was more confession. I wanted to tell the story, because the story was taken away from me, and everybody else had written it. The book came out in 2022. The auction was in 2011, so it was 11 years after. I did want to tell my side of the story. And it was to say, look, I made mistakes, and this happened. But a lot of the story which was told was incorrect. A lot of overreach happened, and no one ever took accountability for it. When I launched the book, I was extremely nervous, by the way. In fact, my CFO came to me, and Inospace was quite a big business at that stage, and he said, why would you want to bring up the past? Just let sleeping dogs lie. And I said, you know what, I just feel I've got to tell the story, because I don't want to go on forever with a story that had evolved into something which just wasn't the case. So I think it's confession, and it is telling my side of the story. I don't have to defend against any legal issue, but really to say, it wasn't such a bad business. We had 20 years of great success. And yes, there were mistakes made. I made mistakes. But at the end of the day, there is a different side to the story, and both sides of the story have got to be told. Alec Hogg: And do you feel you've achieved that objective? Rael Levitt: I think I have. There are obviously going to be cynical people. The Sunday Times, I'm sure no one reads it, because no one even mentioned to me that they'd read it, but when the book came out, they had a headline going, Rael, never do we believe him, as the question. And of course people are going to question it, as they should. But I think largely people say, you know what, I get it. He did make a mistake. He did lie, and he handled it badly. But we hear him. [01:05:21] Alec Hogg: Well, that's the founder of Auction Alliance, and of Inospace, his new project, Rael Levitt. If you read any great novel, you'll find that's the story: someone who rises, falls, but then rises again. And there's no question, from what we've heard today, that this man, back in South Africa, is very much on the rise once more. I think it's a company we'll be keeping our eyes on. Lots of lessons there. It's a good book. I can tell you, I throw so many books that get sent to me for review into the rubbish bin. This wasn't one of them. I'm Alec Hogg, BizNews.com.