MAGNUS HEYSTEK & ROB HERSOV: How to Protect your Offshore Money from the South African Government

Who is pulling their chain? Why can't they see the light?

Wealth is priced in dollars, not in rands. That's number one. So it's almost a charade of lies. Every year they bullshit the public and the public buys it. It's much cheaper. I mean, the cost of making investment offshore is a fraction. How? So I feel like a kid in a toy shop. It's just so much to choose from. Nobody knows about it. Nobody talks about it.

Where is it? Just give us an example.

If you take our top 10 equity funds, for instance, over the last 10 years, the returns Almost identical.

Are these funds liquid or is there a lock-up period?

I like trading plus-one kind of product. If I trade today, I want my money tomorrow.

You don't just invest money on behalf of your clients? You help them with structuring too?

It's a very good question. We structure credit cards for most of our clients. They don't have to bring in money. They just simply swipe the offshore credit cards here in South Africa or debit cards. Before we take on a client, we put our clients through a psychometric test. An idiot and his money must not be locked up in the same room together. Haha, or in the same country. If Pam Golding moves out and the pawnshops moving, that city is dead.

That's a good way of tracking it, actually.

Yeah, there's no more market. You can't price property. And if you reprice it into dollars, it's even worse. That shows you how we've been impoverished by the ANC the last 30 years.

Are we up against the wall?

The offshore money is going to be a target. If you've got money offshore and it's still in your hands, put it into a trust, cut the link.

Can you tell us where it all started?

I was a financial journalist for 20 years. We were taught and trained to ask hard questions, not to accept, you know, the polished image of a message. You've got to go and delve and ask the right questions. And secondly, I also travel globally and attended conferences all around the world— IMF, World Bank, and the big investment companies. So I had a different view of South Africa I didn't see South Africa as the centerpiece of the world like many people do.

As a journalist?

As a journalist or thereafter when I started my business. For the first couple of years after I started, it wasn't necessary. South Africa was going through a boom phase. The commodity cycle was booming. We had the soccer World Cup coming up. There was a construction site in South Africa. 2009, 2010, after the great financial crash, things started going pear-shaped and I saw it in the statistics and I saw it in the fund flows. The rand started weakening. We started being downgraded. And if you started looking at All these things, I felt it was important to warn South African investors that we are heading into an economic and financial storm. And I thought I was doing the right thing and I set out reports and I got on radio, I got on TV programs and I said, there's a storm coming and prepare yourself for the storm. And of course no one liked that. They didn't like it. A lot of people did, but the big institutions, the banks, asset managers, life insurance companies didn't like that. And they embarked on a tremendous campaign to discredit me in comments. But as I always say, I don't work for them, I work for my clients and they pay me. The only person that pays me is my client. They expected honest analysis and based on the analysis, trying to develop some scenarios, personal scenarios for people's families or their businesses, et cetera. And I can give you a couple of examples how I've made a massive difference in people's lives. And as we progress with the Zoomer years, the 9 years, it's becoming very, very obviously we into a financial storm of note. The currency was telling us, the capital outflows, the rand going from like 10, 12, 14, 17, 18, 19. I mean, we don't realise what that does to the wealth of a country if the currency collapses.

For the last 15 years or so, the rand has generally been volatile and has been depreciating, and it's had a number of shocks that come along the way. Load shedding, corruption. There was the downgrade by the rating agencies of South Africa, sub-investment grade. And then on top of that, we were greylisted to say that they don't really trust the way we're managing our criminal justice system, our financial intelligence system. It's not trustworthy. It's being abused by criminals.

So you're up against the asset managers and the banks who try and tell you everything is fine. Don't panic. Well, I said, I'm panicking and this is what I'm going to do. So I devised the investment strategy which was appropriate for our clients, and those who took it have been insulated. I call it ANC-proofed their investments. And that has paid off very well.

And has that been mainly buying international stocks or local stocks that have—

I had to educate our clients to think in dollars. I said wealth is priced in dollars, not in rands. That's number one. Secondly, that meant I had to externalize as much as we can, which was legally possible. And fortunately at that time, the allowances we introduced, 2 million, 4 million, and then 10 million. And, you know, at the same time, the local asset management companies were embarking on campaigns. Local is lacquer, or you don't need to take off money offshore. I had arguments, almost fisticuffs, with fund managers who said, it's not necessary to take off money, we're doing fine in South Africa. Well, I disagreed on that. First of all, you had the technology boom starting in the United States, technology, microtechnology, biotechnology, everything that we see the results now was already starting to develop in the United States. And having been fortunate to go and travel in the States and go and Go to have lectures at Google, Amazon, Facebook, Tesla, you name it. He came back, he said, "We're a very, very, very small fish in a very big sea." Lo and behold, I couldn't find any fund in South Africa that gave you exposure to technology. Nothing. In fact, there's a tiny little fund that one of the big institutions had, they actually closed it in 2013 at the beginning of the bull market. Well anyway, My clients were exposed to these technology funds. They made very, very good returns. And the story hasn't changed. We still today with our economic growth, as we saw last week, is still 1.1, 1.2. Year after year, we have the same pattern. We start the year and they start with a budget and the budget and the minister says this and this. This year we're turning the point, the turning point in terms of our finances, the budget deficit and and year after year after year. And the precious living and getting away with that, it's almost a charade of lies. Every year they bullshit the public and the public buys it and then they keep on buying coal.

That's been 10 years, it's more.

So if you look at pure statistics, South Africa in the last 17 years, if you price our wealth in dollars, we've become a very poor country by about 30 to 40% in purchasing power of a dollar. And I always tell people, do you want to, test my hypothesis or theory, get onto a plane and go into London or to New York and go and buy a meal or a ticket or a hotel room, and then you tell me I'm wrong. It's just horrendous. So that's the story. And I don't see any change. I look at the statistics, I look at the— let's take our debt, for example. South Africa's finance minister announced a historic milestone, saying the country's debt burden is stabilizing for the first time in nearly two decades. Presenting his budget speech to Parliament, Africa's most developed economy has struggled with debt hitting nearly 80% of GDP. It is expected to ease to 77.3% this year and decline further next year. 2008, our debt as a percentage of GDP was 25%. Thabo Mbeki was in power and we were doing very well. And then the slide started. As the ANC needed more money, they just increased the borrowing. But that's only half of the story. I'll get to the other half in a second. Here we are, 78%, 78%, 80%, and that's excluding the debt of certain parastatals. So who knows how real big our debt is. So it's just a humongous number, and most of it has been spent on salaries, perks, not infrastructure. That's the key. We are not spending money.

Remember, we're borrowing debt just to be able to live. We're not even borrowing debt to actually invest that money into productive assets. You're borrowing debt to pay salaries and wages, to pay grants, to make sure that you can actually be able to live as a country. If you had GDP growing at the right levels, then the debt problem would not be there.

Even if it starts coming down a little bit, they're spending on the wrong stuff. We don't see anything that we can say, okay, that was money well spent. Like you, I travel the country and I look, I read, I try and find out where are— what's Where's the money going to? I don't see it. So we see the result of the lack of spending on infrastructure, on roads, railways, ports. And that's one of the reasons why we as a mining country have just fallen off the radar. The Fraser Institute tells us the big mining capital of the world.

So South Africa was top 5 mining country in the world. I mean, it was number 1 in gold at one point.

The world came to us to learn how to mine. 1980, it was 20% of the economy. Today it's less than 6%.

And we had a million people employed in mining. We're under 500,000. And I think we haven't opened a new mine in 5 years.

That's absolutely true. We've had a humongous bull market in commodities and humongous bull market in gold. And the reason why they're not investing in our gold mines or even exploring for gold mines is the uncertainty about government policies.

Gwede Mantashe has destroyed the mining industry.

We should actually have a uniform approach in dealing with major parties. If we don't do that, we're going to be easy meat. So they're not investing because they're not sure what's going to happen. A mine is a 10 to 15 year project. They need certainty on electricity, the price of electricity, the supply of electricity. They need to know when I switch on the power 10 years from now, it's there and the price is predictable. So you can't do that.

South Africa's GDP growth slowed to 0.5% in the third quarter. Now that compares with a 0.9% recorded in the second quarter, reflecting a mixed performance across key industries. The trade, mining, and government sectors were among the primary drivers of growth, though momentum was tempered by a significant contraction in the electricity, gas, and water supply industry.

The roads. Can I get the ore from the mines to the railway roads? So our railway has collapsed. The guys are saying it's too expensive to truck it all the way from wherever it is to the ports. And then you have the ports that have collapsed. So you put that into one big pot and it's a country in deep, deep trouble. And it's been financed by borrowings, borrowings, borrowings. And you can, we already passed the Laffer curve in terms of taxes and so on.

And this has been happening for a long time and you've been calling this out for a long time. And your investment strategy has been off the charts, the results, but has been consistent, hasn't it? It's, you look at South Africa, you're not seeing any real movement? You're investing in dollar-based—

I try and be very objective. I try and analyze what I see, and I analyze, and I try and hear the good news and the green shoots, and then I go and scratch a little bit. I just don't find it. It's nice speeches to make, and it's now turning around, but I just don't see it. And the numbers don't lie.

And even today, people are talking budget surplus, unexpected green shoots in the economy, but that's nothing to do with South Africa.

Pure luck. Okay. Gold price. In fact, between December 2024, the gold price went from $3,000 to $5,000. It's just money for jam coming in. Nothing to do with the government or government initiatives or policies. The same with manganese, copper, and platinum. So that's pure luck. So plus, as an added benefit, they got the rand strengthening because the dollar weakened. Gold has surged to an all-time record high of over $5,000 an ounce. The rand has also strengthened to below 16 rand to the dollar for the first time in almost 4 years. You cannot predict that going forward. In fact, you know, I think we already reached the peak for a very long time as far as that's concerned. So if you want to use last year's economic performance in the stock markets to predict forward, I just think you're going to make a very big mistake because it's just an unnaturally high plateau. So nothing that government has done. In fact, coming back to the economic growth, the 1.1%, if you analyze it even further, Manufacturing in that number was minus 4%. Everything was minus, minus, minus, with farming, and that's driven by the rain. And secondly was financial services or the stock market that just had a tremendous boom.

The increase in the gold price, it means that our miners will actually benefit. Jobs would be a little bit more secured in the mining sector. We may see maybe around 4% wage increases, but indeed, the sector will be able to stomach those kind of increases.

So let's take your competitors, a basket of, you know, Old Mutuals and Standard Banks and whatever, the sort of quasi-indust— the quasi-ANC South African institutions, pension funds, investment funds. Who's pulling their chain? Why can't they see the light?

Well, I think, you know, you're going to look, you're going to go look at the top, you're going to look at all the money that is being managed by the big institutions via pension funds. There's your control. You have this amount of money being managed by the large asset managers and it's extremely, extremely profitable business if you can manage large amounts of money. And there's my, I've no doubt about it, there's discussions, you know, you've got to push the South African markets and don't rock the boat.

So if you look at Old Mutual and Standard Bank, there's just two examples, there are many more. And the money that's deployed with their various investment vehicles and funds, a lot of that money comes from the pension funds. The big pension funds are Eskom, Transnet, PIC, I guess, is a separate entity. And do they have influence on the investment thesis of those big institutions?

Absolutely. At top level. And if you look at the returns, the longer term of returns of those large companies, A, they're very, very expensive. So it's another reason why we take money offshore. Expensive? Well, it's much cheaper. I mean, the cost of making investment offshore on a retail level, on institutional level, is a fraction.

How can you tell the viewers how— why is that the case?

On a general equity or a balanced fund in South Africa, you'll probably pay about 1.5% kind of fees, or in maybe some of them 2%. Now we take money offshore, we can buy ETFs, um, 1%, 0.7%. I mean, it's just, it's just, I mean, it's almost more than—

and Brenthurst fees and Old Mutual's fees, for example, are they Pretty much the same.

We're significantly cheaper if you do a total comparison, TER, TER, I mean it's about a percent difference because we use the, we get the cost saving on the—

And that percent difference makes a hell of a difference over 10 years.

Not only that, the choice is so much wider. When we go offshore, you know, I feel like when I, sometimes when I go into the offshore markets, I feel like a kid in a toy shop. It's just so much to choose from. You know, I've got biotechnology funds, I've got blockchain funds, I can get commodity funds. I'll give you an example. Africa ex-South Africa last year returned 68% in dollar terms. Nobody knows about it, nobody talks about it, but it's there. If you go and scratch, it's there.

And where is it? Just give us an example.

Nigeria, Egypt, Morocco, Kenya, financial services, banks, liquids, you know, that's always been an issue, how liquid. So you've got 68%, nobody talks about it. So, Japan has been for 10 years has been one of our top holdings. We've been using a fund there that's been returning 22% in dollar terms. Nobody talks about Japan.

Funny enough, with the business news conference, he said, put up your hand who's invested in Japan. I think I was one of, but I'm there in private equity, not in public equity.

So again, you go, I feel like Jim Rogers who wrote the book, The Investment Biker. We went to Japan, spent 2 to 3 weeks. We met business people, we met the Reserve Bank of Japan. We asked questions, we spoke to people, we looked around us, came back to South Africa and I said, I like that country, I like the culture, I like the people. How do I invest in that country? Couldn't find it. Had to go and find the Japanese fund. So our clients have got a totally different type of portfolio than the average South African, which was all the same. If you take our top 10 equity funds, for instance, over the last 10 years, the returns are almost identical, 'cause they're all fishing in the same pond.

It's Naspers, Richemont, couple of banks, couple of retail, couple of—

MNET, Naspers. So your returns are almost identical. So you can go any mini money mo and you'll get the same returns. Now I wasn't happy with that. So I spent a lot of my time with our team. We were going to find stuff which intrigues us and then we're going to find the stock.

And when you invest on behalf of a client, you are direct investments. So you hold stocks directly. You hold via ETFs and then you invest in funds. Are these funds liquid or is there a lockup period?

They're all liquid. I don't like lockups as a start. I try and avoid it as much as I can. There might be special circumstances where there is a lockup and if I'm really convinced of the investment merits of that product, I'll say, okay, I'll agree to a lockup.

But that's a limited percentage of your fund. So it's under 5% or under 10%.

I like trading plus one kind of products. If I trade today, I want my money tomorrow.

And you'd only go into a private locked-up situation if you saw unbelievable upsides. So it would be like, you know, SpaceX 10 years ago.

Well, now that we're talking about SpaceX, I am an avenue to give my clients some access to SpaceX right now. So that's something that we go and look for stuff and we ask, we beg, we plead. And if you ask nicely, sometimes, sometimes you—

But that's illiquid.

That would be a 5-year period. And, but you know, that's, I'll make an exception with that.

SpaceX reportedly planning to go public next year.

SpaceX, it won't just be one of the biggest listings ever. It will help set the terms for the next wave of IPOs and force a big question for the trade at large, and that is, are public markets willing to fund strategic capital-intensive companies with massive CapEx and delayed profits? Now, those are similar economics that are sitting under the AI model training and infrastructure buildout right now.

I said earlier, I'll give you an example of how we've made a difference in a family's life. About 10, 12 years, a family from Bloemfontein came to see me and they said, listen, we own 4 or 5 very large residential buildings in Bloemfontein, and that's been the family money for many, many generations, or, but they've had an offer. Someone wants to buy it. Can I have a look at the numbers? I said, give me your numbers and I'll spend the weekend with their clients already. No, they were not applied. I came back to them, I said, you realize you're making 3% on your money? And they said, well, we kind of suspected that. And I said to them, having traveling around the country and just looking and observing what I see, I said, if it was my money, I would sell those buildings, which they did. The price was 60 million rand or something like that, 10, 12 years ago. We took that money offshore. They were very happy. The money's all offshore. I've externalized very large chunk of the family's money. It's now worth about 180, maybe 200 million. That's only one half of the story. About a year ago, they phoned me and they said, listen, interesting story. The buyer of that property has approached them, says, do you want to buy the building back? And I said, you obviously said no. He said, yes, we said no, man. But I said, what was the price? The guy would accept 30 million rand now. Now, can you—

12 years later, having paid 60.

He'd accept 30 now. Now that's what I'm talking about, that nobody talks about the material wealth destruction for people who held onto their physical buildings in South Africa, in most parts of the country, excluding the Cape. You can draw the line from Limpopo right down to the Free State, KwaZulu-Natal. They've just lost their value. And if you reprice it into dollars, it's even worse.

So what was the rand to dollar in the early '70s? 1 to 1?

Well, it was, It was 2 to 1 at one stage. When I became a journalist, it was 140. You got $140 for a rand. We were rich.

So our family were one of the richest families in South Africa in the '70s. We were top 10.

Yeah.

You know, Oppenheimer, Rupert, Gordon, Ackerman, Herzog, Menel for 10 years. And I remember that when I was about 11 years old, '71, '72, 11, 12 years old, I asked my father, we went to skiing in France. I asked him about the rand. Dollar exchange rate and it was around 1 to 1.

Yes, quite correct.

And we were immensely wealthier and it's now 17 to 1. We've lost 17, you know, a multiple of 17 times our wealth just by staying in the rand, or we would have.

I'll give you another example. Sometimes when there's not a rugby game to watch and I say that I play around with statistics and I took an average, I took an average house price in South Africa 20 years ago and I priced it into dollars. And then I compared it to the average house price in the United States. And I came to a conclusion that average house price 20 years ago in South Africa, you could afford to buy about half of the average house price in the United States. So that was not too bad. I did the exercise the other day with the rise in values in States and the decline in South Africa, plus the drop in the currency, you can afford a garage and a toilet of the average American. That shows you how we've been impoverished by the ANC the last 30 years. It's a slow, gradual impoverization. And if you've not been smart and externalized your assets, you've become extremely poor.

I live in South Africa having made my own money, nothing to do with the family overseas. I bring in money from offshore when I need it. And so a weak exchange rate, I live like a king here.

You do.

But the other way around, I feel so sorry for South Africans who've tied their wealth to South Africa for the last—

Well, that's why the middle class in South Africa is really, because their wealth is attached to their house, their property, and their pension fund, which has only got a limited exposure to offshore. And everything is priced in rands. And whatever they've had is just, if you price it in dollars, it's just gone backwards.

But Magnus, you've been so correct on calling out South Africa for what it really is and where it's going under the ANC, but also putting your money where your mouth is, your money and your client's money. And those two things have benefited you and Brenthurst extraordinarily well.

Well, it's grown us into a sizable business. My clients thank me. I actually get calls saying, I didn't see what you were seeing, but thank you for taking my money offshore. Now I have $10 million or $20 million offshore. And it's not only now, it's for the families, the second and the third generation that you've externalized your assets, ANC-proofed it, and it's already offshore.

Since the global financial crisis of 2008, emerging markets have increasingly enjoyed significant significantly higher portfolio inflows into their capital markets from so-called non-bank financial institutions like insurance companies and asset managers, for example, who foray into these markets to achieve a decent return on their portfolio investments. But the problem is when global shocks hit, some of these investors can become very jittery, sell out, and reduce their positions in emerging markets.

How big is Brenthurst now?

Well, Brenthurst is, if you look at assets under management, you know, it's about 30, 35 billion.

And where does that put you? 35 billion under management? Where does that put you vis-à-vis the other big South African names?

I don't know and I don't care. You know, it could be, I mean, there are companies much bigger than us, been around much longer. You know, my, this is my second investment company. The first one was stolen from me, but that's another story. What is it called? But I thank them. I thank them. It was called Magnus Hasteck Investment Services, and I sold it to a big corporation who came knocking on the door, and I thought, this, I really made it, and then they just ripped me, and I—

Do you got the name back though?

I got the name a different way. I'll tell you what, I got the name, the brand to the name. People often, and it still happened at the conference in Hermanus last week, they asked me, you managed the Oppenheimers' money. I know.

When I first met you, I thought, I wonder how he's linked to the Oppenheimers.

You know what, when I started my second company and I was playing look at names, And because I grew up in Johannesburg, driving past little Bremters going to school every day to Alpenkar, it stuck in my mind, the home of wealth, which is the Oppenheimers. So I looked and I searched and I said, but they didn't register the name. So I registered the name. And promptly a week later, I got a letter from Mrs. Oppenheimer from Workman's, you know, one of the Workman's specials, a cease and desist to stop and destroy. And I said, you know, I registered the name, go away. And they did.

And explain the logo.

It's a copy of the White House. My wife is very artistic. I said to design something, the White House, big, powerful, and very well known, and just play around and give it a modern line. So she designed it.

And you've got offices where? Just give us a flavor.

Joburg, Pretoria, Cape Town, George, Somerset West, Stellenbosch, Val d'Avie. We have an office in Mauritius. So we do a lot of offshore stuff now. Is interesting. We have a trust company in Mauritius, which I bought about 2 years ago. There's a lot of foreign South African money floating around, which is not in the right structures at this point in time. A, a lot of people have not yet fully declared their money, so now they're declaring it. And secondly, from an estate planning point of view, they should put their money straight into a trust when they take it offshore.

So you don't just invest money on behalf of your clients? You help them with structuring too?

It's a very good question. The money part is only part of it. Because we operate as almost a family type of office, you get involved with everything. You do the will, you do the investments, you do the trust offshore, you do the, you do almost everything under one roof. And more and more, it's the structures where you house it. You look for tax efficiency. People like to know that the money will be passed on to the next generation. And they wanted with one company, so that's why we've expanded aggressively in Mauritius. And a lot of South Africans who have immigrated still want us to manage their money, but they don't want to link with South Africa, so we set up in Mauritius and that's done very well.

One of the attractions about Mauritius is that it's a low-tax jurisdiction. Corporate income tax and value-added tax are a mere 15%, while personal income tax ranges from 0 to 20%. And a real lure for high-net-worth individuals and families is that there is no capital gains tax.

So it's likely you'll have offices elsewhere in the world.

We are driven by our clients. I'll give you an example of what I mean by that. When we were just after we started, first couple of years, we had an office in Joburg, an office in Pretoria. It was mostly— but then we started noticing the great migration back to the Cap. When Mr. Van der Merwe walks in and he says, I'm going to the Cap, We realized we must follow them and we opened in Bellville and then in Cape Town and then in Claremont and we followed. So the migration of wealthy people from the north to the south in South Africa has been a massive—

But as families, you know, move around the world, I mean, all South Africans have a son, a daughter, a cousin, an uncle in London, in Australia, in Canada. Isn't that going to, as you get to generational wealth?

That's very true. As I said at the seminar, we don't see a lot of migration The question of the elderly clients, it's too difficult, the friends are here, they have to go. They don't wanna give that up. Their money's offshore, they're happy. They've got enough money to live in and they can bring it in if they need to. We structured credit cards for most of our clients. They don't have to bring in money. They just simply swipe the offshore credit cards here in South Africa or debit cards. The kids are immigrating, big number. Now what this creates is the following. Mom and Dad is in South Africa, Johnny and Sally is UK, Australia.

And they need money there.

They need money there. And also they inherit money. Mom and Dad passes away, how does the money get to offshore or vice versa?

And you help on that.

We help with that because that's become a part of our business. And also, you know, people live in different jurisdictions. So you know, you've got to be an expert on Australian tax law, you've got to be an expert on Guernsey tax law.

And Magnus, of the $35 billion or so, how many families does that represent? And what's the minimum ticket for a family to join?

We've never had a minimum. You know, some of my biggest clients today started small. They test you. They give you $5 million or $10 million, they see how that— and then they give the big money. So I've never been arrogant in that, if you don't have a lot of money, I've picked up a lot of business because I don't have minimums. We manage, if I have to count, it's about 2,000 to 3,000 families.

And with that many families, you can't tailor investment.

No, you can't.

Could you do it for your bigger guys, that the guy that's in for a billion or 500 million?

We have a handful of clients that we tailor-make portfolios, very hands-on, very ongoing communication. That you do, that you can do. For the bulk, I would say 90%, they kind of have a— we allow our advisors to have some kind of freedom within a range of funds that we've screened and selected. And so guys, this is, there's a menu of funds, but we don't have the relationship. We don't know the risk profile.

And if you have a client who is low risk, medium risk, high risk, yeah, or wealth maintenance, which is probably the majority of yours, do you offer different balance of a portfolio? So let's say I'm a high risk investor, which I am.

You would not be. My average is about 5 or 10 who would come in and say, I'm high risk, so what have you got? And they're comfortable with that. We, it's interesting, we, before we take on a client, we put our clients through psychometric tests. But most people don't understand where they are on the risk-return profile. So we give them this test that takes 5 minutes. This test tells us a lot about the person. And then sometimes we have to tell the client, you know, you're actually not high risk, you're actually medium to lower risk. And then he said, I'm pretty surprised. He was your personality. So we do that as just a fallback. And from there we build a portfolio, you know, using all the tools that's available and stuff. So it's a different approach, mainly because I studied psychology apart before I did economics. So I just always had an interest in human behavior and money. And we can do 5 programs on that alone. I always say that an idiot and his money must not be locked up in the same room together.

Or in the same country.

Or whatever. Well, there we go. So we've done, we educate a lot of our clients, think globally, live locally, fantastic. You're loyal South African, pay your taxes, but come on, there's so much out there in the world.

And Magnus, let's talk about South Africa briefly. Out of 10, how positive, confident, optimistic are you about South Africa? I'm a 4 at the moment, by the way.

You know, I'm around about the same level. And you know, there's some parts, I mean, if the ANC would just get out of the way of the free market and let the Private sector get involved. Just put your political pride, but they don't want to. They want to control the money. They want to steal money. They will not do that. And they will go down with the country. We've seen it. We've seen the results of when, you know, governments and especially the ANC get involved in a project. Now whether it's a farming project or a rail project or a, it's just so much stealing. I mean, Dowie already mentioned it and we all talk about it. I don't think made me realize how bad it is.

It's interesting because Ian Cameron said— and he knows the police services in this country— he said it's drenched in gangsterism. And if you just deploy that to the ANC level, it's drenched in corruption. It's at every level. I don't know how we get rid of it.

The IMF says good country policies will serve to make a big difference in the propensity of capital. The IMF's advice to emerging countries includes the need to build adequate fiscal and external buffers, strengthening institutional governance while also adopting solid macroeconomic and regulatory tools to build resilience in the event of negative global shocks.

Our biggest catastrophe in South Africa is the way that the ANC has mismanaged the municipalities of towns and cities. All those towns have been destroyed by theft, corruption, incompetence and it's just never been put back into these towns. So the roads collapse. I mean, Clover moved from Lichtenberg to Gondwana 'cause they were, they didn't have water. Standard Bank, Standard Tenants got a water problem. You go into any medium-sized town north of the Western Cape, it's destroyed. All of those properties at some point 20 or 30 years ago had a value in someone's balance sheet, whether it's a family or a personal, it's gone, destroyed. I always joke, if Pam Golding moves out and the pawn shop's moving, that city is dead. And it's true.

That's a good way of tracking it, actually.

Yeah, there's no more market. You can't price property in many, many towns and cities in South Africa. There's no trade. So zero. Joburg city centre, Hillbrow, Berea, Yeovil, those places, Turinfontein, grew up there. We grew up there. I grew up there. I've seen in 30 years how it's been destroyed from a vibrant cosmopolitan area to live and just destroyed, gutted.

But if you had to invest in South Africa, if you had no option, where would you invest? In what sectors, public and private?

I think that if you're looking at the property market, it is the Western Cape, Garden Route, and perhaps north of Umslanga, or Umslanga north, that Club Med is quite a nice development. There's some pockets, but you've got to go and find them and getting harder and harder to find. So you are quite limited. I've been investing quite aggressively for me, the Paarl area. I discovered the Val de Vie estate there 15, 20 years ago. My returns there have been quite phenomenal. So what those developers have done is quite incredible.

There's an airport coming up there.

I believe so. I believe so. The R7 billion expansion program is set to change not only the Winelands landscape, but also the aviation industry. The airport will serve both domestic and international passengers. I would say the triangle from Durbanville, Stellenbosch, Franschhoek, Paarl Winelands, that's where I would invest money.

Cape Town can only grow in one direction. Bam.

Yeah. So, and I've just spent some time in Rolleveen, I was looking around and looking at property and talking about people who actually bought some more. People say I'm anti-South Africa, I've just bought more property. But it's in the right area.

Property, anything else? Would you— are there any public—

tourism? Last year at the business conference, where would I put my money? I would say tourism. Logistics is— is we still, because of the trains, you still have to move stuff. So, so, and, and then there are other smaller startups that we've got, very creative. And any public stocks that you think have got legs, it's not their money that they're putting in, The big funds that they now guide, you have to put money into, but the corruption is so bad. If you talk to people in industry, we talk to a client who sits, says, I'm a civil engineer, we get a tender, and if you don't have your BE certificates, you gotta go get a partner, and all he wants is 30%. Is that enough? 30%.

Does the PIC have, does it have any returns?

Well, they do have, they have certain large listed investments and those you can track, but they also have a very large unlisted book. Which is very difficult to track. And many of those, if you— is underwater or just gone, money disappears. So it's very hard to really find out how, what the returns are.

Can they invest overseas or not?

I don't think they can. I don't think they can. It's a good question. No, they can't.

Okay, so the PRC must be a disaster.

So via the PRC, government pension funds, it all trickles down. A big issue in South Africa is our tax base is shrinking and it's shrinking materially. Last year, 200,000 taxpayers disappeared. We had $3,500 millionaires leaving the country, a lot of them to Mauritius. And even the SARS admits we are extracting 27% of the economy in tax. They say it's too high, it's higher than the average. So yes, they actually admit we're a high-tax country. And of course, as a taxpayer, you ask, how much do I get in return? We know the answer to that question. Those are the trends that I track. I look at taxes as a percentage and how much more can they tax?

Are we up against the wall?

Well, we are up against the wall, but the governments can always increase the taxes, and we say, well, and I predict that the offshore money, the offshore money is gonna be a target. One way or the other, they're gonna say there must be a way we can target that money. And that's why I recommend to my clients, if you've got money offshore and it's still in your hands, put it into a trust, cut the link, and you can, that's the best what you can do to protect yourself. That's what we are doing to our clients.

But surely if you have a pool of capital, let's say you have an exit on a business, a private business overseas, and that money goes into your Mauritius bank account, you can then put it in a trust and protect it?

That was the final part of the jigsaw puzzle in terms of how you structure, how can you save tax. And that's the ultimate, as you know well, wealthy people in South Africa from time immemorial, Cecil John Rhodes, they got their money offshore and then went into trusts.

And Magnus, how old are you? I just I ask this question because, you know, often a founder of a business is the key man risk. So I want to ask you, how old are you? Where's Brentess Wealth in 5 years' time? And who's the bench? Who's your team?

Right, I'm 72 years old.

You look a day over 70.

Thank you for that though. A day over 72. I am extremely fortunate. I didn't coerce them or force them. 3 of my eldest kids all went and qualified as certified financial planners and lawyers and they're all in the company. So I've got 3 of mine, and they've been in the business from 10 to 20 years, so they're all playing senior roles. The average age of my young smart people is barely 35, 40. So I can set the culture, I can set the standard. When I'm not here, hopefully they'll carry on doing it. So I have a very good succession plan. My wife is the marketing director, and I have a very young CEO running the company operationally, still in 40s. You know, like Warren Buffett, maybe I'm around in 20 years, maybe I'm not. But you know, this is my passion. It's always been my passion. I've been doing this for 40 years.

So Magnus, putting your results aside, which you truly deserve, thank you for standing up and speaking the truth.

Well, that's so nice of you to say that. I've taken a lot of claps, but if my clients are happy, I'm happy. That's all it is in my business.