Wednesday 19th December 2018
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Comsure operates in:the UK, Jersey, Guernsey

The Cost of Doing Illegal Business

 

Arnold Bengis is a 79-year-old South African-born businessman making the most of his twilight years. He’s a benefactor and a philanthropist, giving generously to Jewish causes in Israel. He is a doting grandfather and after two failed marriages has found romance while living in London. He is active on Facebook.

In getting here, Bengis has left a lot behind.

Arnold Bengis is also a convicted smuggler and fishing criminal who trafficked disadvantaged South African women to work in his fish factory in America for $4 an hour, sent turncoat employees afraid for their lives into witness protection and taunted the same U.S. prosecutors who pursued Osama bin Laden. He is almost single-handedly responsible for bringing South Africa’s rock-lobster population to the brink of extinction. (In his absence, it has recovered nicely.)

An imperious and ruthless fishing magnate, Bengis was taken down by two independent governments trying to get a grip on a criminal effort too vast for effective policing. For the years prior to his arrest, his methodology was something straight out of a gangster movie.

“There was tremendous loyalty to him — partly out of fear,” says Godfrey Howse by phone from Cape Town, South Africa. Howse served as Bengis’s financial manager and was forced into witness protection when Bengis’s deputy, Collin van Schalkwyk, hired someone to kill him for testifying against Haut Bay Fishing Industries.

In a lot of ways, Arnold Bengis is the illegal seafood trade.

In April 2015, Bengis was ordered by a United States appeals court to pay $22.5 million for violating the Lacey Act, an obscure bit of legislation that makes it a crime to import illegal fish and wildlife. Interviews with legal experts familiar with Bengis’s case, as well as individuals close to him, say Bengis shouldn’t have any trouble paying. Illegally overharvesting South African rock lobster and Patagonian tooth fish — better known a Chilean sea bass — gave Bengis a ridiculously large financial windfall. He owned a sprawling estate in the Hamptons, on Long Island, and a plush apartment on Manhattan’s Upper West Side, and he stashed his many millions in obscure offshore bank accounts to keep them safe from prying eyes.

Marcus Asner, the former assistant U.S. attorney from the Southern District of New York who prosecuted Bengis, stresses what an impact the case had on the global seafood industry.

“In wildlife circles, in fishery circles, this is the seminal case,” says Asner. “This is the case where law enforcement won and took out a big scheme that really threatened a species.”

Of course, Bengis’s crimes extended beyond fishing. He exploited post-apartheid empowerment programs by installing black employees in sham management positions, keeping the bulk of the profits from their businesses. His company bribed South African fishing inspectors, and his deputies threatened the lives of anyone who stood in the way.

The backstory is political. Bengis became spectacularly wealthy under apartheid rule in South Africa (and even wealthier after it was abolished), growing a fleet of ships that caught and supplied fish in enormous quantities. When apartheid ended, the fishing industry — along with every other industry and social program — changed dramatically. New limits were placed on how much fish could be caught. Black-empowerment programs were enacted in an attempt to curb the disproportionate profits that had historically gone to powerful white men, like Bengis. Adhering to these new rules would have crushed his business. Bengis had, over many years, developed an enormous infrastructure to meet the demands of a long list of clients. If, hypothetically, Bengis had to take in half as much fish, the economics would stop making sense.

So he ignored the new rules.

To lawyers and former associates of Bengis in the United States and South Africa, his case is the one that won’t go away. He pleaded guilty to crimes on behalf of his business in South Africa in 2002. Then, in 2004, Bengis personally pleaded guilty in New York and was sentenced to 46 months in prison — with some reduction for participating in an alcohol treatment program. But since then, he has been fighting court-ordered restitution. Later this year, in August, he is taking on his adversaries back in South Africa by personally suing investigators and prosecutors. He points out that the suit is the first of its kind.

“This is a very important case in South Africa as it goes to the heart of the Constitution and should get large press coverage,” Bengis explains in an email. “The case is unique and is the only case of its type ever prosecuted either in the USA or elsewhere.”

Last month, Bengis filed more papers in South Africa’s high court arguing that the United States and South African governments were in collusion. Bengis believes he had already paid for his crimes in South Africa, and for that country’s government to turn around and work with the United States to prosecute him abroad was illegal. He believes he will be vindicated.

“The Accused will become the Accuser — or better still; The Accuser will become the Accused,” writes Bengis in an email. He then compares himself to the Jewish artillery captain in the French army wrongly convicted of passing secrets to the Germans: “Remember Dreyfus!”

There are many who only know the other Arnold Bengis. They describe him as a philanthropist, a man who in 2003 received an honorary doctorate from Ben Gurion University for starting the Bengis Center for Desert Aquaculture. According to Ronni Strongin, vice president for marketing and communications at the American Associates for Ben Gurion University, the university has not taken away his honorary doctorate and still has the Bengis-branded wing, as well as a center for innovation and high tech to honor him.

“Nothing has been rescinded from him,” says Strongin. “He definitely paid for his crime. He was in prison.”

When news broke that Bengis was in trouble in South Africa, in 2001, a lot of his friends and neighbors refused to accept that he had committed any crimes. He was known for giving generously to educational institutions like Herzlia High School in Cape Town, which renamed the pavilion at its main sports field the Bengis Family Pavilion. (Geoff Cohen, the school’s director of education, says it has since been renamed Herzlia Sports Pavilion.)

“No one could believe it at the time,” says Karen Sack, a former resident of Cape Town who was involved with the early investigation of the Bengis case. “He was a well-known philanthropist and someone who was seen as an upstanding person in the community. Within the local community in Cape Town, it was an issue making people very angry.”

Bengis’s son David, who ran a processing facility in Portland, Maine, that handled his father’s fish and lived nearby in Falmouth, also pleaded guilty to related crimes in 2004 and was sentenced to one year in prison. Bengis’s nephew, Jeffrey Noll, served 30 months in prison for his involvement with his scheme. At Bengis’s sentencing, he apologized that his son and nephew “followed me so loyally and as a result stand here with me guilty of a crime.”

His family, however, seems to have come to terms with — and in some cases even lightheartedly embraced — Bengis’s criminal history.

“I love you,” wrote a relative on Bengis’s Facebook page in April. “Wouldn’t have got my criminal mind without u.”

By the time Bengis pleaded guilty in 2002 on behalf of Hout Bay Fishing Industries, the South African rock-lobster population had declined by 65 percent, according to Horst Kleinschmidt, who was then deputy director general in the department of environmental affairs and tourism, which includes the country’s fisheries. Although the species has since recovered, Kleinschmidt is confident it would not have under Bengis.

“If he hadn’t been stopped, and had he carried on, he would have done what would have been a wipeout,” says Kleinschmidt over the phone from South Africa. “We had to stop that.” By then Bengis was sitting on many millions to help cushion the blow. Some of his former employees, however, still haven’t recovered.

Exploiting black-empowerment incentives, Bengis appointed a 59-year-old former crane driver and foreman named Nelson Qwashu head of Amandla Abasebenzi Fishing, another of Bengis’s fishing businesses. Qwashu says he received little of the profits from that company and has had trouble supporting his five children ever since.

“We are still struggling, even now, because we don’t get enough money,” says Qwashu. “Luckily my children are older now. So they are able to support me.”

Working conditions under the Bengis family and its senior management were hard. Edward Swiegelaar, who also worked for Bengis through empowerment companies, says that Colin Van Schalkwyk, a trusted Bengis deputy who has since died, was known for physically and verbally abusing employees.

“He used to hit the staff with ropes or watever [sic] he can find,” Swiegelaar writes in an email.

Jolene Dreyer was sent by Hout Bay to work in its sister plant in Portland, Maine, on a scientific visa in 2000 and 2001. At Icebrand Seafood she was paid about $180 a week to work packing boxes of fish from 8 a.m. to 6 p.m., Monday through Friday. She says the girls were at the mercy of Bengis’s moody son David.

“He would always see the wrong points in the girls,” says Dreyer. “Everything they did was wrong.”

Bengis was also bold enough to take on the prosecutors and agents who investigated his case in the United States. He paid private investigators $47,000 to follow then NOAA agent Christopher Musto, who admits to being impressed with Bengis’s extravagant lifestyle.

“A part of me was in awe of Arnold Bengis,” says Musto. “When you compare the amount of money they could make from smuggling wildlife, smuggling marine fish species, it’s only second to narcotics. But it’s nowhere near the amount of jail time.”

Bengis withheld documents tied to a grand jury subpoena and used a shredder to destroy others. In one case, Bengis placed a note in his trash to government investigators asking them why they were going through his trash.

Admitted to the record was an account of Bengis explaining to associates the unlikely event that he’d caught and prosecuted, because, as Bengis put it, he had “fuck you money.”

Justice Lewis A. Kaplan, known for his precedent-setting work on Guantánamo Bay detainees, presided over the Bengis case in New York. “I view his behavior here as evidencing an astonishing display of the arrogance of wealth and power, without regard to the legal constraints imposed upon him, and a deliberate disregard of those restraints,” said Justice Kaplan at Bengis’s sentencing.

In recent emails, Bengis defends his actions. When asked if he would like any friends or relatives to defend him or praise him, he writes, “I really do not need anyone to ‘speak on my behalf.’ The facts speak for themselves.” He denies that Justice Kaplan made reference to him buying people off and dismisses claims about his arrogance.

He adds: “I did not realise [sic] that arrogance was a crime in America.”

 

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