Will Sol swoop on Britain's casinos?

HE'S famously rude, notoriously crude, and you cross him at your peril. Yet he is also a visionary with an extraordinary imagination whose fantastical creations make William Randolph Hearst's Xanadu seem small fry by comparison. They call him the Donald Trump of South Africa, but his explosive style is more akin to Bob Maxwell brawling his way through a Tarantino script.

Dogged for years by allegations of bribery, but simultaneously feted as the richest self-made man to have come out of South Africa, Sol Kerzner, 67, is more complex, more colourful, and has more edges to him than a Picasso painting.

Love him or loathe him - and there are few neutrals - Kerzner, the billionaire casino-hotels tycoon, has, we now hear, entered the tightly held London casino market through the back door.

His Bahamas-based company, Kerzner International, has bought into the beleaguered London Clubs International (LCI) - one of Britain's premier casino businesses that has recently fallen from grace - perfectly positioning himself to enter the soon-tobederegulated British gaming market.

Analysts expect that within two years the liberalisation proposed in the Budd Report on gaming deregulation will have passed through Parliament, and that it will quickly lead to a doubling of UK casino revenues, from its present pounds 620 million to more than pounds 1.2 billion.

In what is regarded by the City as an extremely canny move, instead of buying LCI shares, Kerzner snapped up $15 million (pounds 9.6m) worth of loan notes in LCI, acquiring 30 per cent of the casino group's bonds (long-term debts).

Since LCI got into financial trouble last year, mainly due to a disastrous investment in a Las Vegas casino that had to be written off, its market value has plummeted from pounds 536 million in 1997 to just pounds 25 million, and it is now bondholders - like Kerzner - and not shareholders who control the destiny of the company. It would be highly out of character, leisure sector analysts add, for Kerzner not to follow up with a full-scale swoop for the entire company.

LCI, which has a debt mountain of pounds 224 million on net assets of just pounds 3 million, is widely regarded as a sitting duck. Its 12 casinos, including the upmarket 50 St James and Les Ambassadeurs in London, make it one of just four major companies that control the sector, the others being Stanley Leisure, Rank and Gala.

It is 13 years since Kerzner, creator of the notorious Sun City and Lost City resorts, left South Africa under a cloud of alleged bribery, transferring his focus to the Caribbean and the United States, where he now owns mega-casino hotels in the Bahamas, Connecticut and Atlantic City.

Each time he has sought to open a casino in a new territory, his controversial reputation has travelled before him and he has had to convince the local gaming board he is a person to be trusted. Each time he has eventually prevailed.

Now, as he contemplates his next move, British casino owners may well be wondering which Sol will turn up: the misunderstood genius with the Midas touch who some say has mellowed with the years, or the pugnacious, uncouth, roughhousing man-boy not shy to tell his fellow board members to buck up or "f*** off".

As LCI's directors may have already discovered, Kerzner's boardroom manner is not exactly Savile Row. Wilf Rosenberg, who worked as the publicist on Kerzner's team for Sun City boxing events in the Eighties - including a number of world heavyweight title fights, says of Kerzner: "The way he ran meetings was unique. He would keep us waiting, then swagger in dressed like a scruff, and kick off with the words, 'What the f*** is going on?' "Then the suits had to talk fast.

Just the facts. He didn't want to hear your excuses. Sol never suffered fools. Try and bulls*** him and he'd rip you apart. You'd be out on your ear.

There were no second chances."

His energy level was phenomenal, adds Rosenberg. "Up at 6am, he'd keep going until 2am, then end the day with a beautiful woman on his arm, a bottle of Scotch in his hand, and a gamble in his casino. The man never sleeps. He's lived one of the fastest lives ever lived.

"To me he was a porcupine, spiky on the outside but soft and generous on the inside. Many people hated him but most were simply jealous.

He was the kid from the Bronx who ended up in Bel-Air. If you did your job well for Sol, he would reward you beyond what the job was worth.

He actually thrived on making people dislike him because he wanted to be seen as the tough guy. It goes back to who he was as a kid."

Solomon Kerzner was born in Johannesburg on 23 August 1935, the youngest and only son of four children to Russian parents who had immigrated six years earlier.

He grew up dirt-poor in the rough, poverty-stricken neighbourhood of Doornfontein, where, as one of only two Jewish boys in his class, Kerzner was regularly beaten up.

His answer was to enrol for boxing lessons, where he learned, in his own words, "to beat up all the boys who beat me up". But Kerzner discovered his talent for boxing went beyond street fighting, and went on to became welterweight champion at the University of the Witwatersrand, where he studied accountancy, qualifying at the age of 26, and becoming a junior partner in a firm of chartered accountants.

His struggling parents, meanwhile, had relocated to Durban, where they ran a kosher boarding house called the Menorah Hotel.

Kerzner used to help out and, inspired by the swanky new hotel franchises coming out of the United States, started to dream of opening a very different kind of establishment.

WITHIN three years, at 29, Kerzner had borrowed money from clients to build South Africa's first five-star hotel, the Beverly Hills. It went up on a deserted beach in a tiny fishing village to the north of Durban called Umhlanga Rocks. Even in that very first project, Kerzner's leitmotif was evident: he saw potential where nobody else did; and then he built faster, bigger, better and more grandiose than anyone else.

Today, Umhlanga Rocks is a thriving resort on the balmy Indian Ocean. But, back then, there was no South African precedent, and so Kerzner based his initial design on crude pictures of Miami hotels he cut out from holiday brochures.

Within five years, Kerzner had started the Southern Sun Hotel franchise, the South African hotel chain that transformed the leisure sector in South Africa and grew to 31 hotels. But his big break came in 1979, when he built Sun City in the so-called independent homeland of Bophuthatswana, striking a deal - which would later be attacked as highly suspicious - with the then homeland leader, Lucas Mangope, for the exclusive gambling rights.

Sources in South Africa would subsequently allege that Mangope was in the pocket of Kerzner, pointing to the mysterious pounds 1.8 million fortune he amassed before fleeing to his private mansion in Switzerland.

Whatever its murky origins, Sun City was nevertheless perfectly positioned - just a two-and-ahalfhour drive to the west of Johannesburg, and it became the favourite haunt of wealthy white South Africans who were otherwise prevented from gambling in Calvinistic, apartheid South Africa.

Later, on the same bushveld site, Kerzner built the even more flamboyant Lost City, creating an artificial rainforest replete with waterfalls, a beach, a sea with waves, a golf course with real crocodiles, and of course thousands of slot machines.

He held regular extravaganzas - including numerous world heavyweight title fights and Miss World contests - playing host to a long list of celebrities, from Frank Sinatra to Liza Minnelli An equally long list, however, viewed Sun City as an apartheid- enhancing, sanctionsbusting scheme, a sentiment famously voiced in a song lyrics: "I ain't gonna play Sun City."

Kerzner was reputed to be worth around pounds 600 million but, as fast as his fortunes rose, so his private life unravelled. By the mid- Eighties, his third marriage - to blonde beauty Anneline Kriel, South Africa's first Miss World - was on the rocks and dark rumours circulated Johannesburg as to just how stormy and violent the parting had been.

His five children all come from his first two marriages, though two of his children were left motherless when Shirley, his second wife, committed suicide in 1978.

In the midst of it all, to celebrate his 50th birthday in 1985, Kerzner chartered a Jumbo jet to fly 150 of his closest friends to Mauritius, where he also owned a brace of casino-hotels, replacing the air stewardesses with dancers who performed an in-flight striptease.

Meanwhile, his womanising, workaholic, alcoholic lifestyle was beginning to damage his health.

In 1989 Kerzner had a heart attack, and his doctor told him not to bother to come back until he had given up his 60 cigarettes a day, cut the booze, and somewhat reduced his daily intake of 20 cups of coffee and a dozen cups of tea.

" My cardiologist said ' No cigarettes and three drinks maximum'," said Kerzner. "I swapped my cigarettes for worry beads but he didn't say how large each drink should be. I still get through half a bottle of Scotch in a night, maybe more, very easily."

Kerzner would later hook up with Californian model Christina Estrada, becoming engaged to her on Valentine's Day 1994 with a diamond ring so large she had to keep it in a bank vault. Her subsequent seven-year wait for tycoon Sol to say "I do" provided regular juicy copy for gossip columnists worldwide, especially when he finally dumped her for her best friend, New Yorker Heather Murphy, who at 33 is half Kerzner's age. She was destined to become his fourth wife.

But by then he was immune to embarrassment. He had already endured the humiliation of being accused of bribery in the acquisition of exclusive casino rights, not just in Bophuthatswana but in the Transkei, another "homeland".

KERZNER later admitted to paying pounds 500,000 in cash to Transkei prime minister George Matanzima but, when accused in 1989 of giving a bribe, Kerzner insisted it was not a bribe but extortion on Matanzima's part. Matanzima was jailed for nine years for accepting the money but Kerzner never returned to the Transkei to stand trial and got off scot-free.

Christo Nel, the Transkei attorney general, pursued Kerzner for eight years, compiling a 300-page dossier on the man and famously declaring: "I have an arrest warrant charging him with bribery, corruption, fraud and perjury. I'm not going to give up now, or ever, not until Sol Kerzner is brought to justice."

But, as time passed, key witnesses - former policemen - disappeared or refused to give evidence, and the crucial middleman in the deal, admitted by Kerzner to be Ci Gouws, was killed in a car crash in the Nineties. Eventually Nel dropped the case. By then, Kerzner had long sold his interests in South Africa and turned his sights - and considerable war chest - on America.

Based in the Bahamas, he has set about building an international empire even more extravagant and fantastical than his South African one. His flagship is the hugely successful Atlantis on Paradise Island in the Bahamas, where his pounds 1.4 billion casino-hotel is set amid the world's biggest manmade aquarium, a waterslide marine park inhabited by 100,000 marine animals including piranhas, sharks and stingrays.

He also built the pounds 200 million Mohegun Resort-Casino in Connecticut, owns the pounds 300 million Resorts casino-hotel in Atlantic City, and has eight other beach resorts at exotic locations in Mauritius, Dubai and the Maldives.

Leisure sector analysts agree that, when change comes, the stuffy and highly regulated British casino market is ripe for the plucking.

Kerzner, whose imagination has never let him down - and whose goal, he says, is to "continually blow away the customer" - could be the man to take it to another level. But, as notorious as he is for grand gestures, his attention to detail is just as impressive.

"I once watched him make an employee paint a wall seven times until he got it exactly the right shade of green," a business associate said. "He wants things just right. And he never fails. Never. I wouldn't be surprised if the boys from LCI have already bought their paint brushes. Just in case."

Copyright 2002
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