South Africa has never been short of colourful characters, but Adriaan Niewoudt’s Kubus scheme in the 1980s still ranks among the country’s most bizarre financial swindles.
On the face of it, it was simple and so good that even major lifestyle weeklies foamed at the bit to feature his purported genius at the time.
All investors had to do was buy a starter pack of a so-called “activator product”, mix it with milk, let it ferment, dry the result into powder and then post it back to Nieuwoudt in Garies, a town in the Northern Cape.
Adriaan Niewoudt’s 1980s Kubus milk scam defrauded thousands
Weeks later, a cheque would arrive in the post, a reward for your supposed “knowledge and effort” as a milk powder grower. Thousands signed up, thinking they had found the goose that laid the golden egg.
Nieuwoudt claimed he needed enormous quantities of the dry powder for an exclusive skincare cream, a formula he said was inspired by his grandmother.
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The only problem was that the cream never existed. Investigators later found tons of the dried and rotten milk culture in sheds.
What investors were actually buying and producing was just being recycled and sold back as new activator product. In Niewoudt’s heyday the Kubus project raked in an estimated R140 million.
Families, farmers and professionals all piled in, convinced they would earn back their initial outlay within months. Many did, but only because new entrants kept the cash flowing from the bottom up.
Victims lost fortunes
Once recruitment of new victims slowed down, the entire house of cards collapsed. The government of the day finally declared the scheme illegal, leaving thousands out of pocket.
Nieuwoudt himself was declared insolvent.
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His troubles did not end there. In the 1990s, he was convicted of unlawful diamond dealing and theft, sentenced to eight years in prison. He served only one before being released.
Later, another conviction for diamond smuggling saw him sentenced to 10 years. Notably, he was never jailed for the Kubus scheme that made him notorious.
‘Master plan’ for tourism
Even after Kubus, Nieuwoudt never stopped creating new ideas. He boasted of kaolin deposits on his land that would spark a mining boom. He drew up a “master plan” for tourism along the Orange River.
Then there was a carbon credit project to electrify rural areas with clean energy. Each pitch demanded money upfront, of course.
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