The evidence was that a portion of the sea was sold to investors and in Kaliva's (a unit at Club Mykonos at Langebaan on the West Coast), owners purchased shares that did not exist on non-existent land and in fictitious shareblock schemes.
Funding for the various nefarious Masterbond schemes came from pensioners without ensuring that the funds were sufficiently secure.
A panel appointed by the curators to investigate the debenture operation was told that money was flowing into Masterbond at such a rate a month before it crashed that staff could not cope.
Between July and October 10 1991, administrative staff had to deal with about R131 million lent to borrowers, about R76 million received in interest and capital repayments from borrowers, and a flood of new funds for investment, which peaked at about R44 million during August that year.
There were galling findings in the first report by the commission in November 1997, which exposed a history of abuse by directors and auditors, and serious deficiencies in the supervisory system and those sections of the Companies Act designed to protect investors.
Had a class action system been available to investors in companies such as the Masterbond Group, Supreme Bond, Owen Wiggins, Fancourt and Marina Martinique, there was little doubt that actions with more than a fair chance of success would have been instituted against the directors and auditors of the failed companies and all the intermediaries who advised their clients to invest in these entities.
The people who suffered most were often elderly and not wealthy. Individually, they did not have the means or the courage to litigate, the commission of inquiry said.
Investors believed they were putting money in some or other Masterbond project. Unbeknown to them, their money was placed in various schemes to which Masterbond had on-lent the money.
Judge Hennie Nel was placed ahead of Gordon Brown, the UK chancellor of the exchequer, by Accountancy Age, an international accountancy magazine.
The magazine listed Nel number 38 out of 50 financial figures whose decisions would affect the working lives of the accounting profession.
Influence, not qualification, determined inclusion in the list, the magazine said.
Apart from a total lack of ethics in the operation of Masterbond and a lack of interest and commitment to action by the authorities at the time, Nel's report highlighted a lack of effective fraud prosecution; a lack of civil remedies; a lack of class actions; a lack of protection for minorities; and lack of legislation relating to precise accounting standards.
Many of these holes have since been plugged by the establishment of oversight bodies and the increasing questioning of corporate ethics. The Financial Advisory and Intermediary Services Act makes it possible for consumers to take action against financial advisers.
Marina Martinique, a development at Port Owen, was designed to be a resort, with commercial and residential properties linked by a seawater canal system and a harbour giving access to the Indian Ocean. The canals were poorly designed and silted up, making them useless. The developer, Marina Martinique Company, went bankrupt after the collapse of Masterbond.
Newspaper advertisements on September 3 1991 - a month before the provisional liquidation order was granted against the group - boasted of Masterbond's "glowing results".
Ernst & Young was aggrieved that the advert did not state that the results were unaudited, that the audit was incomplete and that the auditors were conducting a critical cash flow audit.
October 1991 saw Masterbond apply to the Cape high court for some of its companies to be placed in provisional liquidation.
At that stage the group had kept Ernst & Young, its auditors, at bay and did not disclose that it was going to apply for the provisional winding up of some companies.
Ernst & Young senior partner Dennis Hoffe was rebuffed when he asked why some cheques were held back.
It appeared there were insufficient funds to meet payments, and closer scrutiny showed that Masterbond had a deficit of R50 million, the commission heard.
Provision for the introduction of class action is made in section 38 of the constitution. This operates when a right protected by the bill of rights has been infringed or is threatened. Procedures for such an action have since been formulated.
The introduction of class action had three main objectives: to provide access to justice for those who would otherwise be excluded from access to the courts; the more efficient use of judicial resources; and the modification of the behaviour of actual or potential wrongdoers who might otherwise be tempted to ignore public obligations.
The quest for international examples of class action led Judge Hennie Nel to research models in the US, Britain, Sweden, Israel and Australia.
The Reserve Bank's bank supervision department in July 2002 added its weight to calls for the establishment of an independent oversight body for the auditing and accounting professions.
The bank said this was all the more necessary "in view of the reliance placed on the work and integrity of external auditors in the methodology followed in the supervision and regulation of banks".
It said South Africa should follow the example of the UK and Ireland, where independent oversight bodies for the auditing profession had been created. Such a body should have the power to regulate the activities of auditors and accountants, and to increase their accountability.
Shortly after Masterbond, in glossy brochures that promised returns of 21 percent and lured investors to invest in the group, it ran into serious financial trouble because of a mismatch between borrowings from investors (short term) and on-lendings to property schemes (long term). This was made worse by schemes being incomplete at the time and unable to pay interest on advances, let alone capital.
Masterbond was by no means alone. The first report of the Nel commission also investigated the Owens Wiggins Group, Cape Investment Bank, the Supreme Group, Alpha Bank, Prima Bank and others.
The report painted a depressing picture. It described the companies registration office as "little more than an antiquated filing room which cannot cope".
It said the attorneys-general, the office for serious economic offences and the commercial crime unit of the police could not cope with the many contraventions of the Companies Act, and the provision of the act dealing with the offers of shares and debentures to the public was "simply ignored".
Nobody who was involved with Masterbond came away laughing. Although 98 percent of investors voted to accept a R40 million out-of-court settlement offer by Masterbond's former auditors, Ernst & Young, at a meeting in Cape Town in February 1997, it was a far cry from the R130 million they had been expecting.
Those who voted in favour of the deal, which left Ernst & Young ring-fenced from further claims, accepted losses of more than R232 million. Curator Jeff Malherbe told the meeting that although 85 percent of investors' money had been recovered, it did mean each investor would receive 85 percent of the money he or she had entrusted to Masterbond.
Hennie van Greuning was the deputy registrar of banks in early 1989, when the alarm bells started ringing.
He allocated only two days to investigate Masterbond in April and reported back to the Reserve Bank's registrar of banks, Chris de Swardt, that although Masterbond was technically in contravention of the Banks Act, auditors had verified that the investments "funds are all recoverable".
The auditors denied verifying anything.
Despite further complaints, including warnings from the Reserve Bank's attorneys, nothing was done. Judge Nel described this as a "serious dereliction of duty". Van Greuning later became registrar and served in Washington.
The only assets of Weskus Beleggings, one of the companies in the Masterbond group, was an 88.8ha piece of land in the Vredenburg/Saldanha area.
Koos Jonker had bought the land in 1987 for R150 000 and obtained a bond of R30 million over the property. The money was used on projects unrelated to Weskus, and after the provisional liquidation orders were granted, "not a sod had been turned nor a brick laid".
In 1991 the R650 million failure of Masterbond rocked the country. It was the biggest corporate collapse in South African history.
Since then Fundstrust, Tollgate, Macmed and Regal Bank have gone under with millions lost to investors.
LeisureNet has surpassed them all with losses of R1.1 billion.
The most important lesson to emerge from the debacle is that you, the investor, have to protect yourself by questioning and investigating investment schemes. The golden rule is simply this: if it seems too good to be true, it is almost certainly is.
While financial advisers and entrepreneurs can afford to pass off mistakes as "school fees", individual investors cannot afford to throw away their life savings on expensive lessons.
Do your own investigations. Danger signals include promises of exceptionally high returns and pressure to invest immediately, glossy brochures that say little about the product, and a reticence to answer questions fully.
Don MacKenzie stood out among the Masterbond victims for his crusading zeal. The founder of the Masterbond Victims' Association battled like a man possessed to recover money for the 12 000 investors, two of whom, he said, committed suicide while he spoke to them on the telephone.
MacKenzie maintained that 14 other investors driven to despair by their losses and the drawn-out battle for restitution also killed themselves. About 6 000 investors joined his association. Mackenzie was instrumental in getting charges laid against the three directors in 1991. A retired marine engineer, Mackenzie invested R140 000 in Masterbond. He spent just as much in fighting for justice.