A new tycoon is born: Moti Ben-Moshe. He is fresh, unfamiliar with the economy's complications and distortions, but the country's largest and most complex business pyramid is being put in his hands and management. From today, the burden of proof for the future of IDB Holding Corp. Ltd. (TASE:IDBH) falls on him, both because he was and remains unknown, an enigma, and because he was the face of the deal that exposed the slyness of Israel's biggest business celebrity of the past decade, Nochi Dankner, and drove him and his most well-connected and sophisticated pals from the public fleshpots.
Ben-Moshe is the man will get the praise or the curses, even though he has an equal partner in the controlling interest, Eduardo Elsztain. But Elsztain does not live in Israel, and he removed himself, either deliberately or not, from the acquisition's limelight, leaving Ben-Moshe to face the music alone.
Elsztain and his businesses are better known; he was not required to undergo a special and unique review by the Israel Securities Authority and the Official Receiver at the order of a court. He is one of Argentina's biggest businessmen (within interests in real estate and agriculture), and one of the wealthiest men in South America. His main company, Investments and Representations Inc. (IRSA) (NYSE: IRS; BCBA: IRSA), is listed on the New York Stock Exchange and Buenos Aires Bourse.
Ben-Moshe is a new face in town. He is everything that Nochi Dankner, the crowned king of the last decade, is not. Ben-Moshe has few connections and close associates, and is not owed big favors; he is not blue-eyed and haughty.
Ben-Moshe says the right words that people want to hear, but he is entering a suspicious, skeptical, and cynical market, which is licking its wounds from the tens of billions of shekels in write-offs - big money that was moved between friends and interested parties which squandered the public's money. That is why the huge hopes heaped on him are proportionately inverse to the minimal patience and tolerance. The extent that the general public and bondholders (who dared to take a company away from the man who failed to manage it) pray for the success of this daring and innovative step, there is a good chance that a minority of the surviving financial "aristocracy", even as it tries to bring him closer to its events (after all, he is prepared to buy more things from them) will quietly try, through emissaries, to undercut him.
Here are some of Ben-Moshe's promises made in an interview with "Globes" on December 19, 2013, after the court ruled that the transfer of control in IDB would be subject to a review. Now is the time to keep them.
- "The fact that we're the biggest discounter in Europe, and create competition in every market we operate in, will greatly affect the Israeli consumer as well. I have no doubt at all about this.
- "I am not seeking titles; I've come to work. One of the changes that I intend to institute at the beginning is to draw a salary of NIS 1."
- As for compensation that he will pay IDB executives, compared with the compensation Dankner paid, "The system will not just be more modest, but a lot more modest.. It would do no harm for the others to learn some modesty in their lives."
- "I announce unequivocally, I have no intention of carrying out parties at interest deals."
- "I haven’t acquired the company to sell assets… I think that Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) has immense potential, and it is a mistake to sell the company, but agreements must be kept, and if the sale that Nochi Dankner arranged under pressure does not go ahead, I really won't regret it."
- "I have not yet begun to promise, except to say that I keep my promises… I have proved this beyond question."
The Securities Authority chairman and the Official Receiver did not get their feet wet. They did not dare, and they did not sign off on the deal being kosher or unkosher. There were plenty of excuses: there was no time; it was not possible; Christmas; it snowed; and it was cold. Had we been given 6-12 months, would they have decided yes or no? It seems not.
Will Dankner and his attorney, Ram Caspi, appeal to the Supreme Court? The method of petitions and appeals to the High Court of Justice suits them. The objective is to make everyone involved in the deal sick of it; to force them to spend big money for who knows how long; to drag out the decision until something happens; to evade; to wear down; to exhaust. Furthermore, if until two months ago, the Dankner group, under the nickname "the company", was able to withdraw from IDB NIS 32 million - creditors' money for all intents and purposes - in their struggle for survival, if they file an appeal against the judge's decision and it is accepted, and if the Supreme Court allows more foot-dragging, there is a good chance for withdrawing more of the creditors' money for the private purposes of the parties at interest, even if this is done by underhanded means.
If they appeal, it means that they have not realized the change, not grasped the scale of their failure, which is not part of a possible business measure at a company. This is a failure wholly caused by arrogance and disregard of the public's money, huge leverage based on ties with banks and financial institutions, parties at interest deals, huge salaries to a group of executives who carried out the controlling shareholder's bidding. This is what the appeal will have to defend and protect.
If Dankner decides to appeal the ruling, Judge Eitan Orenstin should, in the principal of equality, and append to the appeal to the Supreme Court an opinion by the Securities Authority and the Official Receiver on the sources of money and the business partners of each and every one of the appellants: Dankner, Alexander Granovsky, the Nakash brothers, the Noiman family, Daniel Jusidman, and Netz Group Ltd. (TASE:NETZ).
Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2014
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